312 Mass. 6 | Mass. | 1942
This is a bill in equity brought to reach and apply twenty-five shares of stock in the defendant Elm Hill Realty Company owned 'by the defendant Gordon (hereinafter referred to as the defendant) to the satisfaction of a debt alleged to be due from him to Peabody Paint ar.d Wallpaper Company (hereinafter referred to as the Peabody company), a corporation now in bankruptcy, for ninety-four shares of stock in that corporation. The suit was originally brought by Harry B. Zonis, receiver of the Peabody company, but it was adjudicated bankrupt on March 2, 1939, and the present trustee in bankruptcy was substituted as plaintiff on July 16, 1941. The case was referred to a master, and, objections having been made to
The master’s report discloses that the Peabody company was duly organized under the laws of the Commonwealth on January 6, 1937, with a capital of $10,000 represented by one hundred shares of common stock of $100 par value a share. The defendant was one of the incorporators of the corporation, its president and treasurer and one of its three directors. He subscribed for ninety-four of the one hundred shares of the authorized capital stock, all of which was to be paid for in merchandise, supplies, furniture and fixtures as set forth in the articles of organization. After the corporation was organized a certificate for ninety-four shares was delivered to him under date of February 1, 1937. A “statement” was filed with the commissioner of corporations and taxation on January 6, 1937, in which the defendant stated, under oath, that the stock had been paid for in property of the character described above. The master found that this statement was false and known to be false by the defendant; that he had paid nothing for the stock and that he “knew that he nor anyone else had paid or intended to pay anything for the stock so issued,” in contravention of G. L. (Ter. Ed.) c. 156, § 16. (See Enterprise Wall Paper Manuf. Co. v. Gordon, ante, 1.) The master found further that the corporation performed its part of the contract by delivery of the certificate and that the defendant was liable for $9,400 on the subscription contract.
Section 19 does not apply to the present case, since its provisions relate only to cases where stock is issued to be paid for in full before it is issued and the subscriber (not one to whom stock has actually been issued and delivered) refuses or neglects to pay the amount demanded for thirty days after the time limited for payment in the demand made under § 18. Section 18 provides as follows: “In the case of capital stock authorized to be issued for cash, whether or not to be paid in full before issue, the directors may require payment in such proportions and at such times and places as they deem proper, by making demand therefor according to the by-laws, or, in default of such by-law, by notice mailed to each subscriber or stockholder at least seven days before his subscription or any portion thereof,
A corporation requires no statutory authority to enable it to bring an action for breach of contract by a subscriber to whom stock has been issued to be paid for in property, as in the present case. A corporation has the capacity to make contracts not in contravention of any statute, and may sue and be sued thereon. The present case is governed by Bridgeport Window Hardware Co. v. Osborne, 222 Mass. 517, 523. In that case the defendant had agreed to transfer to the plaintiff corporation certain patent rights and letters patent at a value of $90,000 in return for nine hundred
It follows that the defendant is liable for the full amount of his subscription and that the decree entered in the court below is right.
Decree affirmed with costs.