Mechanics' Foundry & Machine Co. v. Hall

Gray, C. J. It has long been settled law in this Commonwealth that a subscription for a certain number of shares in a corporation subjects the subscriber to those liabilities only which [274] are imposed by the statute under which the corporation is organized ; and that, when the corporation is authorized by law to lay assessments upon shares, and to sell the shares for non-payment of such assessments, and a subscriber has not expressly promised to pay assessments, no such promise can be implied, so as to enable the corporation to maintain an action against him personally for the amount of an assessment or any part thereof, even if the sum received from a sale of his shares according to the statute has not satisfied the assessment due upon them. The leading ease is Andover & Medford Turnpike v. Gould, 6 Mass. 40, which arose upon an agreement to take the number of shares set against the subscribers’ names, and to be proprietors in a turnpike corporation established under a statute which provided that, when any proprietor of shares should “ neglect or refuse to pay any tax or assessment duly voted and agreed on by such corporation,” the treasurer of the corporation might sell by public auction the “ shares of such delinquent proprietor, sufficient to defray the said tax or assessment, and all necessary and incidental charges,” and pay to him the overplus, if any. St. 1804, e. 125, § 10. Chief Justice Parsons, in delivering judgment, said: “ This rule of law is, in cases like the present, reasonable. Persons not interested in having the turnpike, either from their situation or private property, may be requested to associate and become corporators. They may not be able to judge of the probable expenses or profits. But if they know that, if the assessments become grievous, they may abandon the enterprise by suffering their shares to be sold, they may on this principle join the association.” 6 Mass. 44. The same rule was afterwards applied to agreements to take shares in a manufacturing corporation created by special charter which made it subject to the provisions of the St. of 1808, c. 65, the fifth section of which provided that any such corporation might “ assess upon each share such sum or sums of money as shall be judged by such corporation necessary for raising a capital for the establishment and completion of the object of the incorporation, and for defraying the charges and expenses incident thereto, to be paid to their treasurer at such time or times and by such instalments as shall be directed by the corporation; and if the proprietor of any share or shares shall refuse or neg [275] lect to pay any tax or assessment duly voted and agreed on by said corporation,” the treasurer might sell by public auction “ the share or shares of such delinquent proprietor, sufficient to pay all taxes or assessments which may be then due from said proprietor, with all necessary and incidental charges.” Franklin Glass Co. v. White, 14 Mass. 286. Chester Glass Co. v. Dewey, 16 Mass. 94. Ripley v. Sampson, 10 Pick. 371. Cutler v. Middlesex Factory, 14 Pick. 483. See also Atlantic Cotton Mills v. Abbott, 9 Cush. 423, 424. The provisions of §§ 27-29 of the St. of 1870, c. 224, under which the plaintiff corporation was organized, are not distinguishable from those of the St. of 1808, c. 65. The form of agreement contemplated by § 7, and signed by the defendant in this case, imposes no additional liability. The provision of § 32, that no corporation shall commence the transaction of its business until the whole amount of the capital stock has been paid in in cash, raises no inference that the Legislature intended that the corporation should meanwhile enter upon a course of litigation to compel the payment of subscriptions. If it had been intended to impose any personal obligation to pay assessments, a distinct provision to that effect would have been inserted, as it has been in the railroad acts. Rev. Sts. c. 39, § 53. Gen. Sts. c. 63, § 9. St. 1874, c. 372, § 45. Lexington § West Cambridge Railroad v. Chandler, 13 Met. 311. Troy & Greenfield Railroad v. Newton, 1 Gray, 544. By reenacting, without substantial alteration, the former statute as to the levy and collection of assessments upon shares in manufacturing corporations, the Legislature has unequivocally manifested its intention that the law upon this subject should continue to be as heretofore declared by this court. Low v. Blanchard, 116 Mass. 272. In view of the course of legislation and judicial decision in this Commonwealth, the suggestion of Chief Justice Parsons, already quoted, that any subscriber might well rely on the right to abandon the enterprise if the assessments should become burdensome, has greatly increased in force, and the adoption of a different rule by this court row would work great injustice. .Exceptions overruled.