Court Opinion

ID: 6472971
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:32:26.475916+00
Date Added: 2024-06-11T15:53:52.844903
License: Public Domain

EOUSE, J.,
dissenting.—I dissent from the opinion in this ease for the reason that I think the complaint does not contain facts sufficient to constitute a cause of action, and the demurrer thereto should have been sustained. The complaint, commencing with the second division thereof, is as follows, viz.: “That on the 29th day of May, 1891, at a meeting of the board of directors of said corporation defendant, an assessment of sixty dollars per share was levied by resolution of said board on the capital stock oí: the said defendant, payable at the said office of the defendant within ten days from the 1st day of June, 1891, and that due notice of such assessment, and of the time and place for the payment thereof, was given. to the stockholders of said corporation, in accordance with the *245by-laws thereof, by publication of such notice for ten days in the Phoenix Daily Herald, a daily newspaper published in said county of Maricopa. (3) That by reason of the non-payment of the aforesaid assessment thereon, certain portions of the capital stock of the defendant became and were delinquent, and on the 12th day of June, 1891, were so declared to be delinquent, and a sale thereof ordered by the said board of directors, and in accordance with the charter and by-laws of said corporation, in payment of such delinquent assessment; and that thereafter said board of directors, by I. M. Christy, the secretary thereof, gave thirty days’ notice of the time and place of sale of such delinquent stock by publication thereof in the aforesaid Phoenix Daily Herald. (4) That there was included in the delinquent stock so as aforesaid sold and advertised for sale in payment of the assessment due and unpaid thereon, a one-fourth ({-) interest in share No. 6 of the capital stock of the defendant, which said interest was held and appeared on the books of the defendant in the name of the ‘Mayor of the City of Phoenix, Trustee.’ (5) That at the time and place mentioned in the aforesaid notice of sale, viz., on the twelfth day of July, 1891, at the office of the defendant, in said city of Phoenix, the said I. M. Christy, secretary as aforesaid, in pursuance of said notice, offered for sale, and sold to this plaintiff for the sum of seventeen dollars ($17.00), lawful money, then and there paid by the plaintiff to the said Christy, the said one-fourth interest in share No. 6 of the capital stock of the defendant, then held and appearing on the books of the defendant in the name of the ‘Mayor of the City of Phoenix, Trustee’; this plaintiff being then and there the highest bidder, and said sum of seventeen dollars the highest amount bid for said interest. (6) That, by reason of the premises, this plaintiff became and was on the said twelfth day of July, 1891, the. lawful owner of said one-fourth (-]■) interest in share No. 6 of the capital stock of the defendant, and was then and is now entitled to a certificate of such ownership from the proper officers of the defendant, and to a transfer of said interest to his (the plaintiff’s) name on the boobs of the defendant, and to the enjoyment of all the rights and privileges of such ownership ; and it then became and still is.'the duty of the defendant,, through its proper officers, to issue to this plaintiff a certifi*246cate of his ownership of said on¿-fourth (¿) interest in share No. 6 of its capital stock, and to transfer said interest to plaintiff’s name on the books of the defendant, and to accord to plaintiff all the rights and privileges of ownership thereof; but that, although often requested thereto by the plaintiff, the defendant, by the said I. M. Christy, as secretary as aforesaid, on the day last aforesaid, refused,, and still does refuse and neglect, to issue to plaintiff a certificate of his ownership of said one-fourth (¿) interest in said share No. 6, or to transfer said interest to plaintiff’s name on the books of the defendant, or to permit this plaintiff to, in any manner, avail himself of his rights and privileges as the owner thereof, whereby said one-fourth (¿) interest in share No. 6 of the capital stock of the defendant corporation has become and is wholly lost, to this plaintiff’s damage in the sum of fifteen hundred dollars ,($1,500.00).”
It is alleged in the complaint that the defendant levied an assessment of sixty dollars per share on its capital stock, and • that one-fourth interest of share No. 6 was sold and bought by plaintiff. It is further alleged that said one-fourth interest belonged to the “Mayor of the City of Phoenix, Trustee.” The pleadings of plaintiff shall consist of a concise statement of the facts constituting the cause o ’ action. The complaint must contain a statement of facts, which statement makes a cause of action. Rev. Stats., par. 655. If there be no cause of action stated in the complaint, there is nothing to try, and no judgment can be rendered thereon.
Corporations in this territory a ce formed only under a general law, and the provisions thereof must be complied with. Corporations have no powers excepting those conferred by the statute. Among the powers of such bodies are: “To render the shares or interests of stockholders transferable, and prescribe the mode of making such transfers. To establish bylaws . . . not inconsistent with the laws of this territory.” Rev. Stats., par. 233. Before commencing any business, except that of their own organization, they must adopt articles of incorporation, which must be :xcknowledged. Said articles are practically the charter of the, corporation, and to them we must look for the authority for officers thereof to act. The articles must contain: “. . . 3. The amount of capital stock authorized, and the time when and condition upon which it is *247to be paid in.” Rev. Stats., par. 234. An assessment, as applied to the capital stock of a corporation, means an amount fixed equally upon all the shares of paid-up stock. Boone on Corporations, sec. 117; Beach on Private Corporations, sec. 590. Without authority specially conferred by statute, an assessment of the stock cannot be made. Beach on Private Corporations, sec. 590; Cook on Stock, Stockholders, and Corporation Law, sec. 422. The board of directors have no power to levy an assessment. The levy of an assessment, and the sale of the interest in the stock described in the complaint, were void acts, and the statement of such acts in the complaint did not state facts which constitute a cause of action, and the demurrer should have been sustained. We have no right to ignore the plain and oft-repeated statements in the complaint that the stock was sold for an assessment, and treat the proceedings as though a “call” had been made, and that the sale was made for such call. If we should do so, however, we will find ourselves confronted with difficulties equally as great as those with which we have been dealing. A call may be defined to be an official declaration by the proper authorities that the whole or a specific part of the subscriptions for stocks is required to be paid. Cook on Stock, Stockholders, and Corporation Law, sec. 104. It is a term used only when a demand is made on a subscriber for stock that he pay for the same either in whole or in part. The law requires that in the articles of incorporation the time when and conditions upon which the stock is to be paid up must be stated. Rev. Stats., par. 234. If the stock be not paid up, that fact must be shown by the articles referred to. If not paid up, a call may be made for the payment in whole or by installments as the same becomes due, as specified in said articles. The true meaning of a call, from what has been stated, is apparent. The term assessment is sometimes used in speaking of the amount of the call, but it is never used interchangeably with that term. To make this complaint good, if we should treat the term assessment as a call, there should have been in it allegations to the effect that the stock had not been paid up, that the amount was due, that all the prescribed steps to make it due and payable, as specified and required by the articles of incorporation, had been pursued by the proper officers. In other words, the complaint should have been based on the powers and rights enu*248merated in the said articles, and they should have been alleged, for in them alone the power to make a call must be, lodged; otherwise, they do not exist. Again, a subscription for stock creates a debt, and a call is for a payment thereof, and becomes a debt due when made in the manner specified in the articles of a corporation, to be collected in the mode for the collection of such a debt. In this case, according to the allegations of the complaint, if we treat it as a call, the one-fourth interest in share No. 6 was forfeited and sold; it was confiscated. Plaintiff alleged that for seventeen dollars he bought said interest, and that by being deprived thereof he was damaged in the sum of fifteen hundred dollars. “We have no right to look beyond the pleadings in this case to determine the question before us. If we should, however, we would find that for the paltry sum of seventeen dollars expended by appellee he had recovered damages for five hundred dollars and costs of suit.
This complaint must be tested by the same tests that would have to be applied if it had been a suit by a stockholder for stock which had been forfeited by the company and issued to another. To sustain this complaint is to decide that the company had the right to forfeit the stock described; to take the right from the owner and dispose of it to another. In effect, it is a decision that, under the facts stated in the complaint, and under no other facts, the directors of said company at the time of the pretended sale had the right to forfeit the shares of all the stockholders and to dispose of said shares to other parties. The right of recovery ha the case is bottomed upon the right of the company at the time alleged to sell the stock. It is not an action against the parties for damages for selling property they had no right to set.. The complaint not con-, taining facts showing the right to aell the stock, the demurrer should have been sustained and the case dismissed.