35 Iowa 115 | Iowa | 1872
This whole question underwent an exhaustive discussion in Salem Mill-Dam Co. v. Ropes, 6 Pick. 23, decided in 1827. We despair of being able to add any thing to the reasons there assigned. See, also, S. C., 9 id. 187. This case was followed, in Massachusetts, by Turnpike Co. v. Valentine, 10 id. 142, in 1830; by Cabot & West Springfield Bridge Co. v. Chapin, 6 Cush. 50, in 1850; by Worcester & Nashua, Railway Co. v. Hinds, 8 id. 110, in 1851; by Stoneham Branch Railway Co. v. Gould, 2 Gray, 277, in 1854; in New Hampshire, in the New Hampshire Central Railway Co. v. Johnson, 10 Fost. 390, decided in 1855; in Maine, in Penobscot Railway Co. v. Dummer, 40 Me. 172, and in Old Town Railway Co. v. Veazie, 39 id. 571, both decided in 1855. See, also, Littleton Manufacturing Co. v. Parker, 14 N. H. 543, and Contocook Valley Railway Co. v. Barker, 32 id. 363.
These eases all hold the doctrine above announced, and settle the law in the three States named. We have not been referred to any well-considered case holding the contrary view.
In Hamilton & Deansville Plank Road Co. v. Rice, 7 Barb. 157, cited by appellee, the capital stock was fixed in the charter at $26,000, but the act of incorporation provided that when $500 per mile was in good faith subscribed and five per cent paid thereon, the subscribers might .elect directors, execute their articles, and file them in the office of the secretary, and that from that time they should be a legally organized incorporation.
The agreement which the defendant signed obligated
In Rensselaer v. Wetzel, 21 Barb. 56, the facts are somewhat different, but the whole case is based upon that of Hamilton & Deansville Plank Road Co. v. Rice, supra, the whole opinion upon this branch of the case being as follows: “ Nor was a subscription to the full amount of the stock named in the articles a condition precedent to the recovery.” Citing 7 Barb. 166. It is apparent that as an authority upon the general proposition, this case is entitled to but little, if any, weight.
In Waterford, etc., v. Dalbiae, 4 Eng. Law and Equity, 455; S. C., 6 Welsby, Hurlston & Gordon, 443, the opinion is so meager that it cannot be ascertained that it conflicts with the views hereinbefore expressed, the whole case being disposed of in an opinion of less than three lines.
In the Lexington & West Cambridge Railway Co. v. Chandler, 13 Metc. 311, the act of incorporation provided, that the capital stock should not exceed 2,000 shares; that the number of shares should be determined from time to time by the directors, and that as soon as 250 shares should be subscribed the company should proceed to construct and open their road. After more than 250 shares had been subscribed the directors voted to close their books. This, it was held, was in effect fixing the number of shares at that already subscribed, and a subscriber to the stock was held liable. This is fully in accord with the views before expressed: 1st. Because the articles of incorporation authorized the company to proceed to construct and open the road when 250 shares should be subscribed; 2d. Under
In Kennebec & Portland Railway Co. v. Jarvis, 34 Me. 360, the amount of stock which the corporation might hold was not fixed in the charter, but by a vote of the corporation, and this is the ground of the holding that a stockholder may be made liable before all the stock is subscribed.
In The Iowa & Minn. Railway Co. v. Perkins, 28 Iowa, 281, the general question of the right of a corporation to collect assessments, until all the stock should be subscribed, was not decided, -the defendant being held liable in view of the terms of his subscription.
The only case to which our attention has been called, apparently in conflict with the leading one in 6 Pick. 23, is that of Schenectady Plank Road Co. v. Thacher, 11 N. Y. 102. The opinion advances no reasoning in opposition to the Massachusetts cases, which it seems to misapprehend, and from the facts of which it seeks to distinguish, the case in hand.
¥e feel warranted, therefore, both from authority and reason, in holding that when an act of incorporation fixes the amount of capital stock which a corporation may hold, no assessment can be made upon the share of a stockholder, until all the stock is subscribed, unless a contrary intention appears, expressly or by implication, either in the chSrter or'the contract of subscription.
Section I of the charter is as follows: “ The directors shall have power, and are hereby required, to re-open the books to fill up the capital stock of said company, and shall continue to receive subscriptions therefor until the whole amount of such capital (not subscribed before said commissioners) shall have been taken; and shall also receive subscriptions to the additional capital stock of said company, should the same be increased by said directors, pursuant to the authority herein given, at such time and plapes as the directors may deem expedient; and all sub
These are all the provisions of the charter affecting the question under consideration. They contain nothing, it seems to us, evincing an intention that assessments may be made before all the capital stock is subscribed. The commissioners were authorized to open the books and receive subscriptions to the amount of $100,000, thus taking the initiatory steps toward the organization of the corporation. The charter requires five per cent of the-subscription to be paid at the time of subscribing. It would be manifestly inexpedient to allow these commissioners, without any bond for the faithful performance of their duties, to take the entire subscription of $1,000,000, and receive five per cent thereon, amounting to $50,000. Prudence and even necessity required some organization of the company before all the capital stock was subscribed. Hence the charter provides that when $100,000 shall have been subscribed, directors shall be elected, who shall select from their number a president and vice-president, appoint a secretary and treasurer, and.require them to give bond for the faithful discharge of their duties. The charter requires these directors to re-open the books, and to continue to receive subscriptions until the whole amount of the capital stock, not subscribed before the commissioners, shall have been taken. This duty is specifically enjoined upon them. A failure to perform it is a failure to observe the positive requirements of the charter. This section
Our conclusion is that the • charter does not confer authority to make assessments upon the shares of the stockholders until all the stock is" subscribed, and that the demurrer to this portion of the answer was improperly sustained.
That it is not of such a character as to exonerate a subscriber to the stock from his obligation, the authorities abundantly show. See Barrett v. Alton & Sangamon R. R. Co., 13 Ill. 504; Peoria & Oquawka R. R. Co. v. Elting, 17 id. 429; Sprague v. Illinois R. R. Co., 19 id. 174; Illinois R. R. Co. v. Zimmer, 20 id. 654. The demurrer to this portion of the answer was properly sustained.
If, under this charter, the corporation should undertake the construction of a lateral branch largely increasing the cost of the enterprise, and bearing an undue proportion to the original undertaking, they might be enjoined from so
For the error before alluded to the judgment is reversed and the cause remanded.
Reversed.