Daily Arizona silver belt., 1909-09-29

organized under the laws of the state capital required to authorize it to do business has been paid in, but before the whole of it's capital stock has been issued or subscribed for7
 < "The report of the single justice, with the evidence, shows that the plain tiff corporation was organized in all respects, in compliance with the stat utes; that the requisite amount of capi- tai ($1o00) to qualify it to commence business was paid in in cash, and that the corporation was legally authorized to do business within the purposes of its organizations.
 "The directors were selected by the defendant and Lewisohn ard they were not impartial and independent officers qualifying properly to represent the cor poration in matters where it's interests might be adverse to those of the pro. moters. >
 "Under contracts and in payment for property conveyed to the corporation, 30,000 shares of stock were issued to the defendant and Lewisohn and taken in their name, and 100000 shares were issued to Phillip F. Damaresq, who took them as the nominee and for the benefit and subject to the orders of the de- fendant and Lewisohn. More than two months after the original contracts were made all the directors of the cor statement approving the previous ac. tion of the board in making these con. tracts. The defendant and Lewisohn were the owners of all the authorized capital stock of the corporation except the 20,000 shares in the treasury which 1 belonged to the corporation, and through the corporation they owned that also. As stockholders they knew all the facts affecting the validity and propriety of the contract which they had made with the company. At that time they had no interest adverse to that of the corporation, for they were the sole owners of the corporation. One question is, whether this ratification with full knowledge of all the stock holders is binding upon the corpora. i tion. Another question is whether the contracts were valid when originally made, having been agreed to with the knowledge by the only persons benefic. ally interested in the corporation. | More specifically, the broad question is whether a corporation which has full power to make every other kind of contract within the purposes of it's or ganization is powerless to make con tract, or through it's stockholders tc i ratify contract, with one standing in fiduciary relation to it.
 Whatever may be thought of the conduct of promoters who make con tracts with A corporation while they are the sole owners of it, and whether it be held that their fidueiary relations extend 10 future stockholders or only to those who are the owners while this relation exists, the question before us | is whether, under the law of New Jer sey, corporation is poweriess to bind itself as to such contracts when they 1 are entered into with the assent Of the existing stockholders, all of whor have full knowledge of the facts. Or principle, think that corporation or ganized in that state is not SO crippled 1 Except as l shall state hereafter. know of no ease which holds that il makes any difference that not all th, stock has been issued if the corpora
 ton has been completely organized au6 authorized to go on with it's ordinary business.
 'This court in Haywood versus Lee
 son GIG Mass. 3l0) in dealing with {
 corporation established under the law'
 of Tennessee. held that the reeeiver' of the company might maintain sui for fraud against promoters notwith standing that the stockholders at th' l time of the transaction knew of th'
 facts and agreed to the contract.
 'Wheu the present suits came before
 the court upon a demurrer, Haywoo,
 versus Leeson was followed and held t
 govern them. The precise question: which were then before us have bceI
 considered by the circuit court of ,h' United States and the United State
 circuit court of appeals.
 "'In the suit brought by this pialn tiff against Lewisohn's heirs, and nrol
 demurrer to averments of fact agairs ! Lewisohn, substantially identical wit
 those against the defendant in the pres