Court Opinion

ID: 8019302
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:08:40.670668+00
Date Added: 2024-06-11T16:36:33.949356
License: Public Domain

WOODSON, C. J.
(dissenting). — I understand that the following legal propositions are true and indisputable.
First: That the incorporators of a business corporation may, under the laws of this State, arbitrarily capitalize their company for any amount they deem proper, within the limits prescribed by the statutes; and that the company, after it is incorporated, may, in addition to its capital, use in its business any sum of money its board of directors may fix, whether borrowed money or funds contributed by the stockholders.
Second: That the capital of the company may be paid in money or property, and that the par value of all the stock of the company must correspond in amount to the capitalization of the company so arbitrarily fixed by the incorporators, fully or partially paid, as the case may be.
Third: That the respective shares of the stock of the company cannot be issued for a sum in excess of their par value or face value, nor can the aggregate amount thereof exceed the amount of the capital of the company.
Fourth: That when the capital stock of the company so arbitrarily fixed has been fully paid in money or property, as prescribed by statute, neither the State nor its creditors can compel the company or its stockholders to pay for the use of its business, solvent or insolvent, any sum in excess of the par or face value of. its capitalization; if insolvent, of course the State may force a discontinuance of its business or a dissolution of the company, and its creditors may force it into bankruptcy.
Fifth: That the board of directors of any such company may, at the proper time and in the proper manner, pay off and' discharge any and all indebtedness the company may owe, and may declare dividends out of all surplus moneys or profits it may have on hand over and above its capitalization, whether earned by *448the company as profits or contributed to it by tbe stockholders after the incorporation has been effected.
Under the foregoing incontestable legal propositions, it seems to me that there is no escape from the .conclusion that all contributions or donations made by the stockholders to the company, over and above its capitalization, whether made before or after the incorporation has been perfected, are voluntary acts upon their part, and in no sense constitute-a part of the capital of the company, and the company may at any time, in a proper manner, pay all such sums back to the stockholders, and such act would in no sense impair the capitalization of the company, nor do violence to its legal perfection; and neither the State nor the creditors of the company could legally object thereto or prevent such repayment. Of course, if the company should become insolvent before the payment or distribution had been made, then certain equitable and possibly certain legal rights might arise which might prevent the company from paying such sums back to the stockholders; but that is totally foreign to the question in hand, and needs no further consideration.
The fact that the law imposes a certain tax on the capital of a business company at the time of its incorporation can in no manner force the incorporators to increase its capitalization to the amount they desire or intend to use in its business; and it is wholly immaterial whether that intention is announced before or after the company has been incorporated. This must be true for the obvious reason that the incorporators may, under the law, as before stated, arbitrarily fix the amount of the capitalization of the company, and may in addition thereto use in its business any sum its agents and officers may deem1 proper.
Moreover, as previously stated, the mere fact that the stockholders, at the time of applying for the arti*449cles of incorporation, announced their intention to use in the business of the company more money or prop-' erty than that represented by, its capitalization would not change the legal status of the company, its capitalization, nor share of stock from what they would have been had that announcement been made subsequent to the perfection of the incorporation; nor would the fact that said announcement was made to the Secretary of State in an application for a charter change the situation in the least, for the reason that the law makes no such requirement of the stockholders, nor has the Secretary of State any legal right to require the performance of anything by them which the law does not require. Where it speaks he must speak, but where it is silent he must be silent.
In the case at bar the statement contained in the articles of agreement or application for the charter, that they intended to use $41,000 worth of property over and above the capitalization of the company, in the business thereof, was wholly voluntary on their part, and therefore constituted it no part of the capital of the company.
For the reasons stated I dissent from the majority opinion, and believe the alternative writ of mandamus heretofore issued should be made permanent.