Court Opinion

ID: 6582694
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:34.080647+00
Date Added: 2024-06-11T15:57:20.711545
License: Public Domain

Pardee, J.,
(dissenting.) It is provided in the plaintiff’s charter that “ twenty-five per cent of the capital stock shall be paid in before said company can exercise the privileges and powers herein conferred.” This provision, therefore, of legal necessity is written as a condition precedent in every subscription made to the capital stock. Indeed, each subscription was expressly made “ upon the terms and under the conditions and limitations” imposed by the charter. Each subscriber secured whatever measure of protection there may be in it to himself. All other subscribers combining cannot deprive him of it. The law of the plaintiff’s being requires the subscription of the capital stock, the organization, the call for, and the actual payment into its treasury of one quarter of the capital, prior to the making of contracts for the construction of its water-works. But tins law was disregarded. The organized corporation, not having either called for or received a dollar from the subscriptions to its capital, entered into a contract for the construction of its works. It was the privilege of the defendant to annex to his subscription the condition that he would not become a member of the corporation if it should do that thing.
It is not an answer to his defense to say that all other subscribers have waived the violation of the charter, have paid, and have ratified the contract. Each of them could waive or ratify for himself; no one, nor all of them, could waive or ratify for him. Nor to say that in this case the contract was an advantageous one and therefore neither the corporation, nor the defendant suffered any pecuniary injury. The latter is not to be made to bear the burden of proving that he was not injured. The question is one of construction of a contract. What condition did the defendant annex to his subscription ? Has the plaintiff so far met *412the condition as to be entitled to enforce the contract of subscription? Indeed the question is far reaching; it is, in reality, whether it is possible in making a contract of subscription to the capital of a corporation to impose thereon any condition which will protect the subscribers from an absolute liability.
In this opinion Loomis, J., concurred.
Note.—The document signed by the subscribers to the stock of the plaintiff company, in the foregoing case, was as follows:—
‘ ‘ Whereas, the General Assembly of the state of Connecticut did at its January session, a. d. 1887, by resolution approved the 19th day of May, 18S7, incorporate the following persons, to wit: Bronson B. Tuttle, F. W. Tolies, E. H. Carrington, L. P. Beardsley, Wm. Ward, Amos Culver, Jno. H. Whittemore, Homer Twitchell, L. D. Warner, Geo. A. Lewis and F. B. Tuttle, all of the town of Naugatuck in New Haven County, with all such persons as might thereafter associate with them, their successors and assigns, as a body corporate, for the purpose of supplying the town of Naugatuck with a supply of pure water for public and domestic and other uses, under the name and style of The Naugatuck Water Company, subject to the conditions and provisions of said act of incorporation, which is hereby made part of this instrument of our organization thereunder and acceptance of said grant and franchise:—Now therefore, we the subscribers, within two years after the passage of said resolution by the General Assembly aforesaid, do hereby accept the aforesaid grant and franchise, and do associate ourselves as a body politic and corporate thereunder, upon the terms and under the conditions and limitations in said resolution contained, under the style and name of The Naugatuck Water Company as aforesaid; and further, we the subscribers do hereby agree to take the number of shares of the capital stock of said corporation set opposite our respective names, and to pay for the same as it may be called in by the directors. Dated at Naugatuck, Conn., this 23d day of May, 1888.”