Court Opinion

ID: 7168983
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:24:22.628663+00
Date Added: 2024-06-11T16:15:37.164718
License: Public Domain

On Rehearing.
LAND, J.
In plaintiff’s brief on application for a rehearing appears the following statement:
“On January 12, 1906, Newcomb transferred his subscription to the defendant, Jurgens, and, at a meeting of the board of directors on that date, Mr. Jurgens presiding, it was resolved:
“ ‘That the president and secretary are hereby authorized to grant to Mr. F. E. Howard New-comb a full release from any and all liability arising out of his subscription to 251 shares of stock, having been assumed by Mr. Jurgens.’
*767“On' the same date there was held a meeting of the stockholders of the corporation at which Mr. Jurgens appeared as the owner of 320 shares, voted the same and signed the minutes.
“At this meeting of stockholders the following resolution was adopted:
“ ‘Resolved, that article 3 of the charter would be amended to read as follows:
“ ‘The capital stock of this company is hereby fixed at the sum of fifty thousand dollars, divided into and represented by five hundred shares of one hundred dollars each. This corporation shall commence business as soon as twenty-five thousand dollars of stock is subscribed and paid for, and that twenty-five thousand dollars of stock shall be held in the treasury to be disposed of to others in the future as the board of directors may decide.’
“This resolution was embodied in a notarial act, was recorded in the mortgage office, and was published in the Daily States on the 22d and 29th of January, and on the 5th, 11th, and 21st of February, 1906.”
iThe main contention of the plaintiff is that said amendment of the charter operated a reduction of the capital stock of the corporation, and was not adopted and no certificate of the proceedings was filed in the office of the Secretary of State, as required by the provisions of Act No. 149 of 1898. Section 3 of said act provides that the certificate shall contain, among other things:
“The amount of the capital stock of the corporation at the time said vote was taken and the number of holders thereof, the amount and the number of shares to which it was proposed to and agreed to be increased or decreased, the amount and number of shares whose holders have voted against said change, *_ * and the whole amount of the debts and liabilities of said corporation.”
This language clearly points to a corporation duly organized and engaged in business. It does not refer to an inchoate corporation in process of formation. In the case before ns all the stock subscribers were present at the meeting and voted in favor of the resolution. The proposed amendment of January 12, 1906, did not purport to increase or decrease the capital stock of the corporation. Where all the shares have been subscribed, the reduction contemplated by the statute operates on all the shares, by reducing them proportionally. In the case at bar, as a matter of fact, there was no such reduction made.
Plaintiff alleged in his petition that New-Comb “transferred and assigned to said George Jurgens all of his right, title, and interest in and to the ' subscription to 250 shares of stock, which ■ assignment was accepted by said Jurgens and said company, and said Jurgens thereby became indebted on account thereof to said company in the sum of $25,000.” In other words, plaintiff alleged that .Newcomb transferred his stock subscription to Jurgens, who thereupon assumed Newcomb’s obligations to the company, and prayed for. judgment against Jurgens for $25,000, as the transferee of New-comb’s subscription. The contention that the shares of stock were reduced to the extent of 50 per cent, by the amendment of January 12, 1906, is refuted by the allegations and prayer of plaintiff’s petition. As shown by the evidence, Jurgens took over and held this stock, voted it at the stockholders’ meeting, and that after the amendment was adopted the same stock was converted into treasury stock. Jurgens was never charged on the books with the Newcomb stock, and the treasury stock was sold in part, by the corporation.'
On January 12, 1906, the defendant company was not a going concern, and had not even commenced business, because all of the capital stock had not been paid in cash as required by the original charter.
The amendment of said date provides that the corporation should begin business when $25,000 should be subscribed and paid for, and that the other $25,000 should be held in the treasury to be disposed of in the future as the board of directors might determine. This amendment was advertised and recorded in the mortgage book of the parish of Orleans as required by law, and was read into the original charter. The company had no creditors at the time, and the amendment *769gave notice to future creditors that the capital stock consisted of $25,000, subscribed and paid in, and $25,000 of treasury stock.
As, outside of the Newcomb stock, $36,000 of stock was paid in, to hold Jurgens for $25,000 ■ would raise the total capital stock to $61,000, or $11,000 over the authorized capital. This is a legal impossibility. By consent of all the shareholders, one of them may sell or transfer his shares as in case of other property, or withdraw from the contract. See 2 Thompson, §§ 1515, 1516.
We conclude that the plaintiff, who contracted with the corporation, after the amendment was duly recorded and advertised, has no just reason to complain of the transaction in question. To condemn the defendant, on the evidence before us, it seems to us, would be against equity and good conscience.
It is therefore ordered that our former decree herein be reinstated and made the judgment of the court.
MONROE, J., dissents.