Court Opinion

ID: 5012148
Source: CourtListenerOpinion
Date Created: 2021-10-01 02:57:53.71447+00
Date Added: 2024-06-11T08:17:28.010436
License: Public Domain

HUGHES, Justice
(concurring).
Art. 1538a-1538m, authorizing the issuance of non-par stock by corporations, applies to amendments of existing corporate charters, as well as to newly created corporations. 1538a and 1538d.
Sub-section (d) of Art. I538d provides that at least 10% of the non-par stock shall be, in good faith, subscribed and paid for by the stockholders of the corporation before the corporation shall be chartered or have its charter amended so as to authorize the issuance of non-par stock and “provided further that in no event the amount so paid shall be less than $25,000.00.”
If appellant had informed the Secretary of State at the time the charter amendment was applied for that it received nothing (or at most $100) for the 40,000 shares of non-par stock issued in lieu of the outstanding 80 shares of stock of the corporation, as it now asserts, then the charter amendment would have been unauthorized under the provisions of the statutes above noted, and .undoubtedly the Secretary of State would have refused to approve the charter amendment. If we should now hold in accordance with appellant’s contention the necessary result would be that the charter amendment, being unauthorized by law, is null and void, and all transactions made by the corporation under such charter amendment were invalid, including the sale by the corporation of more than three-quarters of a million dollars of the non-par treasury stock, the issuance of which was also authorized by the charter amendment.
Appellant does not ask that the amendment be nullified and the former status of the corporation restored, and no opinion is expressed as to what decision would be made under such circumstances. Apparently appellant desires us to hold that the transaction was illegal in so far as its liability for taxes is concerned, and valid for all other purposes. This no court should do.
Appellant has not in any manner ’been misled by the Secretary of State. From the very first, franchise taxes have been demanded on the basis that the consideration actually received by the corporation for the issuance of the 40,000 shares of non-par stock was $1,033,181.25, as represented by appellant. In fact appellant paid on that basis the first year following the charter amendment. With full knowledge, then, of the position of the Secretary of State, appellant continued to conduct its affairs as if the charter amendment were valid, only that it refused to pay its franchise taxes on such assumption.
Under these facts appellant is conclusively bound by the representations made to the Secretary of State at the time its charter was amended that it actually received $1,033,181.25 for the issuance of the 40,000 shares of non-par stock to the stockholders of the old corporation.