Court Opinion

ID: 8193227
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:16:21.152241+00
Date Added: 2024-06-11T16:40:40.572196
License: Public Domain

Owen, J.
(dissenting). I regret that more consideration was not given the question of whether an oral subscription to the capital stock of a corporation satisfies the requirement of sec. 1773, Stats. The trend of authority is to uphold the validity of such oral subscriptions, but it is recognized that the charter or governing statute may require the subscription to be in writing. 1 Thompson, Corp. (2d ed.) § 573; 14 Corp. Jur. 519. A consideration of the phraseology and obvious purpose of sec. 1773 convinces me that it requires actual written subscriptions of fifty per cent, of-the capital stock before the corporation is permitted to do business with third parties. Until that time it shall not “transact business with any others than its members;” it is not a completely organized corporation; it does not come into possession of its corporate powers or privileges. ’ Until that time the stockholders shall be personally liablé for any obligations incurred. Manifestly the interest not only of the public but of existing stockholders requires the existence of definite record evidence of whether the organization has so far progressed as to constitute it in all respects a corporation in truth and in fact. To permit the establishment of that fact to depend upon the uncertainties of parol testimony and the vacillations of successive juries is a slipshod policy.
The verdict of the jury in this case rests upon very unsatisfactory evidence. In an action by another creditor the jury is more than likely to find the other way. Is it possible that the legislature intended that the question ¡of whether a corporation is fully organized and is entitled to transact business should rest in such uncertainty? I think not, and I think this court plainly said so in Weston v. Dahl, 162 Wis. 32, 155 N. W. 949, where, of a similar subscription, it said: “Oral promises such as were made to take stock are not subscriptions for stock within the meaning of the statute.” It is true that following this statement it is said: “They rested in parol, and by virtue of sec. 2308, Stats. *6001913, could not be enforced.” This does not seem to have been intended as an explanation or modification of the first proposition, but rather as an additional reason for declaring the oral subscriptions invalid.
No good purpose will be subserved by a prolonged discussion of the subject. Suffice it to say that, in my judgment, the legislature intended that the subscriptions to the capital stock should be in writing and preserved among the records of the corporation, affording those interested, the stockholders as well as the public, definite information as to its corporate status. It well may be that an oral stock subscription is valid under certain circumstances, so that it may be enforced at the suit of the corporation, when it is not valid for the purpose of affecting the corporate status. As to that I express no opinion.
I may add that in my judgment there is no evidence in the case of part performance so as to take Helht’s' oral subscription for the $1,000 of the stock out of the statute of frauds. That was an individual subscription wholly apart from the sale of the partnership assets to the corporation. The sale of those assets did not constitute a part performance of Hecht’s individual contract, and if the statute of frauds is applicable the transaction .was invalid. For these reasons I dissent.