St. Paul, Stillwater & Taylor's Falls Railroad v. Robbins

Gileillan, C. J. Appeal from an order overruling a demurrer to the amended complaint. The action is to recover the amount of a subscription to the plaintiff’s capital stock, which subscription is alleged to have been made in the regular stock-subscription book of the plaintiff, in the words and figures following: “We, the undersigned, do hereby subscribe to the preferred capita] stock of the St. Paul, Stillwater & .Taylor’s Falls Railroad Company, and promise to pay for the number of shares set opposite our respective names ; these subscriptions not to be binding until sixty-five thousand dollars of said stock is subscribed [441] for. Date: October, 1872 ; Name of subscriber: Daniel M. Robbins; No. of shares: 20; par value: $2,000.” The shares were for $100 each. The amended complaint alleges that ‘ ‘ the plaintiff, being fully authorized and empowered to issue the preferred capital stock mentioned and se.t forth in said agreement, and for which the defendant subscribed as aforesaid, did, by an order and resolution duly made and adopted by its board of directors, at a meeting thereof duly convened and held on August 21, 1872, duly authorize and direct the issuance of the preferred capital stock .aforesaid, and also did direct that the books of plaintiff should be opened to receive subscriptions for the same; and that, pursuant to such authority and direction made as aforesaid, the defendant subscribed for said stock as aforesaid.” The amount of $70,500 was subscribed. The amended complaint does not allege any other act done by the plaintiff, either that any call or assessment upon the subscriptions was made, or any demand for payment, or that any stock certificates were issued, or even that plaintiff is ready and willing to issue them, upon being paid the amount of the subscriptions. The subscription by defendant constituted a valid contract on the part of the company to issue the stock to defendant, and, on his part, to pay for it. An implied promise to issue the stock, arising from the circumstances under which the subscription was taken, is the consideration for the defendant’s promise. The question is, was there a breach on the IIart of defendant? It appears from the complaint that, at the time of this .•subscription, the company was fully organized, so that it ■does not stand upon precisely the same footing as a subscription made prior to, and for the purpose of effecting, the ■organization. Such a subscription gives to the subscriber an interest in the corporation, and the right to take part in •organizing it, and this interest and right are a sufficient consideration to support his promise. But the subscription [442] in this case does not appear to have been to the original stock ; on the contrary, it appears that, after the company was fully organized, its board of directors authorized and. directed the issuance of what, in the amended complaint, is called “ preferred capital stock,” and also directed that the company’s books should be opened to receive subscriptions for the same. The mere subscription to this stock, while it constitutes a valid contract on the part of the company to issue the stock to defendant upon his paying for it, and, on his part, to receive and pay for it, does not give him an interest in the company, nor vest in him the title to the-stock. It can be sustained as a contract only on the implied promise of the company to issue the stock to him. No time is appointed, in the writing subscribed, for the payment of the money or the issuance of the stock, except that the subscription should not be valid until $65,000 of the stock should bo subscribed for. We regard the two promises as concurrent and dependent, and that neither party could require the other to perform without performing or offering-to perform the promise on his part. As plaintiff has neither-issued the stock, nor offered to issue it, the action is prematurely brought. Order reversed.