22 N.Y.S. 407 | N.Y. Sup. Ct. | 1893
This action is brought to enforce against a subscriber to shares of the capital stock of the plaintiff an unpaid balance of his subscription. The complaint sets forth that the plaintiff is a corporation, duly incorporated under the laws of the state of Illinois, to buy, sell, deal in, and handle vinegar, and that in contemplation of its incorporation the defendant and others subscribed to its capital stock, and agreed to pay the amounts of their several subscriptions, and that the defendant at the time of his subscription paid a certain sum on account thereof. It is further alleged in the complaint that, since the incorporation of the plaintiff, it has incurred debts to various persons, and has no assets except such as consist of unpaid subscriptions to its capital stock.
So much has recently been written on the subject of monopolies and so-called commercial trusts that, in the disposition of this caise, we have felt constrained to confine ourselves to. the decision of the questions actually before us, without attempting to add to the vast mass of judicial literature, more or less instructive, existing on those subjects. The case, as we find it on the record, is that various persons interested or engaged, in the business of manufacturing and selling vinegar conceived a scheme for uniting in one corporation certain persons and corporations engaged in the same business. That is stating the case as broadly as the defendant claims. A prospectus was issued, and manufacturers and dealers were invited to become members of that corporation. In that prospectus it was stated that “the purpose of the company shall be to buy and sell vinegar, with a view to regulating the production, lessening the cost of selling, of equalizing the distribution of the surplus in accordance with the demands of the various sections of the country; thereby limiting the cost of reaching the consumer, and benefiting both the producer and consumer.”
There is nothing in the record to show what the law of the state of Illinois is as to the relations of a shareholder to a corporation, when he is sued on a subscription to stock; but it is clear that under the law of this state the defendant cannot rely upon a mere prospectus, or on the representations of promoters, to defeat his liability, unless such prospectus or representations have, after the incorporation, been adopted by the corporation, and the business conducted in accordance therewith. Munson v. Railroad Co., 103 N. Y. 58, 8 27. E. Rep. 355. The promoters of a corporation are not the corporation. They cannot contract for or bind it in advance. To quote the language of Judge Redfleld, (1 Redf. R. R. 9,) “the promoters are in no sense identical with the corporation, nor do they represent it in any relation of agency.” This defendant could not rely upon the prospectus, or on representations
O’BRIElsr, J., concurs.
There being no vice in the organization of the company, and it having been for legal purposes, the question of its having forfeited its franchises because of the violation of the laws of the state of organization is one for the authorities of that state to determine, and cannot be disposed of in an action in this state, brought to enforce a stockholder’s liability. I therefore concur.