3 Barb. Ch. 207 | New York Court of Chancery | 1848
The first objection made by the defendants to the complainants’ right to a decree of "foreclosure, in this case, is that the bond and mortgage are void, because the Globe Fire Insurance Company, to whom they were given, was not a legally constituted corporation; inasmuch as it did not organize and commence its business within one year from "the date of its incorporation. The seventh section of the title of the revised statutes relative to the general powers, privileges and liabilities of corporations, (1. R. /S'. 600,) declares that if any corporation created by the legislature shall not organize and commence the transaction of its business within one >cvfrom the dale of its incorporation, its corporate" powers shall cease. The date of the incorporation, under this provision of the revised statutes, refers to the time when the act creating the corporation takes effect as a law; which, in this case, was on the twentieth day after the act of incorporation was -op proved by the governor. (1 M. /S'. 157,- § 12.) And if the year for the commencement of the business of this corporation is to be limited by the date of its original incorporation, and without any extension," its powers ceased on the 22d of May, 1838; o's its stock was not all subscribed for and taken until ten months after that time. I think, however, the lair construction of the act of the 14th of April, 1838, amending the original act of ■incorporation, is that it extended the time for the organization and for the commencement of business; although the act does not in terms extend the time for the commencement of the business of the company. That act took effect as" a law pn the 4th of May, 1838, only eighteen" days before the expiration of the year from the time of the original incorporation of the company. It continued the directors named in the original act of incorporation in office one year from the time when their offices were to expire by such original act. It autnorized the subscription books for stock to be again opened, from time to
If the last $160,000 of the stock of the company which was subscribed for by the Grahams and others, was subscribed for in good faith,' with an intention on the part of the directors of the company that the subscribers should keep it and pay for it, unless it should be taken olf their hands and paid for or fairly secured by' others, the company was duly organized, within the time allowed by law for that purpose. And upon the evidence in this case, the vice chancellor came to a correct conclusion that the subscription for this $160,000 of the stock of the company was legal. The corporation, therefore, was in existence and competent to take this-bond and mortgage when it was delivered to the company in payment or security for the seventy shares of the stock of the company. And the bond and mortgage were valid securities, in the hands of the corporation, for the whole-amount of $7000, for which they were given to and accepted by the company; and as such, they formed a part of its capital stock.
Although the securities given for the $160,000, subscribed by the Grahams and' others, were a part of the capital of the company,. and. could not be withdrawn so as to reduce the capital, without authority of the legislature, or by a proceeding under the article of the revised statutes relative to the' voluntary, dissolution of incorporations, the directors of the company had full power to allow other good and sufficient securities to be taken ás a substitute for that part of the capital stock" of the company.
The objection-that the assignment to the complainants was without' a previous resolution of the board of directors, authorizing it, would probably be well taken if that fact had been
The remaining question to be considered is whether the corporation had the legal power to take a surrender of a part of its capital stock; not for the purpose of issuing new scrip therefor to other persons upon being paid or secured the amount of the same from them, but as an extinguishment of a part of the capital of the company, and to give up the property or effects of the company in exchange for the same. Upon a careful examination of the provisions of the revised statutes upon that subject, I think the vice chancellor arrived at the correct, conclusion that the corporation had no such power.- The .assignment of the bond and mortgage, upon the surrender of the fifty shares of stock held by. the complainants, as well as the .endorsement of the $2000 in consideration of the surrender of the other twenty shares of stock, for the security of the par value of which stock this bond and mortgage was also held by the company, was unauthorized, And being in direct violation of the statutory provision on that subject, the complainants acquired no legal or equitable right, to the bond and mortgage by the
If there are any creditors, or any stockholders, who have not participated in this violation of the laws of the state which were binding on the corporation, they may apply for the appointment of a receiver, to collect in the débls of the corporation and distribute its effects among the stockholders according to their several rights and interests. (2 R. S. 464, 39.) - And if there are none such to apply, the receiver may be appointed upon the-application of the attorney general. So that this bond and*