Coppage v. Hutton

Elliott, J. The appellant sues as the receiver of an insolvent corporation, and seeks to recover a subscription which he alleges the appellee made to the capital stock of the corporation. It is alleged that the appellee, with others, signed [402] articles of association, and that he agreed to take two shares of the capital stock, and pay therefor one hundred dollars. The introductory clause of the articles of association reads thus: “We, the undersigned, agree to take the stock in the amount set opposite our names in a company to be organized for manufacturing and selling the Williamson Straw Stacker.” There were eighty-three signers, and seven of them acknowledged the execution of the articles of association before a notary public, and the instrument was duly recorded. It is-also alleged that eight thousand dollars of stock was subscribed, that the company was duly organized, and a board, of directors elected. There can be no doubt under the authorities that a valid subscription to the capital stock of a corporation may be made by signing the preliminary articles. Such a subscription becomes enforceable upon the perfection of the corporate organization according to law under articles of association. Miller v. Wild Cat G. R. Co., 52 Ind. 51; Nulton v. Clayton, 54 Iowa, 425; Phœnix, etc., Co. v. Badger, 67 N. Y. 294; Cravens v. Eagle, etc., Mills Co., 120 Ind. 6. If the promise of the appellee is not binding it must be for some other reason than that it was made before the organization of the corporation was fully effected. The statute requires that the persons who desire to organize a corporation shall “ make, sign, and acknowledge, before-some officer capable to take acknowledgment of deeds, a certificate in writing,” setting forth therein certain enumerated things. Section 3851, R. S. 1881. The contention of the appellee is that the promise is not effective, because the complaint shows that only seven of the eighty-three signers acknowledged the certificate. It seems quite clear, under the decision of this court in Indianapolis, etc., Mining Co. v. Herhimer, 46 Ind. 142, that the mere signing of the paper was not sufficient to complete the obligation, and that, in order to make valid and effective articles of association against all who sign, all must acknowledge them as the statute re [403] quires. Here it affirmatively appears that seven only of the signers-acknowledged the execution of the instrument, and it. can not be inferred that those who did not acknowledge it remained bound by its terms. As to them the instrument was incomplete, and it is quite well settled that an incomplete subscription can not be enforced. Dutchers, etc., R. R. Co. v. Mabbett, 58 N. Y. 397; Reed v. Richmond, etc., R. R. Co., 50 Ind. 342; Richmond St. R. R. Co. v. Reed, 83 Ind. 9; Williamson v. Kokomo, etc., Ass’n, 89 Ind. 389. Filed April 12, 1890; petition for a rehearing overruled June 20, 1890. It is, however, argued by appellant’s counsel that the complaint does affirmatively show that the corporation was organized, but this does not meet the question, for it may well be that it was organized without the appellee as a stockholder.- The fact that he did not acknowledge the instrument as the law requires implies that he did not become a stockholder, and there is nothing in the complaint which rebuts or opposes this implication. It devolved upon the plaintiff to remove the inference if he could. As the appellee did not acknowledge the instrument as the law requires, he did not become a stockholder, and if he were insisting that he was entitled to the number of shares set opposite his name, it is quite clear that the corporation might successfully resist his claim, since it is obvious that only those who acknowledge the articles of association as the law requires can successfully insist upon their right to stock. If the appellee can not be regarded as a stockholder, then it seems quite clear that he did not bind himself by simply signing the articles of association. Whether a good complaint can be framed is not the question before us, for the only question presented by the record is as to the sufficiency of the complaint as it is written. Judgment affirmed.