Court Opinion

ID: 8257144
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:32:54.413718+00
Date Added: 2024-06-11T16:43:02.076205
License: Public Domain

HaNDY, J.,
delivered the opinion of the court.
This action was brought to recover from the plaintiff in error, as a stockholder in the defendant’s company, certain instalments of stock alleged to be- due.
The declaration alleges, that the defendant below became a stockholder in the company, by subscription made on the 15th November, 1853, and was liable to pay the instalments sued for, which had been duly demanded. The defendant pleaded, First. Ron assumpsit. Second. Admitting that he signed an agreement to subscribe for the shares of stock, but that he never did subscribe and pay at the time' of subscribing, fifty cents on each share of *368stock subscribed, as required by the charter of the plaintiff, or any amount; and that he never did at any time subscribe for stock, and at the same time, pay the sum of fifty cents, or any amount, on each share. To this special plea, the plaintiff replied, that the defendant subscribed for the shares as alleged in the declaration, and afterwards, and before the calls were made for instalments of stock sued for, he paid the sum of fifty cents per share on the amount subscribed for. The defendant demurred to this replication, and the judgment thereupon was for the plaintiff; and afterwards, a final judgment was rendered, on the trial, for the plaintiff.
The question raised by the demurrer, and now presented for decision is, whether the defendant’s signing the subscription paper, the sum of fifty cents for each share subscribed for, not being paid at the time, but having been paid, afterwards and before any calls for instalments of stock were made, constitutes a valid subscription either at the time of signing or at the time of paying the fifty cents per share.
The fifth section of the charter is as follows : “ That upon every subscription for stock, there shall be paid, at the time of subscribing, to the person or persons authorized, &c., the sum of fifty cents on each share subscribed; and the residue thereof shall be paid in such instalments, and at such times, as may be required by the president and directors,” &c.
It has been heretofore held by this court, with reference to charters containing the same provisions, in effect, as this, that it is necessai’y that there should be, not only a subscription or some act equivalent to it, but a payment of the money, required tobe paid by the charter, in order to constitute a stockholder; and that the latter is a condition precedent to the right to become a stockholder, without the performance of which, the subscriber acquired no rights, and the corporation came under no obligation to him. Hayne v. Beauchamp, 5 S. & M. 537; Lewis v. Robertson, 13 S. & M. 538; Miss. Cent. R. R. Co. v. Fant, MS. It is manifest that the payment of the money is the consideration to the right to become a stockholder, which the legislature, in granting the charter, has seen fit to require. It is a rule of action which the corporation is imperatively required to observe, and which it has no *369power to waive, as its powers are all derived from, and restricted by, its charter. And in this consists tbe difference between this case, and that of a condition to be performed in a transaction between natural persons, the latter having all rights and powers not prohibited by law, and the corporation having such powers only as are conferred by its charter. Hence, it is a question of power with the corporation; and when it is ascertained that the duty is positively imposed in the charter, that the money shall be paid by the subscriber, at the time of subscribing, in order to constitute a stockholder, it is clear, that no right can be acquired or duty imposed by a violation of that provision; and to say that the corporation may waive the performance of that essential act, is to say that it may violate the law of its existence, and found a right upon it.
If such a subscription were valid to bind the subscriber, it would also be valid to entitle him to all the privileges of a stockholder. But suppose, that after the time of subscribing and before the payment of the fifty cents on each share subscribed, a dividend of profits had been declared to the stockholders; could the subscriber 'have claimed his dividend as a stockholder ? clearly not; because he had not done that which was essential to his being a stockholder. He had merely manifested his intention to become a stockholder, but had not completed the contract according to the imperative requirements of the charter, and would not be entitled to the privileges, nor subject to the obligations of a stockholder.
It follows from this view of the case, that the defendant was not bound as a stockholder at the time stated in the declaration, and that the averment in the replication, that he paid the sum of fifty cents per share, subsequently to the time of subscribing, is a departure from the declaration, for which the demurrer should have been sustained.
The next question is, whether the subscription became valid and complete from the time of payment of the fifty cents per share, without a new act of subscription at that time; and there can be' but little room for doubt upon this point.
When the money was paid, it was an affirmance of the previous act of subscription, which gave it the same effect as if the defend*370ant bad again affixed bis name to the subscription paper. The payment was made with direct reference to the subscription, and was in completion of it; and for all substantial purposes, the two acts are to be. considered as having been done at the time the money was paid. If, therefore, the declaration had contained the averments of the replication, it would have been free from exceptions, as showing a liability against the defendant from the time of the payment of the money required to be paid at the time of subscribing. But these averments are insufficient to sustain the declaration as they are here presented; and, therefore, the judgment must be reversed and the cause remanded, when the plaintiff will be able to make the necessary amendment.
It is also objected that the declaration is insufficient, in not averring the payment of the fifty cents per share at the time of subscribing, that being a condition precedent to the validity of the subscription.
The averment is, that the defendant “subscribed for twenty shares of the capital stock,” &c., “ according to the statute incorporating the company,” &c. From this averment, tahen by itself, it would be intended that he had done every thing required by the' charter in order to become a subscriber; and especially so, on general demurrer.
The judgment is reversed, and the cause is remanded for further proceedings.