McAlester Manufacturing Co. v. Florence Cotton & Iron Co.

SHARPE, J. If it be conceded that the act of February 28th, 1889, now subdivision 8 of section 1256 of the Code, is applicable to the defendant corporation, still it is not apparent' that the statute empowered the defendant to bind itself by the writing sued on. By the statute referred to, the first power mentioned as given to land companies and corporations organized for the purpose of buying, selling or improving land's is “to invest their money or other property or assets in enterprises which they deem 'calculated to advance their interests.” The second is “to loan money to'individuals or corporations buying, leasing, or making improvements on or near their lands.” The third and last is related to the first two, being “to receive certificates of stock, notes, bonds, mortgages or other security for such investments or loans.’ It is plain that neither the power to lend money nor of receiving stocks, etc., as security for investments. and loans, embraces the power of subscribing originally for stock in a prospective corporation and that such authority if iit exists under the act must be referred to the first clause above quoted. Ordinarily a corporation is allowed to be formed only by natural persons and for purposes peculiar to itself. 1 Morawetz Priv. Corp., § 433. Independent of statute one corporation cannot become an original subscriber for the capital stock of another. — Lanier Lumber Co. v. Rees, 103 Ala. 622; Com. Fire Ins. Co. v. Board of Rev., 99 Ala. 1; Railway Co. v. Iron Co., 46 Ohio St. 44. The relation between the two corporations, if such subscription were permitted would be an anomalous one, and for that reason among others it was held in the case last cited that a statute allowing incorporated insurance companies to “invest their money in real or- personal property, stocks, or choses in action” did not authorize such subscriptions. The statute here under consideration does not expressly Confer On land [242] companies the power to subscribe for stock in tlie formation of other corporations and the field being broad for beneficial investments by other modes, such power is not necessarily or reasonably implied by the statute. For lack of legislative sanction if for no other reason the agreement declared on is void. Authorities supra. Therefore, the court’s 'action in giving and refusing charges was proper and its rulings on objections to evidence are immaterial. — Draper v. Nixon, 93 Ala. 436. The judgment will he affirmed.