Court Opinion

ID: 6254734
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:26:54.602447+00
Date Added: 2024-06-11T08:59:16.860957
License: Public Domain

Opinion by
Mr. Justice Kephart,
This is an action to- recover for a subscription to the stock of a corporation. The plaintiff has appealed from a judgment in defendant’s favor. The defendant, in the *6original articles of association, certified, that lie liad subscribed for twenty shares of tbe capital stock of tbe company then being organized. He now states that be signed tbe certificates merely for tbe purpose of incorporation. This alone will not relieve bim from tbe obligation, assumed and certified by bim, to pay tbe par value of tbe shares of stock subscribed. Whatever may be bis rights as between tbe corporation, its officers and himself, in so far as tbe public and creditors are concerned, tbe articles of incorporation and tbe certificate are conclusive. As soon as tbe company was incorporated by tbe issuance of letters patent, bis subscription as therein expressed, made prior to tbe legal existence of tbe company, was binding on bim as a subscriber; be thereby agreed to pay tbe par value of tbe shares subscribed at such time and in such amounts as tbe directors might require. Tbe subscriber is generally liable on bis subscription, but can be sued only when a call is made by tbe board. “Until such call, there is no obligation on tbe stockholder to pay. It may never be made. If tbe enterprise is successful and profitable from tbe start, or the provision for capital has been larger than actual needs require, tbe duty of payment is only a reserve duty for possible contingencies, and, until they happen, either by calls by tbe corporation on tbe subscriptions, or by tbe rights of creditors, there is no duty of tbe subscriber to pay, no right of action against bim for nonpayment, and no starting point for tbe statute of limitations”: Cook v. Carpenter (No. 1), Lipper’s App., 212 Pa. 165, 176.
To be relieved of this continuing liability, tbe subscriber may transfer bis right or interest in tbe shares subscribed, but such transfer must be made as required by law, subject to such regulations as may be provided by tbe by-laws. Where such transfer is entered upon tbe books of tbe corporation, be ceases to be liable for future calls, tbe consent of tbe corporation is in effect a novation, a release of tbe transferor’s liability; and, unless there is some statutory regulation, tbe assignor is no *7longer liable for future calls on stock subscribed for Mm, or held in his name: 7 S. O. L., sec. 234, p. 256. Under the law in this State it is clearly the duty of the corporation, when required to do so, to make due and legal transfer of stock sold and assigned where no call remains unpaid, and, in the absence of some legal reason for not so doing, they cannot escape the performance of this act. Under the Uniform Stock Transfer Act of May 5, 1911, P. L. 126, it is indicated how the title to shares of stock may be transferred, but (section 3) nothing therein shall be construed as forbidding the corporation “to hold liable for calls and assessments a person registered on its books as the owner of shares.” This is subject to the modification that if the corporation accepts or consents to the transfer, the transferor will be relieved of liability.
In this case there was no by-law regulating the subject of transfers, and, while the transfer books and stock ledgers were offered, they were not used to record either the sales of stock from the corporation, or any transfers that were made thereafter; and, as the appellee defended on a transfer of his subscription, it was incumbent on him to prove some act on the part of the corporation evidencing a consent or acceptance of the transfer, to release him from liability. There is no minute showing the acceptance of the assignment, nor is there evidence that the company transferred the shares owned by the subscriber to another by issuing a new certificate, nor that any one was authorized in its behalf to accept or •.consent to the transfer. See Bell’s App., 115 Pa. 88. An attorney-at-law, employed to procure a charter, cannot, unless specifically authorized, accept a transfer in behalf of the company. Such acts are not ordinarily within the scope of an attorney’s authority. If he has been employed generally to act for the company in this and other matters, or if he has been employed to obtain a charter, using others than those intended to be the real stockholders, with express or implied power to have the *8former transfer all their supposed interest to the latter, then his acts would no doubt be binding on the company: Harrington v. Stivanson, 210 Pa. 10; Snyder v. Armstrong, 6 W. N. C. 412; Smith v. Eyre, 161 Pa. 115; Douglass v. Mitchell’s Exr., 35 Pa. 440.
It will be noted in this case that the so-called books of the company do not show the registry of stock in any person’s name and we learn of this subscription, as hereinabove noted, and others, only from the testimony that the company actually did issue shares of stock. If the company failed to provide the proper books to register and record transfers, and an effort is made to recover the amount of the subscription, the fact that the subscriber’s name does not appear as a registered owner will not relieve him from liability; nor will the fact that his transfer has not been made on the books, hold him for his subscription, if he has in fact duly assigned his stock or interest and the company has acted thereunder or consented to the transfer. The mere delivery of the assignment to an officer of the company, or to the attorney for the real incorporators, would not be sufficient, but if delivered to the officers of the company whose duty it is to make the transfer, or whose duty it is to sign and issue new certificates, or to the attorney who was employed for the real incorporators, inter alia, for obtaining the transfer, statements of such officers or attorney to the effect that the transfer was recognized or acted upon would, under such circumstances, be sufficient to bind the company; it would be evidence of consent. It is not illegal for an attorney to procure disinterested persons to sign a certificate of incorporation with the understanding that when the charter is granted the subscription is to be assigned to the real owners. In such case, the law must be complied with as indicated herein.
Unhappily the case was not submitted to the jury along the lines above set forth. Among other things, the trial judge said: “Mr. Cox, who it is admitted was *9the attorney for the corporation,......would be a proper party to receive that paper, and if he did receive it as the attorney for the corporation, that would be a good delivery, and you would be justified in so finding. It would be an act which an attorney could do under the authority of his employment, and then if, for any reason, the paper is lost and cannot be produced, that is no fault of the defendant.” This authority as an attorney should have been found by the jury from the evidence.
Further on the court charged the jury: “Now, if that transfer of all his interest was made as stated, and you find that to be true, then you come to consider the effect of it. The defendant was one of the original incorporators of the corporation. If his twenty shares of stock went into, and was considered by those who received it as a part of, the capital stock, then he would not be responsible upon that capital stock. If it was accepted, if his assignment or transfer of it was accepted by the corporation, or those who controlled it, then under the law there could be no recovery against him on that stock, or any unpaid portion of it, in the absence of proof that a demand had been made upon him prior to the time the corporation went into the hands of the receiver.” This also was error, for defendant would be liable even though his stock “was considered, by those who received it, as a part of the capital stock,” unless the assignment of his interest in the company or the stock was accepted by some one authorized to receive it; and, if it was not so accepted, defendant would be liable if a call were made upon him, by order of court, after “the corporation went into the hands of the receiver.”
Another important question not passed on by the court below is as to whether a call had been made. As we have stated, the directors may make calls in such amounts and at such times as in their judgment they deem wise and proper, but if the stock was subscribed with the understanding that it was to be then paid in cash, it is immediately due and the subscriber may be *10proceeded against without further notice. The minutes make no reference to this, except where it is stated the shares of stock shall be of the par value of $100 and shall be nonassessable. Inasmuch as the statute of limitations was interposed as a defense, it was important to know exactly what the facts were in regard to the stock, so far as related to this matter.
The claim for the amount certified by the appellee as being in his hands as treasurer at the date of incorporation is clearly barred by the statute. The minutes show the treasurer was succeeded by another more than six years prior to the institution of this action; if the corporation had any claim against him, it should have proceeded to collect it. Not having done so within six years, the corporation and the receiver afterwards appointed are barred. But it appears in the evidence that the money was in the hands of his successor. Whether that is true is not now material.
The first and second assignments are sustained, the judgment is reversed so far as the claim upon the stock is concerned, and a new venire awarded.