10 Ga. App. 582 | Ga. Ct. App. | 1912
(After stating the foregoing facts.)
1. The defendants moved to dismiss the bill of exceptions because it does not definitely disclose who are parties to it. It recites that it is filed in a case of Joseph Rosenheim Shoe Company against certain persons and a corporation, naming them, and that to the final judgment the plaintiff excepts and tenders the bill of exceptions. These recitals are consistent with the record. The motion to dismiss is overruled. Joiner v. Singletary, 106 Ga. 257 (32 S. E. 90). .
2. As to whether the present suit was subject to abatement because of the pendency of the prior suit instituted by the trustee in
But the liability of the stockholders in each of the cases just men-N tioned is essentially different from the liability imposed by law upon j the persons who undertake to organize a corporation and proceed to S do business before the minimum capital stock is subscribed. When ) •persons in this State apply for a charter for a corporation, and ) state what the capital stock of the corporation is to be, the expres- ) sion “capital stock” means something. It means that the new crea- ) ture of the law is to start out on its business career with assets of / the amount stated. It means that those organizing the corporation, S while desiring to exempt themselves from general individual liability for the liabilities that the corporation may incur, will see that it starts off in life endowed with this amount of money (or the equivalent of money) which is hazarded upon the enterprise. Those who are to deal with the corporation are publicly informed that this impersonal trader starts off with this much capital pledged to its success. Ten per cent, of the amount of the capital stock designated in the charter must be actually paid in before the corporation begins business. Civil Code (1910), § 2823 (3). The other ninety per cent, need not be paid in, provided the corporation holds unpaid stock subscriptions, bona fide taken, for that amount. Bing v. Bank of Kingston, 5 Ga. App. 578 (63 S. E. 652).
But the subscribers for the stock may be compelled to pay it in, and are individually liable for it whenever the interests of the corporation or of its creditors so require. Civil Code (1910), § 2823 (3). Thus, the amount paid in, or the amount paid in plus the individual liability of bona fide subscribers for the corporate stock, must always amount to as much as the capital which, according to representations made in the application for the charter, is to be employed ; else the persons who, in violation of this promise and duty, organize the company and proceed to transact business in its name do not relieve themselves of personal liability for the debts
3. The next question is whether the trial judge correctly held that the plaintiffs could not recover because their credit man knew at the time the goods were sold that only about ten per cent, of the stated capital had been subscribed for and paid in. From the testimony of this credit man it is not altogether plain that he knew that only this amount had been subscribed, but it is plain that he knew that only this amount had been paid in. ITis' testimony does show, however, that organization was not complete at this time, and that he did not know that the remainder was not to be subscribed or paid in. Now “one extending credit to a corporation can not complain of acts of mismanagement on the part of officers and agents of the corporation prior to the time when the credit was extended.” Commercial Bank v. Warthen, 119 Ga. 990 (47 S. E. 536). How far does this principle apply here? This transaction took place before the corporation formally began business, but was ratified by the corporation afterwards; for it took the goods and made payments on the account. The law does not require any part of the capital stock to be paid in until the corporation begins business; but prior to formal organization, while the necessary stock subscriptions are being obtained and other preliminaries are being attended to, many things of a provisional nature must often be done; and the law contemplates that they may be done. Bing v. Bank of Kingston, supra.
As to debts incurred by the organizers of the corporation while the affair is in this provisional state, they are liable as partners
4. As to the point, raised by the defendants, that the liability against persons undertaking to organize a corporation is, by Civil Code (1910), § 2220, to make good “the minimum capital stock,” and that the charter in the present ease set no minimum, and that, therefore, no liability exists: Sometimes an application for charter recites that the capital to be employed shall not be less than so many dollars and not more than so many, or that it shall be so many dollars with a privilege of increase, and in such cases the lowest amount named is the minimum referred to in the code section; but in other cases, as in the one at bar, only one amount is named, and that, as it seems perfectly clear to us, is both minimum and maximum.
The other points made in the record are controlled by the views already set forth, and we need not enlarge upon them.
Judgment on the main bill of exceptions reversed; on the cross-bill affirmed.