Newspaper Transcripts in Barret v. Alton & Sangamon Railroad, [Law papers].

Summary: The Alton and Sangamon Railroad retained Lincoln and Herndon and sued Klein to recover five installments due on his stock. Klein had purchased five shares at $100 per share, paid a $25 down payment, but failed to pay the additional $175 in installments. The court ruled for the Alton and Sangamon Railroad and awarded $175. Klein appealed to the Illinois Supreme Court and argued that the subscription was void because he did not pay the $5 per share when he subscribed for the stock and that he had the right to rescind the subscription contract by forfeiting his $25 down payment. The supreme court rejected Klein's arguments and affirmed the judgment. Justice Treat stated that Klein was a subscriber because he paid his promissory note before the railroad closed its subscription books. According to Treat, Klein's "contract was then complete, and his liability fixed." Treat also rejected the forfeiture argument by stating that the "right of forfeiture belongs exclusively to the corporation. It was conferred as an additional remedy, to enforce payment from stockholders." The Klein appeal confirmed the precedent that Lincoln had established in Barret v. Alton and Sangamon Railroad: individuals could not void their stock subscriptions unless there were substantial changes in the corporation charter.
Summary: The legislature chartered the Alton and Sangamon Railroad to construct and operate a railroad between Alton, Illinois, and Springfield, Illinois. The charter provided that the railroad could issue stock for $100 per share, with a subscriber paying 5 percent down and the balance in installments called for by the board of directors. Barret subscribed for thirty shares. He also owned 4,215 acres of land in southwestern Sangamon County which bordered the proposed route. Before Barret paid the balance on his stock, the legislature authorized the railroad to shorten the line, thus bypassing Barret's property. Barret refused to pay the installments, and the railroad retained Lincoln and Herndon and sued to collect the full subscription. Barret pleaded that the charter's alteration voided his subscription agreement. The court disagreed, ruled for the railroad, and awarded $1,351. Barret appealed to the Illinois Supreme Court, which affirmed the judgment and established an important precedent for subsequent stock subscription cases. The development of Lincoln's argument is clear from a series of letters with Martin. Justice Treat relied on Lincoln's citations in writing the opinion and reasoned that unforeseen construction problems concerning a public improvement could not be fully known when the legislature granted a charter. Therefore, the legislature might remedy the situation by amending the charter without the consent of all the incorporators. Treat concluded that a "few obstinate stockholders should not be permitted to deprive the public and the company of the advantages that will result from a superior and less expensive route."