Court Opinion

ID: 3604988
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:50:45.111549+00
Date Added: 2024-06-11T13:59:39.157691
License: Public Domain

I am not prepared to hold that a subscription for the stock of a railroad company organized under the general law is valid, if the ten per cent. required to be paid at the time of subscribing, is not paid. It seems to have been the opinion of the chancellor in Jenkins v. Union Turnpike Company (1 Caines' Case in Error, 86), that a subscription for stock without the payment of the five dollars required to be paid on each share at the time of subscribing, was void when the subscription was made to the stock before the organization of the corporation, but if made after, it might be valid. The statute under which the subscription in question is made, not only requires ten per cent. to be paid, but it forbids the subscription to be received without such payment. It seems to me that a subscription taken in violation of this prohibition is not binding.
But this court has held that the subscription may precede the payment of the ten per cent., and that when the ten per cent. is paid, the subscription is valid from that time. (Black River andUtica Railroad Company v. Clarke, 25 N.Y. 208.)
The only remaining question is, whether the ten per cent. has been paid?
The payment was in services performed under a contract with the company. No price was agreed on for the services before they were rendered. The price must have been ascertained before there could be an application of them on the stock. When the account was rendered and allowed, the defendant was owing the company that portion of the stock which had been called for by the directors, and the *Page 133 
company owed him for services. The payment by each to the other was effected by the company crediting the services on the stock. Was it necessary for any purpose, that the ceremony of paying money by the company to the defendant, and by the defendant of the same money back again, should be gone through with? It seems to me not.
Concede the agreement to take pay for the ten per cent. in services as illegal and void, yet the services were actually rendered. The company could have resisted payment by setting up the illegal agreement. It was optional with the defendant whether he would pay anything on the stock; but he did pay by allowing a portion due him for services to be credited on the stock.
I think this was a ratification of the subscription, and a payment of the ten per cent.
The judgment should therefore be affirmed.
All the other judges being for affirmance, except SELDEN, J., who was inclined to reverse, judgment affirmed. *Page 134