Court Opinion

ID: 6410395
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:52:15.155009+00
Date Added: 2024-06-11T15:51:21.229293
License: Public Domain

Shaw, C. J.
It is a rule of law too well settled to be now . questioned, that when the capital stock and the number of shares are fixed by the act of incorporation, or by any vote or by-law passed conformably to the act of incorporation, no assessment can be lawfully made, on the share, of any subscriber, until the whole number of shares has been taken. Salem Milldam v. Ropes, 6 Pick. 23, and 9 Pick. 187. Cabot & West Springfield Bridge v. Chapin, 6 Cush. 50. Worcester & Nashua Railroad v. Hinds, 8 Cush. 110.
This is no arbitrary rule ; it is founded on a plain dictate of justice, and the strict principles regulating the obligation of contracts. When a man subscribes a share to a stock, to consist of one thousand shares, in order to carry on some designated enterprise, he binds himself to pay a thousandth part of the cost of such enterprise. If only five hundred are subscribed for, and he can have no assurance which he is bound to accept that the remainder will be taken; he would be held, if liable to assessment, to pay a five-hundredth part of the cost of the enterprise, besides incurring the risk of an entire failure of the enterprise itself, and the loss of the amount advanced towards it.
In the present case, less than half of the shares had been subscribed for when the first assessment was laid. Assuming that Cahill’s agreement to take the residue of the shares was valid, it was on condition of receiving the president’s guaranty, and this was not sent to him until after the meeting of the directors had dissolved. As the sale was made for the nonpayment of all the assessments, and one was illegal, the sale was unauthorized, and the defendant did not become liable, by the terms of the statute, to pay the balance. A compliance with the requisitions of the statute is a condition precedent to such liability. Exceptions overruled.