| Or. | Jan 15, 1880
Lead Opinion
By the Court,
The issues of fact, presented by the pleadings, are: 1. Was William Euble a stockholder in the corporation, of fifty thousand shares'of the capital stock? 2. If he was such owner, did he become legally liable to pay the same to the corporation before he bought the land in question ? 8. Was the money which Euble paid for the land in question the property of the corporation ? Í. If not the money of the corporation, was Euble acting for the corporation as its agent in buying this land, and so related in his actions in buying the land that he now holds the same in trust for the corporation ?
The respondent’s claim is that Euble is its trustee, holding this land for the benefit of the corporation.
“ Know all men by these presents, that we, the undersigned subscribers to stock in a certain gravel mine situated on Coyote creek, in the counties of Jackson and Josephine, in the State of Oregon, agree to pay I. N. Muncy fifty per cent, of the capital value for each and every share set opposite our names, as follows: Twenty-five per cent, in hand, and twenty-five per cent, when taken out of the mine, over and above expenses. The said mine is to be divided into two hundred thousand (200,000) shares, of the par value of one dollar each, in gold coin of the United States. It being understood and agreed that each and every subscriber is to have one half of the net proceeds of the mine, pro rata, to the whole amount of the capital stock, until his stock shall be paid in full in said coin, as above mentioned, then he is to receive the amount of stock for which he has subscribed, free from all incumbrance, and full dividends thereafter upon said stock. It being further agreed and understood that the said Muncy is to, at his own expense, extend the ditch known as the McWilliams & Co. ditch down the said creek to a point on the hill above a claim known as the Eobertson claim, and to purchase and place upon said mine another pipe fifteen inches in diameter, and of sufficient length for the successful working of said mine, together with a giant and flume corresponding to the same:
Paid Jay Francis............................................... 320
Paid by note, Joseph F. Lindsay................................. 5,000
Paid by note and horse, James Chenoweth........................ 1,000
Paid 25, Jennette Webb......................................... 100”
It will appear by inspection of the record, as well as by the subsequent testimony, that the name of Wm. Euble, together with the amount of stock by him subscribed, and the words, “ as per arrangement,” in the margin, are all in his own w'riting. This paper is not dated, but was signed by Euble August 27, and which is the same date as the acknowledgment of the articles of incorporation.
Next after this paper the respondent offered in evidence
Exhibit 2.
Coyote Gold and Silver Mining Company, incorporated at Salem, Oregon, August 27, 1878, as follows:
Be it known that the following articles of incorporation are this day entered into by I. N. Muncy, J. L. Murphy, David Stump, and Wm. Nuble, for the purpose of mining in gold, silver, and other precious metals; to purchase placer mines of gold, or ledges of gold, silver, or other precious metals; construct or purchase and own water ditches, quartz mills, or any other thing necessary to the successful prosecution of the work of mining.
Article 1. The name of the company or corporation shall be known as the Coyote Gold and Silver Mining Company.
Art. 2. The duration of the company shall be indefinite.
Art. 8. The place of operation of this company shall be in Jackson and Josephine counties, in the state of Oregon.
Art. 4.. The principal office of the company or corporation shall be at Leland, Jackson county, Oregon.
Art. 5. The amount of the capital stock of said company or corporation shall be two hundred thousand dollars, which shall be divided into two hundred thousand shares of one dollar each.
The above act of incorporation was executed in the city of Salem, in Marion county, Oregon, on the twenty-seventh day of August, 1878, signed by I. N. Muncy, J. L. Murphy, David Stump, and Wm. Nuble, incorporators, acknowledged before H. A. Johnson, justice of the peace in and for said county, and filed in the office of the secretary of state, September 2, 1878.
The incorporators named in the foregoing articles of incorporation agree and bind themselves severally to accept and to cause the directors of said company, when elected and organized, to ratify the contracts and purchases of certain bar and placer gold mines situated on Coyote creek, in Jackson and Josephine counties, Oregon, made by I. N. Muncy and Wm. Nuble.
And it is further agreed that stock books shall be opened,.
Twenty-five per cent, of the par value in cash at the time of subscribing, and twenty-five per cent, to be taken out of the net proceeds of the mines, it being understood and agreed that each subscriber shall be entitled to receive, as dividends, one half of the net proceeds, according to the number of shares he holds, and that the other one half shall be retained by the company until the sum so retained shall equal his indebtedness for stock. Thereafter he shall receive certificates of paid-up stock for all the shares he may hold clear of all incumbrance, so far as the company is concerned, .and full dividends.
It is further understood aud agreed that said incorporators shall, within a reasonable time, extend the ditch known as the Ash & McWilliams ditch down said Coyote creek to a point on the hill adjacent to a claim known as the Nobertson claim, and that they will purchase and place on said mines, in addition to the hydraulic already there, another pipe of fifteen inches in diameter, and of sufficient length for the successful working of the mine, together with a giant and flume corresponding to the same.
It is further agreed that the one half of the net proceeds to be retained by the company, as above specified, shall not remain as assets in the hands of the company, but shall be drawn out by the four incorporators as it accrues in the following ratio, viz.: Wm. Nuble, one half (J), I. N. Muncy, three eighths (f), J. L. Murphy, three fortieths (3-40), and D. Stump, one twentieth (1-20), said sums to aggregate twenty-five thousand dollars, and no more.
It is further agreed that after the payment of the purchase-money of said mining claims, the drawing of the twenty-five thousand by the four incorporators, as above specified, the payment of all costs and expenses of extending the ditch, purchasing and placing in position in work
Sept. 14, 1S78.
Subscribers’ Names. Amount of Stock.
David Stump.................... 5.000 shares
J. L. Murphy................... 7,500 “
Win. Buble..................... 50.000 “
J. E. Bewley.................... 2.000 “
W. Et> Lemon................... 100 “
Z. Davis, per I. N. Muncy........ 2,000 “
E. A. Chase, per I. N. Muncy____ 1,000 “
H. Kelly, per I. N. Muncy---1,000 “
T. S. Bodsbaugh, per I. N. Muncy 5.000 “
I. N. Muncy..................... 50.000 “
G. W. Sloper................... 50 “
John Vernon.................... 1.000 “
H. D. Bay...................... 2,000 “
B. Doty......................... 2,000 “
This last paper which is attached to the articles of incorporation, is dated on the fourteenth day of September, 1878; and it seems (from a comparison of dates with the records of the corporation) was executed the day that the stockholders met to organize the corporation, and from its terms indicates that it was executed before any organization was made, and was preliminary thereto, and with a view to securing an endowment to Monmouth College of twenty-five thousand dollars. In order that the provisions should
The statute, p. 525, secs. 5 and 6, provides for and fixes the powers and duties of corporations. Their office is to start the corporation and proceed to perfect its organization as provided for in section 7, and it is only after such organization that it is capable of carrying on the enterprises enumerated in the articles of incorporation. The acts which the incorporation are authorized to do are such as tend to promote the final organization by the election of directors, when the stock becomes liable to be assessed for the purpose of raising funds with which to prosecute its legitimate enterprises. It was not contemplated by the statute that the corporation should be empowered to make assessments and prosecute the business for which the corporation was created. The stock is not due and liable to assessment until after the organization by the election of directors; and it is provided in section 7 of the act, “ that at the organization each stockholder shall be entitled to one vote for such share of capital stock subscribed by him; but after such first election of directors, no person shall vote on any share upon which any installments or portion thereof, is then due or unpaid.” Section sixteen, also, provides “ that if any such corporation does not elect directors and commence the transaction of the business for which it was formed, within one year from the time of filing articles, etc., shall be divested of its corporate rights.”
The stock is the capital of the corporation on which it is to do business, and it does not become available for that purpose until after directors are elected. All proceedings of the corporators (who need have no pecuniary interest in the corporation) which are prior to such election are steps
We think that the paper offered in evidence executed on the twenty-seventh of August, 1878, contains no stipulations or agreements which afterwards became binding on the corporation or any of the persons who signed it, for the reason that there is no competent evidence showing that the provisions contained in said agreement were ever adopted or agreed to by the corporation, and that such an agreement by the corporation can only be.proved by the records of the corporation, and there is no such record in its proceedings. The same may be said of the other agreement made on the fourteenth of September, 1878. This contained stipulations which could not bind the corporation unless agreed to by the corporation, for it provided for the disposition of the profits of its future business, and it is a self-evident proposition that neither a person nor corporation is bound by a contract which was never agreed to by such person or corporation. We think that Ruble did not become a subscriber by signing these papers above referred to.
We do not, however, decide but what these documents may be competent as tending to show that he authorized his name to be put on the stock books and to explain his subsequent conduct. But suppose Ruble was a subscriber, when did he become such ? Certainly not until he authorized his name to be subscribed to the capital stock, by his direct
If he was a subscriber, when did he become liable to pay his subscription? We think that liability did not accrue under the corporation until after the directors were elected and an order made for a call for the stock, unless by the terms of the subscription the payment is to be made without a call. So this subscription could not in any event have been demanded before the fourteenth of September. Prior to that time the corporation had no secretary or treasurer, or capacity to demand subscriptions. So if this position be true, Euble, at the time he purchased these claims was not owing the corporation the money he paid for the property, and it was his unless he voluntarily parted with it to the corporators, of which there is no evidence (except that the money was carried to the depot in the canteens of Muncy, which Euble had borrowed), and he then had the legal right to invest the money on his own account, for it was still his money though he may then have instructed' to pay it on his future subscription to the corporation, and if he did go to the mines to buy these claims for the corporation with his own money, and afterwards changed his mind, either from a good or bad motive, and took the deeds in his own name, there would be no such resulting trust to the corporation as could be enforced against him until the purchase money was refunded to him or he be placed in such a relation to the corporation as would be equivalent to atender of the purchase money which he had paid. It is claimed that he owed the corporation this amount at the commencement of this suit. To put him in such a position he must be a subscriber to the stock .of fifty thousand dollars. The records of the corporation must show that this amount is due and owing. To show this, it must be shown by the records of the corporation: 1. By the stock book signed by Euble or evidence equivalent to such signing. 2. That one half of the capital stock of the corporation has been subscribed. 3. That an assessment has been made on
None of these things appear from the records of the corporation, except that one half of the capital stock appears in a list on the stock book to be subscribed. But all the names of the subscribers appear to be placed in this list by the secretary, William Ruble, except his own name, which is in the handwriting of W. F. Briggs, and without the consent of Ruble, who refused to sign the same, and this list was so made by the secretary after this suit was commenced. The undertaking to which these names are subscribed is as follows: “We, the undersigned, subscribers to the capital stock of the Coyote Gold and Silver mining Company, do hereby bind ourselves to take the number of shares that we subscribe for, and to pay therefor in United States gold coin, as per conditions entered into by the incorporators and others, in the town of Monmouth, Polk county, Oregon, September 14,1878, and recorded in the journal of said company, on pages 5, 6, and 7.” “Names of original subscribers.” Then follows the list of subscribers in the manner following:
Subscribers’ names. Amount of stock. Amount paid. When paid.
P. 0. Address.
David Stump, 5,000. §2,500. Jan. 17, 1S79.
Monmouth, Polk Co.
And other subscribers in like manner. These conditions referred to in the undertaking are contained in exhibit number two, above set out in this opinion. One of these conditions is, “that the incorporators agree and bind themselves severally, to accept, and to cause the directors of said company, when elected and organized, to ratify the contracts of and purchases of certain bar and placer gold mines, situate on Coyote creek, in Jackson and Josephine counties, Oregon, made by J. N. Muncy and William Ruble.” Another condition is, “ that said incorporators shall, within a reasonable time, extend the ditch known as the Ash and McWilliams ditch down said Coyote creek, to a point on the hill adjacent to a claim known as the Robertson claim, and that they will purchase and
It is evident from this agreement that the opening of stock books and the ordering of the sale of stock were proceedings to be had after the corporation was organized, and such orders should appear in the records of the corporation.
The corporation had no authority to make this order to reduce the stock to half price, for the statute limits their powers, section 4, page 525, when it says the articles shall specify “ the amount of the capital stock,” and “the amount of such shares of such stock.” This must be the true, not the fictitious amount.
Thus section 6 provides that it shall be lawful to organize when one half of such stock is subscribed, so that the
It is claimed by the respondent that Ruble is estopped from disputing that he was a subscriber of fifty thousand dollars of the capital stock of this corporation, by his acting as secretary, and acting and voting as a subscriber, and serving as a director. The evidence shows that at the meeting of those who claimed to be stockholders and who elected the directors, each individual voted one vote without reference to the number of shares held by him, and that at that time no subscription had been made to the capital stock which would bind any subscriber to pay, unless he became so bound by having voted at this meeting, or acted as an officer. The list of stockholders whose names appear on the stock book, appear to have been placed there after this organization by the secretary, and would not be the subscriptions of these individuals unless authorized or assented to by them. These preliminary papers were not subscriptions, and did not authorize the secretary to subscribe the stock book for the persons who had subscribed these papers. (Granger Market Co. v. Vinson, 6 Or. 172" court="Or." date_filed="1876-12-15" href="https://app.midpage.ai/document/grangers-market-co-v-vinson-6893685?utm_source=webapp" opinion_id="6893685">6 Or. 172.) If any of these persons whose names are on this stock book were sold for a call on the stock, he could answer that he had not subscribed; or, if he had subscribed, could set up any condition precedent to payment, to be performed by the corporation, and which had not been performed. As in this case, the conditions in the agreement of September 14, to be performed by the corporators, had been violated, for as between the corporation and its stockholders, the conditions of a subscription may be inquired into, for both parties are chargeable with notice of these conditions, and there is no estoppel. Any actions or declarations of
When this corporation claims that Ruble owes it twelve thousand five hundred dollars, as one fourth of his capital stock to the corporation by him subscribed, and he denies the subscription, it is necessary for the corporation to prove the subscription by producing the subscription signed by Ruble, either by himself or by another for him with his authority, or by some acts of his which are equivalent to a subscription. And as has been already stated, we do not think these acts show that he was a subscriber, or that the proof shows that the other persons whose names are put down as subscribers in the stock book have subscribed in such a manner as would make them liable to an assessment for unpaid stock. (See 6 Or. 172.) But we think the evidence does show that Ruble purchased the property in
But we do not think this court can make a corporation for the plaintiff from the evidence, with Euble as member and stockholder, and declare him indebted to the corporation the sum of money he paid for this land. And if the corporation desires this property, and it is of the great value claimed by the plaintiff, no injustice would accrue to the plaintiff if Euble should retire from this mining enterprise, and on the payment to him of his money, be required to transfer the property to the corporation; and the plaintiff can have no pecuniary interest in holding Euble as a mem
We think, therefore, that the plaintiffs have not proven the essential facts to maintain their complaint, and that the decree of the circuit court should be reversed and the plaintiff’s bill dismissed.
Dissenting Opinion
dissenting:
Being unable to agree with the opinion of the majority of the court in this case, I feel compelled to dissent.
Under the facts as developed by the evidence iu this case, I hold that it Avas the duty of Euble: 1. To have filed the third articles of incorporation in Jackson county; and, 2. To have bought the mining ground iu dispute for and in the name of the corporation then being formed for that special purpose; not, as is claimed by him, Avith money of his own, which Avas to be returned to him, but Avith money which he, and others engaged in the enterprise, had agreed to advance for that purpose, and in consideration of which Euble was to OAvn and to have issued to him fifty thousand shares of the stock of the corporation, when the same was in a condition to make such issue.
But it is sought, on behalf of Euble, to repudiate and avoid his agreement Avith the subscribers to the preliminary agreement and Avith his co-corporators, on the ground that
It is further claimed that Ruble was exonerated from compliance with his agreement on account of irregularity in the organization of the plaintiff corporation, as well as informality in its subsequent proceedings. In answer to this position, it may be suggested that it could have made no difference whatever with Ruble as to what was to have been done after he had complied with his agreement, inasmuch as he did not comply with it, whether the subsequent proceedings were regular or not. Thus it will be seen that subsequent informality could not exonerate him. And it will be further noticed, by closely observing the facts, that nothing would have gone wrong in the entire enterprise, except for Ruble’s own dereliction and want of good faith. In the view which I have taken of this case, I regard it as immaterial whether Ruble, technically and in the strict sense of the term, became a stockholder in the plaintiff or not. There can be no doubt but that the preliminary subscription, gotten up by Muncy, related to the property in question, and that the plaintiff was incorporated for the purpose of absorbing this very preliminary association. It was understood between Ruble and his associates, after subscribing the Muncy papers, that he was to own one fourth of these mines, and that the others were to own interests therein in proportion to the amount subscribed. After signing the Muncy papers, Ruble took a lively inter
In the organization of the incorporation the Muncy subscription was adopted as its subscription of stock, as is conclusively shown by the construction placed upon it by all parties concerned in the enterprise. All the subscribers, including Ruble, recognized and treated it as such. Ruble notified them, as subscribers of stock, to appear at Monmouth on September 14, 1878, for the purpose of organizing the corporation, by electing directors and other officers. All of the subscribers, in obedience to this notice, did appear either in person or by proxy, and the organization of the plaintiff, then and there accomplished, was based upon this subscription and none other. Ruble claimed to own fifty thousand shares in the stock by virtue of said subscription and the right to vote the same. As a matter of fact he was elected one of the directors of the corporation by virtue of this subscription, and he was also elected secretary of the corporation. Both of these offices he then and there accepted, and entered upon the discharge of these duties. As such secretary he transferred the preliminary subscription to the regular stockbook of the company, with the exception of his own subscription, which he failed and refused, for some cause, to transfer. He also issued certificates of stock to all the subscribers except himself. Having thus taken the lead and principal management of this enterprise upon himself, he has succeeded in securing the title to the property in dispute in his own name; which virtually gives him control of the other mines not conveyed to him, as he has succeeded in securing those which control the water rights.
I claim that, under the facts in this case, Ruble is estopped in equity from denying that he is a stockholder in the plaintiff. (Thompson on Liability of Stockholders, secs. 105, 124, 162, 165, 166; 5 Otto, 667; Dong v. Naper, Supreme Court of Ill., 8 Reporter, 522.)
In my opinion the bill ought to be retained and the decree of the circuit court modified in accordance with the views herein expressed.
A very full statement of facts embodied in the opinion is omitted.—Reporter.