Davis & Rankin v. Dexter Butter & Cheese Co.

The opinion of the court was delivered by HoktoN, C. J.: It is evident from the provisions of the written contract between Davis & Rankin and the various other parties or subscribers thereto that at the time of its execution it was the arrangement that a private corporation was to be formed by the parties, or some of them, to operate the factory, with a capital stock of not less than $7,000, to be divided into shares of $100 each. The stockholders are the parties who elect the directors or trustees of a corporation at such time and place as the by-laws prescribe, and it is not to be assumed that the directors or trustees will act contrary to the interest or directions of the stockholders. It appears from the petition that, after the Dexter Butter and Cheese Company was organized, it took possession and control of the [696] factory, and agreed to assume and pay the balance of the money due for the construction thereof. The corporation had the power to make such an arrangement, and the written agreement referred to in the petition does not limit the powers or rights of the corporation. It is insisted, however, that if the corporation pays the balance claimed, the parties signing the agreement may be called upon to pay more than they subscribed. This does not necessarily follow. If the subscribers who have not paid Davis & Rankin have taken stock and paid for their shares in the corporation, then the corporation ought to have that money in its treasury' to apply to the payment of the indebtedness assumed by it. If they have subscribed and not paid, then their stock can be sold and applied to the payment of the debt. If they have not taken any stock, the corporation has obtained a factory worth $7,000 for $5,446.91, and it is only just that it should pay the balance due upon the property. The subscribers who have not paid Davis & Rankin and have not taken any stock in the corporation have no claim or interest in the factory, as stockholders or otherwise. i The judgment will be reversed, and the cause remanded, with direction to the court below to overrule the demurrer to the amended petition. All the Justices concurring.