Court Opinion

ID: 6721999
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:56:15.601596+00
Date Added: 2024-06-11T16:01:34.588562
License: Public Domain

This was an action by the grain company to recover from Aten the unpaid balance on a subscription to the capital stock. Aten signed a subscription agreement whereby he agreed to purchase stock to the amount of $500 and that there was a balance of $450 unpaid. Aten maintained that the petition was defective in failing to allege corporate capacity, that the stock subscription agreement was not binding because no certificate had been secured from the commissioner of securities to sell the same, and that no action could be brought under 6833 GC. until 60 days after the directors had designated a time and place of payment. A judgment was rendered for plaintiff, whereupon Aten prosecuted error. In sustaining the judgment of the lower court, the Court of Appeals held:
1. As the petition alleges incorporation, this allegation implies that the provisions of the law had been fully complied with, including the provision that 10 per cent of the. capital stock must first be subscribed and that 10 per cent of such subscription must be duly paid into the corporation in money.
2. A subscriber of corporate stock cannot set up defects in the organization of a corpora*727tion as a defense to his liability on his subscription.
Attorneys — Willet & Pennell, for Aten; L. M. Bowers, for Grain Company.
3. Under 6373-2 GC. if a corporation solicits subscriptions for shares of stock it its own company without securing a certificate from the commissioners of securities, this noncompliance does not render the stock subscription agreement void, but only subjects the corporation to a statutory penalty.
4. 6833 GC.-, which provided that an action cannot be brought upon a stock subscription contract until 60 days after a time and place is designated by the directors for payment, held not applicable where the stock subscriptions contract contains the terms and conditions of payment.