OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY. [No. 11. Vol. II.] 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 : "3. 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: -: Vol. II.] OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY. [No. 11. "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, Vol. II.] OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. Canney. [No. 11. The defendant moved for a nonsuit on the following grounds: (1) There is no evidence that demand was made for payment of all the claims named in the assessment. (2) The charter was not legally accepted, the corporation was not legally organized, the capital stock was not legally fixed or limited, and the charter became void three years after its date, because only fourteen days' notice was given of the first meeting. (3) The assessment was illegal because seventy-six shares only had been taken. (4) The plaintiffs could in no case assess the defendant beyond one hundred dollars, the amount of his share; and the defendant, having paid that amount before the assessment, could not be assessed any amount whatever. (5) The plaintiffs' sole remedy is by a sale of the defendant's share. (6) The plaintiffs can have no right of action against the defendant till after a sale of his share. The court pro forma declined to order a nonsuit, and the defendant excepted. The defendant offered no evidence. It was agreed that there were no questions of fact, except the following: (1) Was a demand made before the assessment upon the corporation for payment of each of the debts named in the assessment? (2) Was a demand made before the assessment upon the corporation for the payment of any of the debts named in the assessment? (3) Did the stockholders, present at the meeting of February 15, 1871, vote the assessment in good faith, exercising reasonable care and prudence and a sound judgment, for the honest purpose of paying the debts of the corporation? These three questions were submitted to the jury, who answered each in the affirmative, whereupon the court pro forma ordered a general verdict for the plaintiffs, subject to the opinion of the court on the questions of law raised in this case. The court instructed the jury that a demand made upon the corporation by a creditor need not be in writing nor by express words; that anything said or done by a creditor or anybody authorized by a creditor, intended to give the corporation to understand that a demand for immediate payment was made, and so understood by the corporation, would be a demand; that a demand made upon the directors or the treasurer would be made upon the corporation; that a demand made upon one director or an acting treasurer, or other agent, would be a demand upon the corporation, if it was the duty of such director, acting treasurer, or other agent to communicate such demand to the directors, and if it was so communicated before the assessment, so that they understood, before the assessment, that payment was demanded; and the defendant excepted. During the trial a person sat by the defendant's counsel, occasionally consulting with them in such a manner that the jury might have inferred that he was the defendant. Near the beginning of the trial, the defendant's counsel, being asked whether they would admit a certain fact, replied that they did not admit anything. Afterwards, one of the plaintiffs' counsel, while introducing evidence tending to show that the defendant was a stockholder, remarked to the defendant's counsel that he did not know whether the fact of the defendant's being a stockholder was in dispute. The reply was, in substance, a refusal to admit that fact; but after the plaintiffs' evidence on that point had been introduced, that fact was not controverted. In the closing argument, the plaintiffs' counsel com Vol. II.] OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY. [No. 11. mented briefly upon the defendant's letter to Chick as showing a remarkable forgetfulness of the defendant on the point of his being a stockholder, and as giving a character to the whole defence. To this course of argument the defendant objected; but the court declined to interfere, being of opinion that, although this line of argument was of little weight in this particular case, it was not carried beyond the plaintiffs' legal right; and the defendant excepted. The books and documentary evidence used at the trial may be referred to as part of the case. Per CURIAM. I. This is an action in the name of an insolvent corporation, to collect an assessment levied for the purpose of paying their debts. The creditors of the corporation are the parties likely to be principally benefited by a recovery in this suit. Although the action is not prosecuted in the name of an assignee or receiver, we think the interest of the creditors is to be so far regarded, that no defence grounded on defects in the plaintiffs' organization can be maintained in this suit, unless it could have been successfully set up in answer to a creditor's bill against the stockholders to enforce their personal liability. The defendant contends that the corporation has never had a legal existence. The charter provides that any three of the grantees "may call the first meeting of the corporation, by publishing a notice of the time and place of meeting. ... at least fifteen days prior thereto." Only fourteen days' notice was given of the first meeting. Ordinarily such a provision in regard to the time of notice would be regarded as merely directory, and a literal compliance with it would not be held an essential prerequisite, a condition precedent to the existence of the corporation. See Narragansett Bank v. Atlantic Silk Co. 3 Met. 282, pp. 288, 289. The purpose of the provision was, "to secure the rights conferred by the charter to those to whom it was granted, among themselves, by providing an orderly method of organization. Hoar, J., in Newcomb v. Reed, 12 Allen, 362, p. 364; and see Walworth v. Brackett, 98 Mass. 98. If neither the grantors of the charter (i. e. the state) nor any of the grantees complained of the defect in the preliminary notice, it would seem that the objection could not be subsequently raised by this defendant who has taken stock in the corporation, thereby recognizing the corporate existence, and manifesting his purpose to participate in the profits thereof. Angell & Ames on Corporations, 7th ed. §§ 83, 94, 524, 635; Methodist E. U. Church v. Pickett, 19 N. Y. 482; Eaton v. Aspinwall, 19 N. Y. 119; Appleton M. F. I. Co. v. Jesser, 5 Allen, 446, p. 448; Black River & Utica R. Co. v. Clarke, 25 N. Y. 208; Congregational Society v. Perry, 6 N. H. 164; Haynes v. Brown, 36 N. H. 545, pp. 562, 563. The defendant, however, relies on sec. 35, of ch. 147, Comp. Stats., which provides that "any act of incorporation," for a dividend paying corporation, "shall become null and taken to be wholly void at the expiration of three years from and after the passage of such act, unless the grantees or corporators in the act named. . . shall have, within said time, accepted such act or charter, organized as a company under it, and entered in good faith upon the proper business of the corporation." The argument apparently is, that "organized as a company under it" means VOL. II.] OSSIPEE HOSIERY And Woollen MANUFACTURING Co. v. Canney. [No. 11. organized in literal compliance with all the provisions of the charter, whether merely directory or otherwise." We think it means rather organized under color of the authority of the charter, with the bona fide purpose of acting under and according to the charter. The statute was not found to allow corporations, or their members, after professing to organize under the charter, and after acting under such organization, to repudiate their debts by setting up their own "neglect of duty" in a matter respecting which the public at large are not interested nor likely to be well informed. The object of the statute was rather to limit the time within which bona fide action should be taken by the grantees to avail themselves of the privileges of the charter. A de facto organization, formed and operated in good faith, under color of the charter, is an organization under the charter, within the meaning of the statute. The present case differs from Unity Ins. Co. v. Cram, 43 N. H. 636. The so-called " Unity Insurance Company" was an association" which had undertaken to assume corporate powers under a general act, ch. 152, Comp. Stats., - a portion of which is as follows: Sec. 1. "Any persons may voluntarily associate themselves together, and have all the powers of a corporation, for either of the following purposes: to organize a fire-engine company, or a mutual fire insurance company." Sec. 2. "Every such association shall be formed by written articles specifying the objects of the association, and the conditions on which it is formed, and subscribed by each member thereof." The articles of association were not signed by the members. It was rightly held that the subscription of the articles was a condition precedent to the creation of a corporation or to the exercise of corporate rights. "It is the basis on which all subsequent proceedings are to rest, and is designed to take the place of a charter or act of incorporation, by which corporate rights and privileges are usually granted. If there were no such requirement, there would be an absence of any provisions by which the right to exercise corporate power could be definitely fixed and established.. . . . It is not a case of a defective organization under a charter or act of incorporation, .. but there is an absolute want of proof that any corporation was ever called into being, which had the power of contracting debts or of rendering persons liable therefor as stockholders." Bigelow, J., in Utley v. Union Tool Co. 11 Gray, 139, pp. 141, 142. "We think these reasons have no application to the case now before us. In this there was an act of incorporation from the legislature. There is no question that the corporate powers which it conferred were assumed by the persons by whom it was intended that they should be enjoyed, so far as they chose to avail themselves of them. . . . . The evidence was ample to show that the persons named in the act of incorporation with their associates, or at least all of them who desired to do so, have accepted the act," organized under its authority, "issued stock, elected officers who have acted and served in that capacity, carried on business, contracted debts, and exercised all the functions of corporate existence. It is therefore too late" for a stockholder "to deny that the corporation ever had any legal existence." Hoar, J., in Newcomb v. Reed, 12 Allen, 362, p. 364; and see Walworth v. Brackett, 98 Mass. 98. In Unity Ins. Co. v. Cram, it seems to have also been held that the giving of the notice prescribed by statute was |