Georgia Life Insurance v. Bell

Atkinson, J. 1. The proposed amendment was sought under the provisions of the general law as embodied in the Civil Code, § 2201. It is there declared, “Any banking, railroad, insurance, express, telegraph, canal, or navigation company in this State, whether incorporated by special act of the General Assembly or by the secretary of State under the general law, may have its corporate •name, or its principal office, or the face value of each share of .its capital stock, or the number of its board of directors, or the amount of its capital stock changed in the following manner, to wit: The [506] company desiring to have its name, or its principal office, or the face value of each share of its capital stock, or the number of its board of'directors, or the amount of its capital stock changed shall file in the office of the secretary of State a petition signed with the, corporate name, stating the name and character of the corporation, the date of its original charter and all amendments thereto, that it desires an amendment to its charter, changing its corporate name, or its principal office, or the face value of each share of its capital stock, or the number of its board of directors, or the amount of its capital stock, any or all, as the case may be, and paying to the secretary of State a fee of $25.00 to be covered by him into the treasury of the State; and also file with such petition a certified abstract from the minutes of the board of directors, showing that the application for the proposed amendment has been authorized by the vote of a majority in amount of the entire capital stock at a meeting of the stockholders called for the purpose, by resolution of the board of directors, notice of which meeting shall be mailed to each stockholder, or, in case of death, to his legal representatives or heirs at law, addressed to his last known residence, at least ten days previously to the day of said meeting: Provided, however, if the petition is to change the principal office of any of such companies, then the certified abstract from the minutes shall show that the amendment was authorized by the unanimous vote of the stockholders present at the meeting held for such purpose. Affidavit made and signed in due form of law by the president or sec•retary shall be attached to said petition, showing that it has been published once a week for four weeks in that newspaper in which is published the sheriffs sales of the county in which the principal office of said corporation is located.” No attack is made on the validity of the organization of the corporation. Shortly after the issuance of the charter, the owners of 1129 shares of the stock, who constituted all of the stockholders at that time, at a meeting of the stockholders of the corporation, unanimously passed a resolution which was reduced to writing and signed by.them, as follows: “We, the present stockholders of the Georgia Life Insurance Company, hereby subscribe for the remaining shares of the 10,000 proposed; namely, 8871 at par. We agree that said stock be sold from time to time at such prices as the directors of said company may see fit. The net proceeds arising from the sale of said stock to be the [507] property of said Georgia Life Insurance Company,- and to be credited to our stock account.” This was spread upon tbe minutes of the corporation; and subsequently, in pursuance of the contract, the directors sold 3880 shares of the stock thus subscribed above par, and placed the net proceeds in the treasury of the corporation. Under these circumstances the contract was binding upon the corporation, and also upon the subscribers, and gave the stock a status as such and the subscribers a standing as stockholders in the affairs of the corporation. If the stock was not paid for in cash, the company-held the written agreement of the subscriber to pay for it at its par value, and the agreement could have been enforced. The subscribers in the instant case were recognized by the corporation as the owners of the stock so subscribed, because they sold a very large portion of that stock and received a price in excess of the par value, which they applied to the corporation, by virtue of the contract to treat -the subscriber as the owner of stock, and their right to accept an increased price upon the faith of the contract therefor. "Whatever may be-said of a case where no other fact is presented to support the proposition that the subscriber is 'a stockholder than the bare fact of subscription, yet where it appears that the corporation dealt with the subscriber as the owner of the stock and converted' into the corporate treasury a large sum, based upon a contract made with him as the owner of that stock, for all practical purposes, relatively. to other stockholders, they will be treated as standing upon an equal footing with reference to the conduct and management of the corporate affairs. 1 Cook on Corp. § 13; Reed v. Gold, 102 Va. 37 (45 S. E. 868); Cotter v. Butte & Ruby Valley Smelting Co., 31 Mont. 129 (77 Pac. 509); South Dakota v. North Carolina, 192 U. S. 286 (24 Sup. Ct. 269, 48 L. ed. 448); Spear v. Crawford, 14 Wendell, 20 (28 Am. D. 513). It is declared in the Civil Code, § 2398, that the stock in insurance companies shall be deemed, personal, and be transferable in the manner prescribed by the by-laws of the company, but that no share shall be transferable until all previous calls thereon shall have- been paid in. This distinctly recognizes that there may be ownership of capital stock by the subscriber before he has paid his" subscription therefor. From what has been said it clearly appears that the subscribed stock, mentioned above, should be held capital stock of the corporation, within the meaning of the Civil Code, [508] § 2201, supra, and that the subscribers aré to be regarded as the owners thereof. Being such, the statute (Civil Code, § 2201) is authority for the right of such stockholders to vote the stock upon the question of amending the charter. There is no statute which disqualifies stock from voting on account of non-payment of subscriptions thereto, nor because a formal certificate has not been issued therefor. 2. It was contended that the corporation’s by-laws limited the voting of stock to that which appeared upon the stock books, and to which certificates had been formally issued. The by-law in question is set forth in the second headnote. This by-law was designed to safeguard the voting of stock which had been formally issued and entered on the minutes. For this purpose it was a proper regulation, as it tended to secure the rights of the real owner of the stock. But it did not purport, and was not intended, to prevent the owner of stock, to whom a formal certificate had not been issued, from voting his stock on the question of amending the charter so as to bring about a fundamental change. To give it such a construction would make the by-law conflict with the statute (Civil Code, § 2201) which contemplates the vote of all the stock. 3. There was no issue of fact involved, but -the questions were purely of law, and are controlled by the principles announced in the preceding divisions. The judge committed error, therefore, in enjoining the defendant company from making application for the amendment to its charter. Judgment reversed. All the Justices coneur.