ÆäÀÌÁö À̹ÌÁö
PDF
ePub

pared and signed by the parties thereto between the first day of September, 1879, and the sixteenth day of September, 1879, and that said Smith did not sign said articles, nor authorize any one to sign his name thereto, and that said Smith died intestate on the eleventh day of July, 1879.

3. That in the year 1877, the defendant, said George R. Smith, signed and delivered to one Cyrus Newkirk, who was afterwards named in said articles as one of the directors of plaintiff and who was then soliciting subscription to the capital stock of said proposed incorporation, now the plaintiff herein, a certain written instrument to be read in evidence in the case.

32. That prior to the bringing of the suit in the probate court of Pettis county, the plaintiff had complied with all the conditions of said written instrument referred to in the preceding stipulation as to the construction and completion of said railway, and that on October 30, 1880, plaintiff made a call for payment of all subscriptions to its capital stock.

4. That for the purpose of this trial the same effect shall be given to the instrument referred to in the third stipulation as though the name of the Sedalia, Warsaw and Southern Railway Company appeared in the stead of that of the Sedalia, Warsaw and Memphis Railway Company.

5. That after said articles of association were filed in the office of the secretary of state, as aforesaid, the plaintiff corporation duly organized by the appointment of William Gentry, one of the directors named in the said articles, as president; also by the appointment of D. H. Smith, another of said directors, as vice-president; John D. Crawford, secretary, and Cyrus Newkirk, treasurer.

6. That after such organization by plaintiff, said Cyrus Newkirk turned over and delivered said instrument referred to in the third stipulation to the secretary of the plaintiff, and that plaintiff thereupon received and accepted the same as a subscription to its capital stock, and ordered the name of said Smith to be placed upon its stock books as a stockholder of fifty-five shares of its capital stock, which was accordingly done.

7. For the purpose of this case the instrument of writing referred to in stipulation No. 3 shall be considered as applying only to the $1,000 cash part thereof, which yet remains unpaid, the remaining portion having been heretofore arranged in a manner not affecting the issues in this case.

8. These stipulations shall not be taken as binding or estopping either party hereto, in any other cause, but shall be used in the trial of this case only.

The plaintiff read in evidence the subscription paper referred to in the stipulation signed by the defendant's intestate, which constitutes the foundation of the demand against his estate.

"We, the undersigned, agree each severally to take the number of shares of the capital stock of the Sedalia, Warsaw and Memphis (Southern) Railway Company written opposite our names respect

ively, and to pay for the same as soon as the road of said company shall be fully completed and in operation to the south line of Pettis county, in the direction of Warsaw, and the road-bed of said company completed from Sedalia to Warsaw. The payment of our several individual subscriptions to be secured to the satisfaction of the board of directors of said company before a contract for the building of said road is closed.

[merged small][merged small][merged small][ocr errors][merged small]

"On condition as follows: One thousand dollars cash; $3,000 in work to be done for said railway company at the shops of the Smith Manufacturing Company, at regular prices; $1,500 in real estate, consisting of the three lots on the north side of Fourth street. in the city of Sedalia, lying south of the lots of the Smith Manufacturing Company, and adjoining the M., K. & T. railroad on the westabove mentioned lots are numbered 14, 15 and 16, of block 1, Smith & Martin's Third Addition.

"(Signed.)

G. R. SMITH."

This being all the evidence, the plaintiff asked the court to declare, in substance, that the plaintiff, upon the agreed facts, was entitled to recover the $1,000 mentioned in the subscription paper. The court refused to make the declaration and rendered judgment on said facts in favor of defendant, from which the plaintiff appeals.

The only question presented in the record is, whether the defendant's intestate by virtue of his signature to the paper submitted in evidence, which was preliminary to the execution of the articles of association, became legally bound as a stockholder in the corporation, subsequently organized under article 2 of chapter 21 relating to the voluntary incorporation of railroads. The corporation contemplated in this preliminary paper is a creature of the statute. By complying with certain requirements specifically indicated therein, the subscribers of said paper, or any one else desiring the same thing, might be come entitled to the rights and be subject to the liabilities of stockholders in a body corporate.

The statute which enables them to call into being the body corporate governs their relation to that body. It is full and explicit, and leaves no excuse for resorting to the rules of the common law in determining who are and who are not members of the body. I accept this proceeding as an attempt to enforce the statutory liability of the defendant's intestate as a member and stockholder of the association contemplated in the preliminary paper.

In recurring to the statute it would seem that only two modes are provided by which a person may become a subscriber to the capital stock of a corporation, either by signing the articles of association alluded to in the first section of the second article, or by subscribing to the capital stock after the creation of the corporation. The defendant's intestate died before the articles of association which gave being

to the corporation were executed and filed, consequently he could not have become a member by subsequent subscription. If he did not become such before they were filed, then he was no subscriber or stockholder at all. As it appears from the agreed statement of facts that his name was never signed to the articles of incorporation, the argument against the plaintiff is conclusive, if the premises are

correct.

That they are correct, I think no one can doubt after reading the provisions of the statute relating to the incipient steps necessary to be taken in order to give rise to the relation of stockholder and corporation. Section 764, Revised Statutes, provides that any number of persons, not less than five, may form a railroad company; that for such purpose they may make and sign articles of association, in which shall be set forth the name of the company, period of its existence, the termini of its road, its length, the counties through which it is to run, the amount of capital stock, number of shares of stock, and the names and places of residence of the directors. It requires each member to subscribe to such articles by signing his name and place of residence, and the number of shares he agrees to take. A certain amount of capital stock must be subscribed, according to the character and length of the road, and five per cent. of the amount so subscribed paid thereon to the directors named in the articles. To these articles must be attached the certificate of at least three directors, under oath, to the effect that the conditions relating to the amount and payment of stock have been complied with. The section then goes on to say: "And thereupon the persons who have so subscribed such articles of association, and all persons who shall become stockholders in said company, shall be a corporation by the name specified in such articles of association, and shall possess the powers and privileges granted to corporations, and be subjected to the provisions relating thereto contained in this chapter."

I am unable to perceive how any persons of the requisite number, desirous of forming a railroad company under the provisions of this statute, can do so in any other mode than the one pointed out in it. In no other mode can the relation of stockholder and corporation, under this statute, be established. The statute neither contemplates nor alludes to any preliminary paper of subscription such as the one given in evidence. The fact that informal papers and circular letters are commonly signed and published as a part of the enterprise and zeal which gives birth to public corporations, can make no dif ference as long as the statute fails to recognize them among the necessary and prescribed legal steps to be taken by the incorporators to create the body corporate. The allusion in the statute to "all persons who shall become stockholders in said company," evidently refers to such as become stockholders by subscribing for stock after the corporation is established, in subscription books opened by the directors, according to the provisions of section 711, Revised Statutes.

It has been held by the courts of New York, in construing a statute in most respects like our own, that a party failing to sign the arti

cles of association could not be subjected to the liability of a stockholder, although he has signed a preliminary subscription paper. Troy & Boston R. R. v. Tibbitts, 18 Barb. 297; Poughkeepsie & Salt Point Plank Road Co. v. Griffin, 24 N. Y. 150. I find nothing in the cases cited by plaintiff's counsel materially conflicting with this construction. Some of them are cases in which preliminary requests, petitions, or subscriptions are made prior to, or in contemplation of, the grant of a charter by legislative enactment. The acts when passed took effect upon the petitioners or subscribers, and by force of their terms made them liable as members or stockholders, although they may have failed to participate in the subsequent proceedings by which the corporation was organized. Others are cases in which the act of incorporation, either general or special, had been passed, and the defendants are held liable as stockholders, by reason of subscriptions within the peculiar meaning and terms of the acts, or because the acts, unlike the one before us, failed to prescribe any particular method of subscription by which a person might acquire the rights and be subject to the responsibilities of a stockholder. Tonica, etc., R. v. McNeely, 21 Ill. 71: Johnson v. Ewing Female University, 35 Ill. 518; Buffalo & N. Y. City R. Co. v. Dudley, 14 N. Y. 336; Hartford & New Haven R. v. Kennedy, 12 Conn. 500; Taggart v. Western Md. R., 24 Md. 663; Penobscot R. Co. v. Dummer, 40 Maine 172; Kennebec & Portland R. v. Palmer, 34 Maine 366; Cross v. Pinckneyville Mill Co., 17 Ill. 54; Athol Music Hall Co. v. Cary, 116 Mass. 471.

I do not regard the case of Peninsular R. Co. v. Duncan, 28 Mich. 130, as an authority in point. Without assenting to the conclusion reached in that case by a majority of the court (there being an able dissenting opinion against it), I need only remark, for the purposes of this case, that the construction adopted by the court was placed upon the peculiar phraseology of the statute which it was held referred to preliminary subscriptions, thereby intending to make the signers thereof members of the corporation when established. There being no such reference or intention contained in the language of our statute, I am of the opinion that the defendant's intestate can not be held liable as a stockholder by reason of his signature to the paper submitted in evidence. Accordingly the judgment of the court below is affirmed.

PHILLIPS, C., not sitting. EWING, C., concurs. absent.

HOUGH, C. J.,

Note. See 1854, Troy & Boston R. Co. v. Tibbitts, 18 Barb. (N. Y.) 297; 1856, Buffalo & N. Y. R. Co. v. Dudley, 14 N. Y. 336; 1861, Poughkeepsie & S. R. Co. v. Griffin, 24 N. Y. 150; 1873, Carlisle v. Saginaw Valley R. Co., 27 Mich. 315; 1874, Dutchess, etc., Co. v. Mabbett, 58 N. Y. 397; 1875, Reed v. Richmond, etc., Co. 50 Ind. 342; 1875, Parker v. N. C. M. R. Co., 33 Mich.. 23; 1878, Monterey, etc., Co. v. Hildreth, 53 Cal. 123. Beach, § 513; Clark, p. 271; Cook, $$ 57-59; Elliott, § 344; Morawetz, §§ 54-57; Taylor, § 516; I Thompson, §§ 1157-1160.

Sec. 102. Same. The statute may make those who incorporate members and not those who take the stock.

THE CASE OF THE PHILADELPHIA SAVINGS INSTITUTION.'

1836. IN THE SUPREME COURT OF PENNSYLVANIA. I Wharton (Pa.) Rep. 461–468.

At the last term, an application was made by Mr. Norris for a rule to show cause why an information in the nature of a writ of quo warranto should not be filed, to inquire by what authority Joseph Feinour and others exercised the rights of members of the Philadelphia Savings Institution.

At the same time a rule was granted upon the president and directors of the same institution, to show cause why a mandamus should not issue, requiring them to admit William C. Bridges to participate in the transaction of the said institution, at its meetings of business. Upon the return of these rules, the following appeared to be the material circumstances:

The Philadelphia Savings Institution was incorporated by an act of the legislature of Pennsylvania, passed on the 5th day of April, 1834. The first section declared that certain persons therein named (fortysix in number) and all and every other person or persons, hereafter becoming members of the Philadelphia Savings Institution, in the manner hereinafter mentioned," should be created and made a corporation and body politic, with the usual powers and capacities.

The 2d, 3d and 4th sections were as follows:

"Sec. 2. The object of this corporation shall be to receive from time to time, and at all times, from all persons disposed to entrust them therewith, such funds as may be deposited with them, and for which they shall pay to the depositor such rates of interest as may be from time to time agreed upon by the directors of the said institution: Provided, That the said rates of interest shall not be reduced without giving at least sixty days' notice of their intention so to do, in two or more of the daily papers of the city of Philadelphia.

"Sec. 3. For the security of the depositors of the said institution, it shall be the duty of the persons named in the first section, and of their associates, to raise and form a capital for the said institution, of not less than $50,000, nor more than $200,000, in shares of $25 each, which capital shall be at all times liable to the depositors for the amount of their deposits and of the interest accruing thereon. The said shares shall be transferable on the books of the company in such manner as may be designated by the by-laws of the said institution. "Sec. 4. There shall be a meeting of the members of the said Philadelphia Savings Institution, on such a day in the month of May next, and at such place as the five persons first named in this act, or any 1 Note. Arguments omitted.

« ÀÌÀü°è¼Ó »