137 Mo. App. 461 | Mo. Ct. App. | 1909
Lead Opinion
— This is a suit in which it is sought to enforce the liability of a stockholder in an incorporated railroad company against the defendant, who had signed only a preliminary subscription paper. That is, it is sought to enforce the liability of a stockholder against the defendant who had not signed the articles of association nor otherwise subscribed for stock in the company, in accordance with the statute. The circuit court sustained a demurrer to, the petition giving judgment to the effect that upon the facts stated, no liability arose against the defendant from signing the preliminary subscription paper. Plaintiff prosecutes the appeal.
The material facts in the petition are as follows: After averring that the plaintiff is a railroad corporation, duly incorporated and existing under the laws of Missouri, it is alleged that the defendant and a number of other persons were desirous of associating themselves together for the purpose of constructing a railroad from the city of Shelbina to the city of Shelbyville, in Shelby
“We hereby subscribe the amount set opposite our names as the amount of stock to be taken in a corporation, to be hereafter organized by the subscribers hereof, for the purpose of constructing and operating a steam or electric railroad between the cities of Shelbyville and Shelbina, Shelby county, Missouri. This agreement not to be binding unless said corporation is organized within one year from June 1, 1906.”
It is averred defendant subscribed to said agreement and at the time of subscribing set opposite his name thereto subscribed, the sum of two thousand dollars, and thereby agreed and promised to take stock in said corporation when formed, to that amount and to pay for the same the sum of two thousand dollars. It is then averred that the full amount of the stock of said railroad company required by law was duly subscribed in good faith; that all necessary steps were taken to the due and proper organization and incorporation of the plaintiff company, and at a meeting of the stockholders thereof, held at Shelbyville, on September 10, 1906, the amount of the capital stock of said corporation was fixed at the sum of $110,000, and divided into two hundred and twenty shares of five hundred dollars each. It is further averred that the plaintiff company accepted the subscription made by said defendant and other persons and that on the faith thereof, it expended large sums of money in and about procuring its incorporation and in the construction of said railroad which it undertook and completed; and also entered into contracts and incurred liabilities to a large amount, etc. It is further averred that the directors of the plaintiff company levied four several calls upon the stock subscription mentioned, and
It is argugd on the part of plaintiff that the subscription executed by the defendant was given in consideration of mutual promises of numerous other persons, associates, who also subscribed to the identical preliminary paper declared upon in this case, and that such mutual promises constituted a valid and subsisting consideration for his contract of subscription which inured to the benefit of the corporation subsequently formed. And therefore the plaintiff, afterwards incorporated, having accepted the defendant’s subscription and tendered its stock certificate to him, is entitled to recover in this case on the theory that the original subscription inured to the benefit of the plaintiff corporation, subsequently formed. ffNoAV there can be no doubt in those cases where individuals associate themselves and mutually subscribe to an undertaking, each subscribing and joining therein upon the inducement offered in the mutual subscription of the others, that such mutual promises constitute a valid and sufficient consideration to support the contract therein contained. That is to say, the rule is well established that in bilateral contracts, the promise of each of the parties is a sufficient consideration for the promise of the other. Upon the principles of the common laAV, such contracts are enforced accordingly. [Moss v. Green, 41 Mo. 389; Steele v. Johnson, 96 Mo. App. 147; 6 Amer. and Eng. Ency. Law, (2 Ed.), 727.] And this doctrine obtains, of course, with like force and effect in respect of the mutual prom
Mr. Cook, in his valuable work on Corporations, adopts the rule deduced from the cases by Professor Collins of the Cornell Law School on this question, as follows: “Such an agreement, not made as a step authorized by statute in the process of forming the corporation, is a mere offer to the corporation not yet in existence, and is revocable by any subscriber until the birth of the corporation, which operates'as an acceptance of the offer, and thereafter the subscription, if not previously revoked, is irrevocable and may be enforced by the corporation.” [1 Cook on Corp. (6 Ed.), sec. 75; 26 Amer. and Eng. Ency. Law (2 Ed.), 902, 903; 10 Cyc. 380, 385 and numerous cases cited in the footnotes to the several treatises above-referred to.]
It appears that our Supreme Court, in Haskell v. Worthington, 92 Mo. 560, proceeded on the same theory
It appears, too/ that this court, in Haskell v. Sells, 14 Mo. App. 91, declared the doctrine that an agreement signed by several parties to take shares in a corporation to be thereafter formed, was a contract upon a valuable consideration which inured to the benefit of the corporation when organized in pursuance of the subscription and was enforceable at law by the corporation or its assignee. That, too, was a business corporation. In truth, it was the same concern involved in Haskell v. Worthington, supra, and the suit was by Haskell, assignee of the corporation, against Sells, who had signed the preliminary subscription paper not authorized by statute. The doctrine of that case is that the mutual promises of the several parties who executed the unauthorized subscription paper, constituted a sufficient consideration to infuse validity into the contract; that the contract thus made was for the benefit of a third party; that is, the corporation to be subsequently formed; and therefore, the contract for subscription inured to the benefit of the corporation and became completed by the incorporation of the company which operated an accept
In Newland Hotel Co. v. Wright, 73 Mo. App. 240, 243, the Kansas City Court of Appeals gave expression to the same doctrine although the judgment of the court in that case was based upon the grounds of estoppel, the stockholder having participated in a meeting of the company.
Now all of the authorities which we have examined pertaining to the contract touching the relation of stockholder and corporation, proceed upon the theory that such a contract is trilateral in its nature.Indeed, the doctrine obtains generally to the effect that a subscription to the stock of a corporation is a trilateral contract; that is, it is an undertaking not only between the corporation and the individual stockholder, but it is an undertaking between the corporation, the individual subscriber and all other subscribers to the stock as well. [26 Amer. and Eng. Ency. Law (2 Ed.), 902; Graff v. Pittsburgh, etc., Ry. Co., 31 Pa. St. 489; Braddock, etc., Ry. Co. v. Bily, 11 Pa. (Super. Ct.) 144; Phila., etc., Ry. Co. v. Conway, 177 Pa. St. 364; Acetylene Light, etc., Co., v. Beck, 6 Pa. (Super. Ct.) 584.] OSn this theory, that the several other subscribers as well as the individual subscriber and the corporation are parties to the contract, the law is well settled that a subscriber for stock in a corporation cannot obtain a cancellation of his subscription,, except by the unanimous consent of the other subscribers. Even a majority of the stockholders cannot withdraw and refuse to proceed. By the unanimous consent of all the subscribers only may the subscription of an individual subscriber be cancelled.! [1 Cook on Corp. (6 Ed.), sec. 169; Ollesheimer v. Thompson Mfg. Co., 44 Mo. App. 172.] Therefore the several other stockholders or subscribers being parties to the contract of subscription as well as the individual subscriber and the corporation, it seems to be obnoxious to the most elementary principles of contract law and of
However all of this may be, we are precluded, as was the very learned trial judge, by a decision of our Supreme Court squarely in point. The Constitution of the State, amendment adopted November, 1884, provides that the courts of appeals shall be controlled by the last previous ruling of the Supreme Court on any given question of law or equity. In the case of Sedalia, etc., Ry. Co. v. Wilkerson, 83 Mo. 235, our Supreme Court had before it the identical question involved here, and gave judgment to the effect that although the subscription paper therein involved had been signed by the defendant and numerous others agreeing to take, stock in plaintiff railroad company, to be thereafter incorporated, no enforceable obligation was thereby created for the reasonNTuTdefendant in that case had not brought himself strictly within the statute authorizing the organization and incorporation of^railroad companies by having subscribed to the articles of association of the proposed company or become a stockholder thereafter in the stock-book of the company authorized by statute to be opened after its organization. It seems the judgment in that case took no account whatever of the fact of mutual subscriptions by the numerous other persons who had subscribed' to the preliminary paper along with the defendant. . The court saw fit to adopt the view and follow the reasoning of two New York cases, Troy, etc., Ry. Co. v. Tibbetts, 8 Barb. (N. Y.) 297, and Poughkeepsie, etc., Plank Road Co. v. Griffin, 24 N. Y. 150, and affirm the doctrine that unless the subscriber followed his preliminary subscription by further actually subscribing to the articles of association, or to the stock-book of the company thereafter opened, in accordance with the statute, no contract of subscription was made, and therefore none could be enforced against him nor
Learned counsel have urged us to certify this case to the Supreme Court for final determination, as in conflict with Newland Hotel Company v. Wright, 73 Mo. App. 240. While that case certainly proceeds upon a theory contrary to the judgment herein given, the judgment of the Kansas City Court of Appeals was placed upon the grounds of estoppel, and it in no sense conflicts with the judgment to be given here. We are therefore not permitted, under the Constitution, to certify the cause. The Wilkerson case, supra, is precisely in point and controlling authority.
In obedience to the mandate of the Constitution the judgment is affirmed. It is so ordered.
Concurrence Opinion
— I concur in the result, solely because bound by. the constitutional provision to follow the last controlling decision of the Supreme Court.