157 Mass. 68 | Mass. | 1892
There is an informality in the appeal from the decree overruling the demurrer, and in the appeal from the final decree. The Commonwealth is the only party defendant, and the appeals should have been in its name. The appeals taken were not authorized by law. Pub. Sts. c. 151, §§ 13, 16. But by § 19 a party who has by accident or mistake omitted to claim an appeal within the time allowed for that purpose may be permitted to appeal at any time within one year. Under these circumstances, although the formal objection has not been waived, yet, as leave to enter an appeal now might be granted, and as the case has been fully argued on the merits, we have considered the substantial question upon which our decision is desired.
That question is whether the Commonwealth, in levying the corporation tax upon the petitioner, had a right to include the proposed and unissued new shares in estimating the value of the shares in the petitioner’s capital stock.
The provisions of statute for the taxation of railroad corporations are found in Pub. Sts. c. 13, §§ 38-40. Under these provisions the aggregate value of the shares in the capital stock is to be taken as a basis.
There is no doubt that for certain purposes one may be considered as a stockholder of a corporation before he has received a certificate of his shares, or even paid for them. It has been so held under statutes making stockholders liable for debts of a corporation. Hawes v. Anglo-Saxon Petroleum, Co. 101 Mass. 385, 395.
An examination of the various provisions of the statutes leads to the conclusion that for the purpose of levying the corporation tax only shares which have been fully paid for, and which are either actually issued, or at any rate are ready to be issued, can be included in the valuation. There is a general provision that “ no corporation, unless specially authorized, shall issue any share for a less amount to be actually paid in thereon than the
Where a corporation increases its capital stock, an accepted subscription for new shares constitutes in the first instance a contract between the subscriber and the corporation, which creates reciprocal rights and obligations; but until the time comes for the issue of the new shares according to the terms of the contract, it cannot, in any usual and ordinary sense of the words, be said that the subscribers become holders of shares. The peculiar rights of shareholders, such as the right to vote at meetings and to receive dividends of profits, do not exist until then. It is obvious, under the statute above cited, that one who has subscribed for shares and paid in only ten per cent of the par value thereof is not entitled to vote at meetings. The provision that each stockholder is entitled to one vote for each share held by him means one vote for each full paid share, such as the other statutes allow to be issued. There is no provision for splitting votes, and allowing those who have paid ten, twenty, or fifty per cent a vote in proportion to the amounts so paid in by them. The authority which the petitioner possessed for increasing its capital stock involved, within reasonable limits, the power in its board of directors to determine when the payments should be made in order to effect such increase. Pub. Sts. c. 112, § 58. This power is necessarily incident to the power expressly granted. And when the board of directors, acting in good faith towards the Commonwealth, and within reasonable limits, has fixed the time for payments to be made, and for the increase to take effect, the creation of the new shares is postponed until that time arrives. During the interval, the relation between the subscriber for new shares and the corporation is that of parties who have
On the whole, it seems to us that the tax upon the corporate franchise of the petitioner could not lawfully be based on a valuation which included the rights of subscribers on the 1st of May, 1891, when the shares were not to be issued until the 5th of January, 1892. See Sewall v. Eastern Railroad, 9 Cush. 5, 11; Fisher v. Essex Bank, 5 Gray, 373; Field v. Pierce, 102 Mass. 253, 261; St. Paul, Stillwater, & Taylor's Falls Railroad v. Robbins, 23 Minn. 439; Spring Co. v. Knowlton, 103 U. S. 49, 57; Busey v. Hooper, 35 Md. 15, 31; Burrall v. Bushwick Railroad, 75 N. Y. 211, 216; Neiler v. Kelley, 69 Penn. St. 403, 407.
The liability of this valuable right and interest to taxation in another form is not before us.
Decree affirri ed.