Court Opinion

ID: 5218090
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:27:37.505885+00
Date Added: 2024-06-11T08:27:28.300951
License: Public Domain

Ingraham, P. J.
(dissenting): ■
I dissent. It appeared from the testimony that certain individuals, of whom the plaintiff was one, constituted themselves a committee to organize a trust company under the laws of the State of Hew York; that one Howard Maxwell was constituted the chairman of that committee, and-that as such he was authorized to receive subscription's to the capital stock of the company, which was to consist of 5,000 shares of- the par value of $100 each, and each subscriber was to pay $2.00 per share for the stock, so that the trust company would start business with a capital of $500,0.00 and a surplus of $500,000., Subscription blanks were prepared, by which each subscriber subscribed for the number of shares of stock stated, for which.he agreed to pay $200 per share, and such subscription agreement authorized “Howard Maxwell, as attorney for me, to enter upon the. proper subscription book my subscription for said shares, or for any shares that may be allotted me. in the event of over-subscription.” There was a book containing a record of these subscriptions showing the number of each subscription, its date, the number of shares subscribed and the amount paid by each, subscriber. This book was produced and introduced in evidence by the plaintiff. On the-20th of March,' 1907, a certificate of organization - had been executed which contained the names of those organizing. *541themselves together for the purpose of forming a trust company-under the laws of the State of Hew York, and the corporation was organized by the election of Maxwell as president and one Bouker as secretary. After the execution of this instrument these subscriptions to the stock were obtained. The first seems to have been obtained on August 29,1907, and by September 27,1907, the whole amount of capital stock was subscribed, when the company applied to the Superintendent of Banks of the State of Hew York for the certificate required to entitle it to transact business. Maxwell and Bouker verified and filed an affidavit to which was annexed a true and correct list of the stockholders of the defendant with the post office address and the number of shares of stock held by each of them respectively. From that list it appears that Maxwell had subscribed for 625 shares and that other individuals named had subscribed for certain shares of stock, completing the amount of capital provided for by the articles of incorporation. The plaintiff was not named as an incorporator or a stockholder. This list of stockholders seems to contain the names of those whose names were entered in this book as having subscribed for this stock of the company on or prior to September 27,1907, but included none-of the stock subscribed for after that date. On the same day, September 27, 1907, Maxwell, as president, and Bouker, as secretary, of the defendant, also verified an affidavit which stated that the capital sto.ck of the said corporation was the sum of $500,000 and was divided into 5,000 shares of $100 each; that the amount of the said capital stock, to wit, the sum of $500,000, has been in good faith subscribed to and paid in cash. These affidavits and the list of subscribers were submitted to the Superintendent who, on the 1st of October, 1907, issued a certificate authorizing the persons named who had organized the corporation to transact the business of a trust company under the title of the “ International Trust Company,” with a capital stock of $500,000, in accordance with the' said certificate of organization and the laws of this State, and on that day, October 1, 1907, the defendant actually commenced to transact business under the certificate of incorporation. Thus, upon the completion of the subscription of capital stock of the corporation authorized by this certificate of incorporation, and the actual payment of the amount of subscription in cash, all of the capital stock authorized was *542actually issued and the subscribers became the stockholders of the corporation.
Whatever authority this committed had to receive subscriptions then clearly terminated. Neither the corporation nor the com-' mittee could receive further subscriptions after the amount of the authorized capital stock had all been subscribed;' but as the capital stock had all been subscribed before the formal authorization to do business, it seems to me that no act of this committee, who had been organized to.obtain subscriptions to the stock, could bind the corporation as to subscriptions subsequently obtained after the stock had all been subscribed and had been paid for .to the corporation. The subscription to the stock was complete. The stock had been subscribed. The amount called for by the subscription had been actually paid in in cash, and was on deposit to the credit of the corporation, and the corporation had started to do business under its charter as an. actual existing corporation.. There is no dispute but that the subscription for the capital stock had actually been paid in by the first day of October, and the plaintiff had then, so far as appears, neither subscribed to the stock, nor actually paid any money to either the corporation or to the committee.-'
It appeared from the evidence that prior to the first day. of October the amount paid upon these various subscriptions had not equalled the amount that was required by the sum of $145,000, and that on September thirtieth, to make that amount good, Maxwell, who was the president of the Borough Bank, had directed the cashier of that bank to send to him a cashier’s check for $145,00 to make good the subscription. Just whose subscriptions this was designed to make good does hot appear from the record, but Maxwell, himself,. had subscribed for 625 shares, for which he was required to pay $125,000. To justify this appropriation of the bank’s money, he directed the cashier to charge the cashier’s check to an account in that bank in the name of one Carrie M. McGuire, to which there was a credit of an amount exceeding $145,000. That this was an embezzlement of the money of the bank, or the McGuire account, may be conceded; but by the payment' of. this $145,000 the subscription to the stock of the defendant corporation was complete. The $1,000,000 required by the subscription was deposited- in a bank to the credit of the defendant, and it was upon this deposit *543that the' defendant was authorized to transact business by the Superintendent of Banks. To make this McGuire account good, Maxwell transferred to its credit the various sums of money that he had received as subscriptions to its capital stock, and other moneys which he procured, so that eventually this account was restored to the condition in which it was before the cashier’s check was given and charged up against it. After the first of October, when the defendant was authorized to transact business, and when the subscriptions. to its capital stock were complete, Maxwell apparently received further subscriptions to stock. One of those was the plaintiffs, who subscribed for twenty-five shares of stock, and on October 15, 1907, he paid to Maxwell $5,000, and received from Maxwell a receipt for $5,001), in full payment of twenty-five shares of stock of the International Trust Company. That receipt was signed “ Howard Maxwell, International Trust Company, President.” The plaintiff also signed the usual form of subscription, whereby he subscribed for twenty-five shares of the stock of this company. By it he agreed to pay $200 a.share, making a total of $5,000, and by it he authorized “ Howard Maxwell, as attorney for me, to enter upon the proper subscription book my subscription for said shares, or for any shares that may be allotted me in the event of over-subscription.”
This subscription is undated,.but according to the book introduced by the plaintiff it appears that it was the last one received, and was entered in the. book as of the date of October 15, 1907. So far as appears from the evidence and from the entries in this subscription book the subscription of the plaintiff and the payment of the $5,000, the amount required by his subscription, were all received upon the same day, October 15,1907. It is not contended that the defendant ever directly received any part of this $5,000. The money was paid to Maxwell as chairman and was clearly received by Maxwell as chairman of the committee to receive subscriptions and not on behalf of the bank. It was a void, subscription on its face because.all of the stock of the bank had been subscribed. The record of the' subscriptions which had completed all authorized capital stock had been filed With the Banking Department, and the bank was actually transacting business which it could not do until the stock had been subscribed in full and the subscriptions paid in. It *544is conceded that the subscription was void, and the action is based upon the fact that it was a void subscription, and the plaintiff' is suing for money had and received. To. hold the 'defendant -liable it must appear that the defendant had actually received the plaintiff’s money. This, as I view it, the evidence conclusively disproves. . The defendant never' received a dollar of the plaintiff’s money, and received no possible benefit from the payment of the money to Maxwell as chairman on October 15, 1907. That Max well had swindled the plaintiff may he conceded, but for Maxwell’s embezzlements or frauds' the defendant, was not.responsible. It is sought to hold the defendant liable because of the fact that Maxwell used the money that he received from the defendant to make good his embezzlements of the money of the Borough Bank of which he was president which was occasioned by his applying the funds'of the Borough Bank to make good his or other subscriptions of the defendant’s stock to the corporation; but it seems to me to' be perfectly clear that this imposed no liability upon the defendant. Maxwell had applied the money of the Borough Bank to the payment of his or other subscriptions to the capital stock of the defendant. After the subscriptions were made and the money actually paid in to complete them the Borough Bank could not have" recovered the money so paid from the defendant because of Maxwell’s embezzlement; and the fact that Maxwell. had subsequently received the plaintiff’s money, had deposited' it in the Borough Bank to his own credit and subsequently charged his account and credited the McGuire account to make good the charge that he had made on the books of his bank against that account did not make it a transaction with which this defendant had anything. to do or for which the defendant was in any way responsible. Maxwell himself, however, had subscribed 625 shares of the ■defendant corporation. As. chairman of this committee Maxwell had issued to the defendant a receipt for.$5,000 which he was to apply upon the subscription which the plaintiff had authorized Maxwell to make on, his behalf. That the plaintiff had a cause of action against Maxwell, either to recover hack the $5,000 orto compel Maxwell to transfer to the plaintiff twenty-five shares of the stock for which Maxwell had subscribed, is conceded, but as there could be no further subscription to the defendant’s stock, as it was fully *545subscribed and issued, and as the defendant had never authorized Maxwell or any one else to accept further subscriptions of its stock, it seems to me that the plaintiff’s remedy was against Maxwell and not against the defendant.
At the end of the' case the plaintiff asked for the direction of a verdict, which the court denied. The defendant then moved to dismiss the complaint, which motion the court granted. There was no request to submit any question to the jury, and, therefore, all questions of fact were resolved in favor of the defendant.
I think it clear, upon this evidence, that the court was right in refusing to direct a verdict for the plaintiff, and it was not error to direct a verdict for the defendant, so that the judgment should be affirmed.
Scott, J., concurred.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.