Court Opinion

ID: 6420085
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:59:06.473426+00
Date Added: 2024-06-11T15:51:44.545884
License: Public Domain

Lord, J.
The plaintiff was authorized to become a corporation by the St. of 1872, c. 155. The persons named in the act of incorporation met on April 15, 1872, elected Erastus P. Carpenter their chairman and Joel H. Hills their clerk, and voted *544to accept the statute. Assuming that the passage of the act and the formal acceptance of it by those named therein constitute a corporation de facto and de jure, its powers, duties and liabilities are quite - different from those of a corporation which has been organized by an election of officers, subscription to stock, payment for the, same, and certificate of shares duly issued. Such a corporation undoubtedly holds the franchise by which it is authorized to receive subscriptions to its capital stock, and enforce collection of the same. But until something further is done than merely to accept the charter, it has not become the corporation contemplated by the charter, with a capital stock of $50,000. It is clear that such was the corporation authorized by the statute, and to the stock of such a corporation they were authorized to receive subscriptions; and although that corporation, when organized and lawfully in operation, had the right by vote to increase its capital to the sum of $150,000, yet the statute did not authorize the formation of a corporation with an original capital of $150,000.
At the meeting at which the charter was accepted by the corporators, a committee was chosen to receive subscriptions to the stock of such corporation; that was to a corporation with authority to organize with a capital of $50,000, and it was to the capital stock of such a corporation that the defendant subscribed; and the first and most important question to be settled is, whether such a corporation was ever organized. If organized, and the proper steps had been taken to obtain subscriptions to its capital, and proper proceedings had thereon, it might enforce the collection of such subscription by suit.
In determining the rights of this corporation, it is necessary to look into all their proceedings from the beginning. When the corporators met, April 15, 1872, they chose a committee to receive subscriptions for stock, and voted that, when the amount of the subscription should reach $50,000, the clerk should call a meeting of the subscribers, giving seven days’ notice thereof, stating time and place of meeting, and business to be transacted. On April 20, 1872, the clerk of the corporators made a record of the fact that, having received verbal notice that the amount required by the act of incorporation and vote of the corporators had been subscribed, he had issued a notice to the subscribers *545calling a meeting on April 29, 1872, for the purpose of organizing the company.
Upon whom, or how, this notice was served, does not appear, except that the record showed that six subscribers acknowledged that they received such notice at least seven days before April 29. It does appear, however, that there were more than forty subscribers, and that the number of shares subscribed for exceeded nine hundred. It is quite apparent that all the subscribers were, or were intended to be, notified of the meeting; and all such subscribers took part in, or were allowed to take part in, the proceedings of the meeting.
The first action of that body of men was the selection, on motion, of a committee of three appointed by the chair, to report the names of subscribers to the original amount of the capital stock of $50,000. That committee reported the names of fourteen persons whose aggregate subscriptions amounted to $50,000. These names were “ taken promiscuously from the names subscribed, and not in their regular order of subscription, as they appeared under the agreement.”
That these fourteen persons thus selected might have met by themselves and organized a corporation with a capital of $50,000 divided into shares of $100 each, according to the terms of their charter, need not be questioned; nor need we discuss the question whether it would have been competent for such corporation to have increased its capital by vote at its first meeting, or whether it were necessary that a meeting should be called for that purpose. It is manifest that no such organization was made or attempted to be made by them. The record of the meeting, in its obvious signification, is the record of a meeting of all the subscribers; and all the proceedings had were the proceedings of those subscribers, and the by-laws which were adopted were adopted by that meeting of subscribers, and not by a corporation organized by the fourteen reported as original subscribers, acting by themselves as a corporation. Although this is the natural and apparently the unavoidable construction of the record, that it is the doings simply of that body of men, and not of a corporation, yet it is not left to inference or implication from the language used. The record itself makes it certain that it was a meeting of these men, and not the meeting of an organized *546corporation. The motion to increase the capital stock from $50,000 to $100,000 was made by Andrew G. Pierce. Pierce appears to be one of the forty odd subscribers to stock, but he was not one of the fourteen. If this were a meeting of that corporation consisting of fourteen persons, it is entirely plain that Pierce had no rights there, that his presence was irregular, and the presiding officer of the corporation could not have acknowledged his presence or have received a motion from him. But the meeting being a meeting of persons sustaining a particular relation to the chartered corporation, and Pierce coming within that description and having received notice to attend the meeting, might properly attend and participate in the proceedings of the meeting while it retained its original character; and such character it is apparent that it did retain through its whole duration.
It follows from this review of the proceedings that the corporation created by the charter, with a capital stock of $50,000 to be divided into shares of $100 each, was never legally organized; and, not having been legally organized, no assessment could legally be made by the corporation upon the subscriptions to the capital stock of such corporation. The subscription, of itself, does not give the corporation a right to sue the subscribers to the stock. If that alone were sufficient, then, as soon as the corporators had met and accepted the act, a right of action would have accrued against each of the forty odd subscribers for the ninety odd thousand dollars. The first step to be taken by the corporation is to show that it is the corporation which the statute created, that it has done all that was necessary to be done to fulfil the terms upon which the subscriptions were made, and that the assessment laid upon the subscribers was one which the corporation had authority to lay, and that it had been properly laid. But inasmuch as no such corporation as the statute created was ever organized, all that was done in relation to the increase of capital was irregular and void, and the corporation as it exists de facto has no right of action against original subscribers to its stock. Athol Music Hall v. Carey, 116 Mass. 471, 473.
We do not discuss the question what is the present status of the corporation, nor its relations, or the relations of those who have participated in its proceedings, to the public. We decide only this, that the plaintiff has not shown that there has been *547such an express promise to it by the defendant, in the subscription paper offered in evidence, as to enable the plaintiff to recover upon it; and it is only upon such express promise to the plaintiff that the action is founded, or that the plaintiff is entitled to recover. Judgment for the defendant.