65 Cal. 616 | Cal. | 1884
The complaint in this case was filed by a stockholder for the purpose of enjoining the trustees of the Spring Valley Water Works, a corporation, from issuing and selling twenty thousand shares of stock. The capital stock of the corporation was eight million dollars, divided into eighty thousand shares, of the nominal value of one hundred dollars each. At a meeting of the stockholders, duly called, held on the 6th of July, 1876, it was resolved (more than two thirds of the capital stock being represented, and the vote being unanimous as to all present) that the capital stock be increased to sixteen million dollars, to be divided into one hundred and sixty thousand shares of one hundred dollars each. At a regular meeting of the board of trustees held April 1, 1884, it was resolved by the board that the president and secretary be authorized to issue and sell twenty thousand shares of the increased stock of the corporation at eighty-seven and one-half dollars per share, the stockholders to be entitled to purchase one share of stock for every four shares which they then owned.
The Civil Code of this State, section 359, makes provision for an increase of the capital stock of an incorporation. The Constitution of this State contains the following prohibition in article xii., section 11: “ Ho corporation shall issue stock or bonds except for money paid, labor done, or property actually received, and all fictitious increase of stock or indebtedness shall be void.” The question for decision on this appeal is, whether the stock proposed to be issued and sold will create a fictitious increase of stock. Webster’s Dictionary defines the word “fictitious ” to mean feigned, imaginary, not real, counterfeit, false, not genuine. The circumstances under which the stock
We do not think the issue or sale of the stock in question is within the prohibition of the Constitution. Order affirmed.
Morrison, C. J., Ross, J., Sharpstein, J., and Mc-Kinstry, J., concurred.