Court Opinion

ID: 8042792
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:42:01.131151+00
Date Added: 2024-06-11T16:37:23.106371
License: Public Domain

Sanders, J.,
dissenting:
If the question for determination be as stated, namely, whether, under the laws of this state, a corporation *205may be formed having capital stock with and without par value, I should answer the question, as does the learned chief justice, “No,” because it is apparent from the amendment of subdivision 4 of section 4 of the general corporation law (Stats. 1923, p. 370) that in any case in which it is required by law that the par value of the shares of a corporation be stated, but the shares of such corporation are without nominal or par value, there shall be stated in lieu thereof that such shares are without par value, and there shall be stated in the certificate:
(a) “The amount or number of shares of authorized capital stock to be issued without par value; (b) the number of shares actually subscribed, and the amount subscribed therefor, which shall be not less than two thousand shares; (c) and if there be more than one class of stock created by the certificate of incorporation, the description of the classes so created; (d) and the amount of each class subscribed, and the amount paid therefor.”
Here we are called upon to interpret a certificate which apparently endeavors to state substantially what is required to be stated in a certificate where the corporators desire to adopt the method of financing their corporation without any nominal or par value. The certificate states the number of shares to be issued without .par value, the number of shares actually subscribed, and the amount subscribed therefor. It creates more than one class of stock, described as common stock without any value, and preferred stock with an expressed par value. It gives' the amount of each class subscribed, and the amount paid or to be paid therefor. The question is whether the certificate is such a substantial compliance with the law as entitles it' to be filed by the secretary of state.
It is claimed that, as the word “par” is not used in the proviso, the description of any class of stock created with an expressed “par value” vitiates the certificate. True, the word “par” is not used, but no other term defining what is meant by. the word “amount” in the phrase, “and the amount of each class subscribed, and *206the amount paid therefor,” is used. Par value means face value. 3 Bouvier, Law Dictionary, p. 2444. We all know that it is a current phrase expressive of this idea. Conformably with this understanding of the word “par” as used in the certificate, it indicates the amount in dollars which the preference of the preferred shares shall have over any other class of stock created. Such preference not being negatived, and not being contrary to the statutes of this state, I see no reason why the certificate should not be filed.
October 4, 1923.
My esteemed associates seem to lose sight of the fact that the only purpose for allowing the creation of more than one class of stock is to permit the corporators to give to one class preference over another class, if the corporators so desire.
I think the writ should issue.