Langan v. I. & M. Cons. Co.

Day, J. I. Appellants claim that the Jasper County Coal Company was a stockholder in the construction company; that as such it is liable, under section 1082 of the Code, to the amount of the unpaid installments on the stock owned by [323] it, and that for that reason the demurrer of the coal company to the petition should have been overruled. The only averments of the petition to which this claim is applicable are as follows: “The capital stock of said company actually subscribed was the sum of forty-five thousand dollars, * * * each and all of the defendants herein being subscribers to said stock, either directly or through the said coal company; that at no time has said stock been entirely paid up, nor is it now.” It is apparent that the allegation that said stock has not been entirely paid up can refer only to the gross sum of forty-five thousand dollars. There is no averment that the coal company has not paid up for all the stock which it holds or owns. 1. corporation: notice. II. Appellants claim that the stockholders -should be held individually liable for a failure to comply with the provisions °f sections 1076 and 1077 of the Code. In McKellar Stout, 14 Iowa, 359, it uras held that a failure to comply writh the corresponding sections, 1161 and' 1162, of the Eevision does not render the private property of the stockholders liable for the debts of the corporation. 2.. — ; books of the corporation. III. It is further insisted that the stockholders are individually liable because' of a failure to comply with the provisions of section 1078 of the Code, respecting the manner of keeping the books of the corporation. We are of opinion that for such failure the stockholders cannot be held individually responsible. If the books are fraudulently kept those guilty of participating in the fraud may be held personally liable under section 1071 of the Code. 3 _; indebtness. TV. It is insisted that the stockholders are liable individually, because the corporation incurred an indebtedness, exceeding two-thirds of its capital stock, in violation of the provisions of section 1061 of the Code. We discover nothing in the provisions of the statute justifying the conclusion that stockholders may be held individually liable for a violation of this section of the Code.. [324] 3. ——: construction conpany. [323] Y. It is sought to hold the stockholders liable under sec [324] tion 1068 of the Code, for failure to comply with the provisions of sections 1062 and 1063, respecting the publication .of the notice of the formation of the corporation. The latter clause of section 1068 provides: “But this section shall not be deemed applicable to railway corporations and corporators, and stockholders in railway companies shall be liable only for the amount of stock held by them in said companies.” The articles of incorporation of the Iowa & Minnesota Construction Company, attached to the petition, contain the following provision: “Article 3. This corporation shall have the right and power to buy, assume, make, have, hold and execute any contract or contracts which it may be able to secure, for construction of the Iowa, Minnesota & North Pacific Railroad, or any part thereof, or any collateral and outlying and connecting railroad, and it shall have power and right to acquire, hold and transfer real and personal property, and own, operate and control the road or roads it may construct or acquire, and in all things pertaining to its business shall possess the same rights and privileges as private persons.” This article confers upon the corporation authority to construct a railroad, and to operate it. The construction company is a railway corporation under both the majority and minority opinions in First National Bank of Davenport v. Davies, 43 Iowa, 424. The stockholders, therefore, are not liable under section 1068. 5.__. an other company as stockholder: fraudulent represenations. VI. It is claimed that the stockholders of the construction company are individually liable, because of fraudulent representations as to the financial ability of the company. The coal company defendant could not make any representation except through its officerg< pj.g officers had no authority to make fraudulent representations as to the pecuniary ability of the construction company, and such representations would not render the [325] coal company liable as a stockholder in the construction company. VII. The defendants Clark, Couch, D. Ryan and Robert Ryan are merely stockholders in the coal company. They did not individually become stockholders in the construction company by the coal company becoming such stockholder. The petition seeks to recover of them merely as stockholders. They are not such, and are not liable under the allegations of the petition. The demurrers were properly sustained. Affirmed.