Graebner v. Post

Siebeckee, J. Appellant contends the court erred in directing a verdict upon all the issues in respondent’s favor, because no valid call was made for the unpaid stock subscriptions, and because his claim for a setoff was denied. It Reasserted that no by-laws were ever adopted under the power expressly given to the board of directors by the articles of incorporation. A set of by-laws were prepared and approved at a stockholders’ meeting, which was held before the articles of incorporation had been recorded. Tío other by-laws were thereafter prepared or formally adopted by the board of directors. It appears, however, that the set of by-laws so prepared were referred to and considered as the by-laws during the existence of the corporation. The evidence discloses that they were treated as the by-laws of the corporation at meetings of the board of directors, of which appellant was a member and its president from the time of the organization of the board. The conduct of the board of directors indicates that they regarded them as the by-laws of the corporation, and they should therefore be so regarded in law. “By-laws may be adopted as well by the acts and conduct of the corporation as by express vote or adoption in writing, unless it is otherwise provided.” Germania I. M. Co. v. King, 94 Wis. 439, 69 N. W. 181. It is further objected that the call for payment of unpaid stock subscriptions has no validity, in that the proceedings taken for such call, under the by-laws, failed to provide the notice to stockholders as required by sec. 1754, Stats. 1898. This question becomes immaterial in the case, since we are persuaded that it abundantly appears appellant must be bound by the action of tire corporation in making this call on stock subscriptions. He was a stockholder from the time of the organization of the corporation, and a member of the [396] board of directors and acted as its president from the time of its organization to the commencement of this action. He participated in making five calls for stock subscription without objection under a like resolution and notice to stockholders before this one of Januaiy 18, 1899. He took part in the proceedings of the board of directors in making this call by resolution and prescribing the notice to be given. He received printed notice thereof, accompanied by a copy of the resolution. He attended a meeting of the board of stockholders February 8, 1899, at which the call was ratified, and a like meeting at which payment under this call was extended to December 15, 1899. He made no objections at any of these times that the call was irregular or illegal, but assented to the proceedings taken in relation thereto. He made, executed, and delivered his promissory notes to' the secretary, payable December 15, 1899, for the amount due from him on his stock under this call, and acted as president of the meeting of the directors May 21, 1900, when the board, by resolution, voted to apply the $250 advanced by him as counsel fees for the corporation on the unpaid portion of his stock subscription. Appellant’s participation in all of these proceedings as stockholder, director, and officer of the board affords ample ground for an effective waiver of any irregularity in the call and.notice thereof, and estops him from raising any objection as to their validity. “A subscriber of stock may, by his acts or express agreement, waive a call itself, or informalities in-its making, or notice thereof.” Kansas City H. Co. v. Harris, 51 Mo. 464; Stone v. Great Western O. Co. 41 Ill. 85; Danbury & N. R. Co. v. Wilson, 22 Conn. 435; Wis. River L. Co. v. Walker, 48 Wis. 614, 4 N. W. 803; State Bank B. Co. v. Pierce, 92 Iowa, 668, 61 N. W. 426; Cook, Corporations, § 120. Such waiver and estoppel have been held binding on a stockholder in ease of informalities under statutory requirements in mak [397] ing calls and giving notice thereof. Willamette F. Co. v. Stannus, 4 Oreg. 261. It is further argued that the court erred in not awarding judgment allowing appellant credit for the sum of $350, with interest, by way of setoff to any amount due from him to the respondent. The appellant, as president, employed counsel on May 19, 1900, to represent the corporation in litigation then threatened, before action was actually taken to declare the corporation insolvent and for the appointment of a receiver. He paid them the sum of $250 counsel fee upon the ground that it could not be procured from the treasurer, and that no other funds were available for that purpose. At a meeting of the board of directors May 21st following, this employment of counsel, and the sum advanced by him, were,, by resolution of the board, directed to be applied as a payment on his unpaid stock subscription. The services performed by counsel under this retainer appear to have been exclusively for the benefit of the corporation. Eespondent thereafter advanced an additional sum of $100 for services of counsel in the said litigation. It seems that the money so advanced and paid by appellant for counsel fees was, under the facts, a proper credit to be applied on his unpaid stock subscription, and should be allowed as a setoff in his favor in this action. Under the ruling of the court, such- a setoff was erroneously denied. For such error the judgment must be reversed and a new trial ordered. This result makes any further discussion unnecessary. By the Gourt. — Judgment reversed and a new trial ordered.