| Mo. | Oct 15, 1887
This action was instituted by the plaintiff as assignee of “The Missouri Cotton-Seed Oil Company of St. Louis,” to recover the sum of twenty-five hundred dollars, the par value of twenty-five shares, which it is alleged in the petition the defendant subscribed to the capital stock of said company by the following written contract:
“We, the undersigned, hereby severally subscribe for the number of shares set opposite our respective names to the capital stock of ‘The Missouri Cottonseed Oil Company,’ a company to be organized under the laws of the state of Missouri, and we severally agree.
“Dated this 28th day of July, 1879.
SHARES.
200 Wm. V. Kay....................■$20,000
50 John B. Tilden.................. 5,000
50 H. C. McNiel, Friars P., Miss____ 5,000
50 Calvin Haskell..........,....... 5,000
10 Miles Sells................. 1,000
10 G. J. Shaw...................... 1,000
10 Web. M. Samuel................ 1,000
20 W. H. Waters................. 2,000
10 Given Campbell.................. 1,000
25 Chas. T. Worthington, Leota, Miss. 2,500”
The defendant admitted that he signed the subscription paper, but denies that a company was ever, in pursuance thereof, organized Tinder the laws of the state of Missouri; avers that the corporation pretended to have been organized was not the corporation contemplated by the subscribers to said paper, and that his signature thereto was obtained by fraud. To show that plaintiff ’ s assignor was incorporated and organized under the laws of Missouri, and was the company .contemplated by the subscription paper, and entitled to recover thereon, the following certificates of association, and incorporation, and proceedings thereunder, were introduced in evidence:
“ It is hereby certified by the undersigned, William Y. Kay, John B. Tilden, and John Goodin, with the purpose of having, for themselves and those who may hereafter become associated with them, all the powers of a corporation under the laws of the state of Missouri, for carrying on a manufacturing and business
“In witness of all which, we have hereunto signed our names, and given our true residence, this twenty-third day of September, A. D., 1879.
“William Y. Kay, Chicago, Ills.
“John B. Tilden, St. Louis, Mo.
“John Goodin, St. Louis, Mo.”
The document was duly acknowledged and filed, for record on the twenty-third of September, 1879.
“ CERTIEIOATE OE OOBPOR ATE EXISTENCE.
“Whereas, William Y. Kay, John B. Tilden, and John Goodin have filed in this office a certificate in writing as provided by law, and have in all respects complied with the requirements of the law governing
££ Michael K. McGrath,
[Seal.] “ Secretary of State.”
On the twenty-ninth of September, 1879, Messrs. Kay, Tilden, Goodin, and Hart, a majority of those designated to constitute the first board of directors in the certificate, met, elected Kay, president, and Hart, secretary pro tern., read the recorded certificate and certificate of incorporation, and declared the association perfected, and thereupon proceeded to adopt a series of. by-laws, among others the following :
£ £ Art. 10. The capital stock shall be paid in upon such assessments and at such place as the board of directors may order, a written or printed notice of which shall be given each stockholder by the secretary, and any subscriber who fails to pay any assessment so ordered, after thirty days notice, shall forfeit to the company the amount (if any) already paid on his stock.”
After the adoption of the by-laws, the directors proceeded to ballot for officers, and William Y. Kay was elected president and treasurer ; the election of secretary was postponed, and, £,,on motion it was ordered that the call of the stock of this corporation be made as follows: Fifty per cent, payable on the first day of October, 1879; twenty-five per cent, payable on the fifteenth day
Kay and Tilden were the promoters of the enterprise ; the defendant, who was a planter, being in Mississippi, signed the subscription paper while temporarily in St. Louis, at the solicitation of Tilden. The capital stock of the company was to be fifty thousand dollars ; the defendant was the last subscriber to the stock. When he subscribed for twenty-five shares, there was only forty-three thousand five hundred dollars of the stock subscribed for, including his subscription, and so far as the evidence in this record shows, there never was another dollar of stock either subscribed for or taken. With this subscription paper in hand, Kay and Tilden proceeded to get themselves and Goodin incorporated by the name of The Missouri Cotton-Seed Oil Company of St. Louis, with a capital stock of fifty thousand dollars, divided into five hundred shares of one hundred dollars each, as stated in their certificate, and then, with the assistance of Hart, thej^ effect the organization as stated, and make the call. The company was incorporated
The defendant, however, contends that plaintiff’s assignor is not the company contemplated in the subscription paper which he signed, and points to the name of the company and its purpose, as stated in the certificate for incorporation, in support of his contention; The name of the company is the same as that designated in the subscription paper ; the addition of the words, “of St. Louis,” is simply indicative of the place where its business was to be done, and to distinguish it from other companies that might be engaged in the same business in other localities. The objects for which the company was incorporated, as stated in the certificate, are within the general terms of the business indicated by the name of the company in the subscription paper, the manufacture of cotton-seed oil, and the business that was to be carried on, in the contemplation of all the parties, is the business contemplated by the certificate. The words used therein, which, it is contended, would authorize the company to engage in another and different business, when read in connection with the whole paragraph, and given only;. such meaning as they are entitled to from their association in it, are evidently intended,to cover only such business as might be incidental and necessary to the main business, and the doing of which might necessarily grow out of .it. Besides, the company never did engage in any other business, the ■calls, if any were made, were solely for the purpose of ■carrying on the business contemplated by the subscribers, and the defendant ought not to be permitted to say, in defence to an. action for calls on his' subscription, ¿made to carry on the business which he contemplated, by the company incorporated for that purpose, and
The defendant further pleads, and urges as a defence to this action, that he was induced to sign the subscription paper by the false and fraudulent representations of Tilden that certain of the defendant’s neighbors and friends had agreed to take stock in the company. Even if it be conceded that Tilden’s false representations could avoid the contract made by the defendant, yet they cannot avail the defendant in this case, for three reasons: (1) Before he subscribed, he could have ascertained whether the representations were true or false; (2) the terms of the subscription contemplated an organization before the first day of September, 1879, and he had time enough to ascertain whether those representations were true or false before the organization, and to have notified his associates of his withdrawal from the enterprise, before they acted on the faith of his subscription, in case he found them to be false ; (3) the representations were not of the existence of a fact essential to the sue cess of the enterprise, however desirable it may have been to the defendant that his neighbors and friends should have been his associates, and however beneficial he may have believed their becoming interested therein would have been to the enterprise. If he intended that their becoming so should be a condition of his subscription, he should have put it into the contract — for ordinarily it cannot be deemed essential to the success of an enterprise to be carried on by a corporation that its stock shall be owned by any particular persons. As soon as created, it becomes transferable personal property; the owners of stock to-day cannot tell who their associate owners will be to-morrow. It is put upon the market and bought and sold by whomso-. ever will. The essential fact is behind the subscription
For while the defendant cannot question the corporate existence of the company, and has not made it appear that it was other than the company to which he subscribed stock, and cannot successfully plead his reliance upon false inducements held out to him to subscribe, against which he might have protected himself by ordinary prudence, yet there is one thing which he had a right to rely upon, and that was, that his subscription should not be put to the hazard of the venture until the capital stock deemed necessary to the success of the enterprise had been taken or subscribed for. The success of the enterprise, and the profits to be derived, therefrom, may depend entirely upon the full amount of the capital being taken up, and ‘c there is a wide difference between the existence of the company as a corporate body and the liability of parties for their subscription to its capital stock. Hager v. Cleveland, 36 Md. 476" court="Md." date_filed="1872-06-20" href="https://app.midpage.ai/document/hager-v-cleveland-7893498?utm_source=webapp" opinion_id="7893498">36 Md. 476. The right of the company to enter upon the business for which it was incorporated, and to call ■in subscriptions to its capital stock, was upon condition that its capital stock, as stated in the recorded certificate, had all been taken or subscribed for.
The rule, as stated by Thompson in his work on Liabilities of Stockholders (sec. 120), is supported by an unbroken chain of authorities : “ Where, on the organization of a corporation the number of shares of the capital stock and the sum to be paid for each share are agreed upon and inserted in the agreement of subscription, the subscribers are not bound to pay their subscriptions until the requisite number of shares is filled up by subscriptions. The same rule applies when the company is incorporated under a general law, which
In this case, the indisputable evidence is, that the capital stock of the company was to be fifty thousand dollars, but it was not inserted in the agreement of subscription, and for that reason this case is taken out -of the first class of cases mentioned in the rule, but it comes within the terms of ,the second class to
If an action had been commenced by the corporation to recover the amount of defendant’s subscription called for and unpaid, the defendant would have had a right to show that he had' never become liable to any call or assessment on his subscription, for the reason that no.
For wbicb error the judgment is reversed and cause ■remanded.