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Vol. II.]

CONSOLIDATED FRUIT JAR Co. v. DORFLINGER.

(No. 11.

patented, when in fact it was not securely protected by a patent, was invalid in equity. Thus Vice-Chancellor Wood, afterwards Lord Hatherley, in 1853, intimated an opinion that the trade-mark would be invalid where no patent had ever existed ; Flavel v. Harrison, 10 Hare, 467 ; but afterwards, in the same year, when considering the case of a patent which had expired, suggested some qualification of the general doctrine. Edelsten v. Vick, 11 Hare, 86, 87; compare with Morgan v. McAdam, 36 L. J. Ch. 229, 231. But such doubts, or hesitations, were removed in England by the case of The Leather Cloth Co. v. The American Leather Cloth Co., in the house of lords in 1865, 11 H. L. 523, affirming a decree made by Lord Chancellor Westbury, in 1863. 4 De G., J. & S. 137. In this case Lord Kingsdown said: “If a trade-mark represents an article as protected by a patent, when in fact it is not so protected, it seems to me that such a statement primâ facie amounts to a misrepresentation of an important fact, which would disentitle the owner of the trade-mark to relief in a court of equity against any one who pirated it;" and added, that he would have great difficulty in assenting to the distinction suggested by Vice-Chancellor Wood, in the case which had been cited. 11 H. L. 543, 544. Lord Kingsdown here succinctly restated the opinion of Lord Westbury, in the court of chancery; and Lord Westbury adhered to it in the court of appeal. Page 548.

An exception from this rule of decision had been previously, and has been since, recognized in the case of an article, such as patent leather, or patent thread, whose designation of this kind is in constant use, though no one supposes that it is thereby intended to convey the impression that the subject is protected by any patent. Marshall v. Ross, Law Rep. 8 Eq. 652, 653. So after a patented privilege is long since expired, such a designation may have become a general or special word of art. Hall v. Barrows, 4 De G., J. & S. 155. But such exceptions only confirm the rule of decision in ordinary cases.

Lord Westbury in the court of chancery (4 De G., J. & S 138, 139) seems to have had American decisions in view. His opinion appears to have been followed in the Patent Office of the United States. If other American opinions are conflicting, it may, perhaps, be attributable to undue deference to the supposed authority of Sykes v. Sykes. If there be such a conflict, the question is too doubtful for interlocutory adjudication.

The above observations may not be applicable to the alleged trademark in the words The Mason Jar of 1872.” The complainant, if so advised, may renew his application as to this mark. But a man is perhaps not at liberty to flood the market with various designations, all including more or less of a common subject, without making the differences very distinct. How this may be as to the particular subject here, I cannot at present decide.

As to the other alleged trade-marks a preliminary injunction is refused.

VOL. II.

Laida

33

Ossipke HOSIERY AND WOOLLEN MANUFACTURING Co. v. Canner. [No. 11.

Vol. II.]

SUPREME COURT OF NEW HAMPSHIRE,

(To appear in 54 N. H.)

INSOLVENT CORPORATION. — SUIT BY. - DE FACTO ORGANIZATION.

SUIT AGAINST STOCKHOLDER. — DEMAND, — ULTRA VIRES, ETC.

OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING CO. v CANNEY.

In an action by an insolvent corporation to collect an assessment for the purpose of pay

ing their debts, the interests of the creditors will be so far regarded that no defence grounded on defects in the organization of the corporation can be maintained, unless it could have been successfully set up in answer to a creditor's bill against the stockholders to enforce their personal liability. The plaintiffs' charter provided that the first meeting of the corporators might be called

by publication at least fifteen days prior thereto. Only fourteen days' notice of the meeting was given. Held, that if neither the grantors of the charter (i. e. the state) nor the grantees complained of the defect in the preliminary notice, the objection could not subsequently be raised by a stockholder in a suit by the corporation against him to recover an assessment made under the provision, chapter 136, section 4, General

Statutes.
A de facto organization of a corporation, formed and operated in good faith, under color

of the charter, is an organization under the charter, within the meaning of the statute

of 1846, chapter 321, section 7. In a suit brought against a stockholder to recover an assessment made under the pro

visions of chapter 136, section 4, General Statutes, he will be regarded as having waived the right to object that the whole number of shares fixed and limited by the

corporation was not subscribed for, if he has paid for the stock for which he subscribed. The order in which the parties shall exercise the right of challenge of jurors is within

the discretion of the court at the trial term, and their ruling on this point is not matter

for exception. No particular language is necessary to constitute a demand for payment. It is enough

if both parties understand that a demand is made. A corporation brought a suit against a stockholder to recover an assessment made under

chapter 136, section 4, General Statutes. The stockholder wrote to the treasurer of the corporation as follows : “I suppose you are somewhat anxious to hear from me, as it is past the time specified for the assessment to be paid. I have the money due me, and shall have it the first of next month, so thought I would not borrow or hire it for so short a time; therefore you will excuse me for being so backward in paying my proportion." Held, that said letter was competent evidence to go to the jury to show an admission by the defendant that payment of all the debts named in the assessment had been demanded of the corporation. If the objection, that some of the debts for which such assessment is made are not

binding upon the corporation, is not insisted on at the trial, it will be regarded as

waived. Payment only of the debts of a corporation, in the cases and to the extent specified in

chapter 135, General Statutes, can be enforced against individual stockholders under

chapter 136, section 1. An assessment can be made under chapter 136, section 4, to pay those debts only of

which the payment can be enforced by bill in chancery under section 1, and payment

of no other can be demanded under section 2. The provisions of chapter 135, section 4, General Statutes, which forbid a corporation

to contract debts or incur liabilities exceeding one half of its capital stock actually paid in and unimpaired, and of its other property and assets, are directory; debts contracted and liabilities incurred in excess of that amount are binding upon the corpo

ration. Section 5 of the same chapter gives such creditors an additional remedy against the direc

tors of such corporation. The stockholders may assess themselves to pay such debts under chapter 136, section 4,

if they are individually liable to pay the other debts of such corporation.

Vol. II.

OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY.

(No. 11.

When a creditor of a corporation had no knowledge that the corporation had exceeded

the limit beyond which it is forbidden, by chapter 135, section 4, the contract debts, and could not by inquiry have ascertained that fact, the doctrine of ultra vires will not be applied to him.

ASSUMPSIT, by the Ossipee Hosiery and Woollen Manufacturing Company against Havillah D. Canney, for an assessment made by the plaintiffs upon the defendant, as a stockholder in the plaintiff corporation, for the purpose of paying the corporate debts, under Gen. Stats. ch. 136, sec. 4. In empanelling a jury, the plaintiffs peremptorily challenged one juror and the defendant one; the plaintiffs then passed the list to the defendant without exercising the right of second challenge; the defendant challenged a second time ; the court then allowed the plaintiffs to challenge the juror drawn to take the place of the one set aside by the defendant's second challenge, and the defendant excepted. Writ dated February 14, 1872. The defendant pleaded the general issue, and the following brief statement: The plaintiffs will take notice that at the trial of said suit the defendant will offer evidence that the charter of said pretended plaintiffs was never duly accepted ; that the amount of capital stock was never duly fixed and limited, and that the number and the amount of shares in the same were never limited and fixed; that said plaintiffs never organized under their charter within three years from its passage ; that said plaintiffs did not at the time said suit was begun, nor at any time before, nor at the time of the assessment in said declaration mentioned, owe any just liabilities ; and that no demand for the payment of any liabilities of the plaintiffs in said declaration mentioned has been made ; and that there was no legal ground for making said assessment; that said plaintiffs had, at the time of said demand and said assessment, ample funds to pay all their liabilities and all costs thereon, and at said time ample unincumbered personal property to satisfy all claims and all costs thereon; and that the same was duly exposed so that it might have been attached by said creditors of said plaintiffs ; and said defendant is not and never has been a stockholder in said plaintiff corporation, and never subscribed for any shares therein ; and there are not and never have been any shares in said corporation; and that the defendant never received any certificate of stock in said plaintiff corporation ; and that no assessment has been made as by said writ is alleged.

The plaintiffs' charter, approved July 7, 1866, is as follows: Section 1 is in the usual form, incorporating Smith, Dorr, and others, their associates, successors, and assigns, by the plaintiffs' name, giving them the powers and privileges, and making them subject to all the liabilities, incident to corporations of a similar nature. Section 2 authorizes the corporation to carry on a manufacturing business, and to hold property. T6 The capital stock of said corporation shall not exceed the sum of $50,000, which shall be divided into shares of $100 each.” “Section 3. Any three of the persons named in the first section of this act may call the first meeting of the corporation, by publishing a notice of the time and place of meeting in some newspaper printed in the county of Carroll, fifteen days at least prior thereto, at which meeting or any adjournment thereof a clerk shall be chosen, and by-laws for the regulation and government of said corporation, not inconsistent with the Constitution and laws of this state, may be established.” ....

Vol. II.] OssipEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY. [No. 11.

Three of the grantees called the first meeting, to be held August 9, 1866, and notice thereof was published July 25, 1866. The defendant objected that this was only fourteen days' notice, instead of fifteen, as required by the charter; that the first meeting and the adjournment thereof, and the adjourned meeting, were not legal; that the acceptance of the charter, the organization of the corporation, the limitation of the amount of stock, the by-laws, and all other acts and proceedings of those meetings were nullities; and that the charter became void by force of Gen. Stats. ch. 134, sec. 2. At the first meeting the charter was formally accepted; officers were chosen ; a vote was passed fixing and limiting the capital stock at $8,000; a committee was appointed to draft by-laws; a vote was passed adjourning the meeting to September 6, 1866, at which time by-laws were adopted ; and these were the only meetings at which the corporation was organized and the stock limited

The court ruled pro forma, that if by the proper computation of time the notice was published only fourteen days prior to the first meeting, such a defect did not, as a matter of law, defeat this suit, nor make the charter void on the ground that it was not legally accepted and the corporation not legally organized; and the defendant excepted.

In the autumn of 1867 the defendant took one share of stock, paid $100 for the same, and became a stockholder ; but there was no evidence that he ever attended any meeting of the corporation, and he did not attend any meeting at which anything was done having any bearing on this suit. Seventy-six shares only were taken ; and no certificate was filed with the town clerk, as required by Gen. Stats. ch. 135, sec. 8. In September, 1870, the plaintiffs were insolvent, and have so continued to the present time.

At a meeting of the stockholders, called by the directors, and held February 15, 1871, “ Voted unanimously, that an assessment be and is hereby made upon each stockholder of this corporation, who was a stockholder on or before the 15th day of September, A. D. 1870, of $200 per share for each share owned by such stockholder, to be paid to the treasurer of said corporation forthwith, to pay the debts and demands due and owing from this corporation to the following named persons, whose names and debts and demands are as follows:

L. R. Hersom & Co., $5,632.15. [Here follows a list of about eighty other creditors, and the amount of the debt due each of them.] Amount, $15,318.28. The said debts having been contracted prior to said 15th day of September, 1870, and payment of said debts having been legally demanded by said persons, and the same not having been paid and discharged, and unincumbered personal property of this corporation sufficient to satisfy the same, with costs of suit, not having been exposed so that it might be attached in suits of the said creditors against this corporation :

43. Voted unanimously, that the directors and treasurer be instructed to collect said assessments forthwith and pay said debts.”

In the first count of the declaration, it was alleged that all of said debts had been legally demanded. In the second count (added by amendment during the trial) that allegation was omitted.

The following letter from the defendant to the treasurer of the company was introduced in evidence:

deneged, and tasty the attached

Vol. II.

OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY.

[No. 11.

tillg the followacturing in o and

“Dracut, Mass., March 20, 1871. “Friend Chick: Dear Sir, - I suppose you are somewhat anxious to hear from me, as it is past the time specified for the assessment to be paid. I have the money due me, and shall have it the first of next month, so thought I would not borrow or hire it for so short a time; therefore you will excuse me for being so backward in paying my proportion. I suppose you intend to start the mill again ; hope you will have good success this time, and trust you will if you get rid of the land sharks. If you wish for any of my assistance in that respect, I will come up and do what I can. Respectfully yours, &c.,

H. D. CANNEY.” One Chick, the plaintiffs' treasurer and agent, testified that the corporation commenced manufacturing in October, 1867, in Ossipee; suspended business during the following winter; began again the following spring, and continued till September 16, 1870, when creditors sued, attached, and shut up the mill. The corporation was then insolvent; was owing the debts named in the assessment, with the exception of possible trifling mistakes. Demands had been made on me- not all after the failure; some before that. Chick, and one Smith, a director, testified specifically what creditors had made demands upon them; and there was no direct evidence that any creditor had made demand upon any stockholder or officer of the corporation, except upon Chick and Smith. For some of the debts named in the assessment, neither Chick nor Smith testified that demands had been made upon either of them. A list of the creditors and the amount of their claims (from which the list in the assessment was copied) was produced at the stockholders' meeting at which the assessment was voted, and also at a directors' meeting January 13, 1871, at which it was voted to call said stockholders' meeting. Subject to the defendant's exception, Quarles, the clerk of the corporation, was allowed to testify that at said directors' meeting said list was talked about; that it was there stated and not denied that all the debts on the list had been demanded ; that at said stockholders' meeting the list was talked over, and about those debts having been demanded ; that he there stated that he did n't want to put one in the list that had n't been demanded; that he thought all the information given at each of said meetings about demands having been made was given by Chick and Smith. The court ruled that this testimony of the clerk was competent evidence on the question of demands made by the creditors upon the plaintiffs, and the defendant excepted. As to what the defendant ever knew of the organization of the corporation, the number of shares taken, and the facts and proceedings upon which the assessment was founded, there was no other evidence than that stated in this case. The court ruled that the defendant's letter to Chick was evidence competent to be submitted to the jury to show an admission of the defendant that payment of all the debts named in the assessment had been demanded, and that for this reason a nonsuit could not be ordered for want of evidence of such payment having been demanded; and the defendant excepted. Chick and Smith testified that said debts were all due, as near as they could ascertain from the books of the plaintiff and the bills sent in ; and that some of the creditors demanded payment in general terms, without naming the precise sums due them, and without any definite settlement being made to determine the sums due,

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