Court Opinion

ID: 8019394
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:08:48.141993+00
Date Added: 2024-06-11T16:36:34.260580
License: Public Domain

BLAIR, J.
— Certiorari. Relator seeks to quash the record of the St. Louis Court of Appeals affirming a judgment rendered against him by the St. Louis City Circuit Court in an action instituted by the De Giver-ville Land Company, a corporation, .to recover on a *214stock subscription agreement. It is contended the decision of the Court of Appeals conflicts with certain decisions of this court.
The relevant facts are that relator was. one of a large number of persons owning realty in the vicinity of a railroad switchyard. To rid the community of the noise and smoke emanating from this place it was determined to organize a corporation and purchase the property from the railroad. Relator and 127 other property owners affected participated in this movement in its beginning. They signed an agreement whose pertinent provisions are: “The undersigned, each acting herein for himself and not for the other, hereby subscribe for the number of shares set- opposite his or her name, in a corporation to be organized under the laws of the State of Missouri, as hereinafter provided.” Then follow paragraphs stating the purpose of such corporation to be the acquisition of the switchyard mentioned, and proceeding: “And we do hereby appoint as a committee” six named persons “as our attorneys in fact and agents ’ ’ to make the purchase and take, or designate a taker of, title “for the benefit of the subscribers hereto, in the proportion of their respective subscriptions. The said committee is hereby authorized' by the undersigned to cause a corporation to be formed, with a capital stock equal to the total amount of the subscription hereto, to which corporation, when organized, the above described real estate.is to be conveyed.” Further, the committee, or its nominee, was authorized to borrow on the property any sum needed over and above the aggregate of the subscriptions. All subscriptions were made payable on demand of the committee, when in their judgment the amount subscribed justified the purchase of the switchyard property. Relator and 127 others signed this agreement and, as therein stated, set opposite their names the amount of their respective subscriptions. Relator’s subscription was $2500, the principal of the sum for which the circuit court gave *215judgment against him. The subscriptions aggregated $100,000. The gentlemen authorized by the quoted agreement to do so, incorporated the De G-iverville Land Company, their names alone appearing in the articles of association as stockholders. The corporation thereupon purchased the desired tract of land, paying • therefor $100,000 in cash and mortgaging the property for the remainder of the purchase price. The several subscribers, except relator, paid in their subscriptions as they had agreed. Relator, when demand was made upon him in July, 1910, refused to pay, and subsequently the action mentioned was begun against him. The $2500 relator had subscribed was advanced to the corporation by another. Relator was not named in the articles of association.
Liability of Corporate1" stock, I. It is contended the opinion of the Court of Appeals is in conflict with the decision of this court in Sedalia, Warsaw & Southern Ry. Co. v. Wilkerson, 83 Mo. 235. In that case this court held a railroad corporation organized under section 764, Revised Statutes 1879, could not recover upon a subscription agreement, saying that the relation of stockholders in a corporation could not, under that section, be created in any mode other than by exact compliance with the statutory provision; i. e., that Ably those became stockholders who signed the articles of association and set out therein the number of shares they took; that in that manner only could one, in the first instance, come into the company as a stockholder. Under other sections one might subsequently acquire stock and become a stockholder, but a contract purporting to bind him to take stock in the company, entered into before the company was organized, was not obligatory. We shall not enter upon an effort to distinguish -the statute (Secs. 3339 et seq., R. S. 1909) under which the De Giverville Land Company was organized, from that involved in the case to which we have just referred, In the ease at *216bar we are to determine whether it is the law that one bound by a contract whereby he subscribes a named amount of stock in a business corporation he assists in originating and which.he authorizes his agents and attorneys-iii-fact to bring into existence, can, after such attorneys-in-fact and agents have organized the corporation, pursuant to his written authorization so to do, repudiate his contract, abandon his associates, take the benefit of the common enterprise and escape liability.
It is unnecessary to examine at length the criticisms which have been made of the rule approved in the Wilkerson case. The rule supported by reason and the weight of authority is quoted in Railroad v. Crow, 137 Mo. App. l. c. 466: “First, that the co-adventurers who sign such contract obligate themselves to each other and that the promise of each is a consideration for the promise of the others. Second, that the subscription is in the nature of a standing and continuing proposal to the corporation which is contemplated by the parties, and that when the corporation is called into existence and accepts the proposal, the minds of the contracting parties meet and the contract is obligatory. ’ ’
In the case just referred to and in that before us the Court of Appeals has collected the authorities and they need not be set out here.
The rule is stated thus in 7 R. C. L. 222, sec. 192: “The law is fairly well settled that where parties propose to form a corporation, and become shareholders therein, and such parties intend to become such shareholders, without further act upon their part, upon the incorporation of the company, and the agreement remains open and is unrevoked, and the corporation is formed in pursuance of it, and thereafter acts upon it by accepting the same, such agreement is valid and binding as a subscription to the capital stock of such corporation.” This rule we think applicable to the facts of this case. The authorities referred to lead to *217the conclusion that, at all events, the decision in the Wilkerson case, in so far as it conflicts with this holding, should be overruled. At least its application should be restricted to the particular facts in judgment in that ease.
Conflict in Opinions Removed: judgment, II. Other questions are discussed in the briefs. These arise chiefly out of the discussion by the Court of Appeals of problems confronting it in its effort to distinguish the Wilkerson case. Since we have disposed of that obstacle these matters become unimportant. Upon them it is un- „ necessary for us to express an opinion. We do not deem it necessary further to examine the opinion upon questions whose vitality is destroyed by the view we take of the Wilkerson case. 'The conclusion of the court was correct. The grounds upon which it distinguished the Wilkerson case cannot, in view of our conclusions as to the rule in that case, be considered as authoritative. With this qualification as to those portions of the Court of Appeals opinion, our writ is quashed.
All concur. Bond, J., in result.