Littleton Manufacturing Co. v. Parker

Gilchrist, J. The charter of this corporation provides that the members may divide the capital stock into as many shares as they may think proper, and may order assessments and fix the time for their payment. It also enacts that the shares of the • corporation shall be liable and holden for the payment of all assessments duly made thereon. The agreement, dated on the 22d day of March, 1839, and signed by the defendant, and purporting to be a “ subscription for the capital stock” of the company, states that “ the amount of the stock is fixed at fifty thousand dollars, divided into five hundred shares of one hundred dollars each,” and the subscribers agree “ to take and pay for the number of shares in the stock of said company,” annexed to their names respectively. The defendant subscribed for one share, and the whole number of shares subscribed for was one hundred and thirty-eight. The general question presented by the case is, whether any assessment for the general objects and purposes of the corporation could be made, until the five hundred shares mentioned in the agreement were subscribed for. If this could be done, and the defendant could be compelled to pay assessments on his share, the result would be, that instead of paying -^th part of the whole capital stock, he would pay TTr¥th part of it, and if $ 13,800 should be insufficient to enable the corporation to proceed in its undertaking, as probably would be the case, all the money he might pay would be lost. The agreement provides, in express terms, that the [549] capital stock shall be fifty thousand dollars, and that it shall be divided into five hundred shares, and the defendant has not become a party to any agreement providing that the capital stock shall be thirteen thousand eight hundred dollars, and that the number of shares shall be one hundred and thirty-eight. In the case of the Salem Mill-Dam Corporation vs. Ropes, 6 Pick. 23, a charter provided that the capital stock should be divided into five thousand shares, not exceeding one hundred dollars each. Only twenty-six hundred and eighty-seven shares were subscribed for, and it was held that no legal assessment could be made for the general objects of the act of incorporation, until all the shares should have been subscribed for. In a subsequent case between the same parties, 9 Pick. 187, the same position was reaffirmed by the court, and also in the case of the Central Turnpike Corporation vs. Valentine, 10 Pick. 142. In the Norwich and Lowestoft Company vs. Theobald, 1 M. & M. 151, the statute, establishing the company, provided that “ the whole of the said sum of £100,000 shall be subscribed before any of the powers and provisions given by this act shall be put in force.” It was held that the completion of the subscription list was necessary to enable the company to make a call upon the shares. It does not appear in this case, that the assessments were laid for the purpose of defraying the preliminary expenses of the corporation, in which case perhaps they might have been recovered by virtue of the promise contained in the written agreement. 6 Pick. 23. Nothing is said in the case about preliminary expenses. The case finds only that the company went into operation, and built a factory, and called on the defendant to pay his assessments. It is unnecessary to examine the question whether the agreement contains an express promise to pay the assessments that might be laid upon the shares. Where the charter provides no other mode of enforcing payment of the assessments than a sale of the [550] shares, it has been held, that an action to recover the amount of the assessments cannot be maintained, unless there have been an express promise to pay them. Andover and Medford Corporation vs. Gould, 6 Mass. 40; Worcester Turnpike vs. Willard, 5 Mass. 80; Taunton Turnpike vs. Whiting, 10 Mass. 326. But such a promise, whenever it is made, must of course be considered as a a promise to pay only legal assessments, or in the words of the charter in this case, “ assessments duly made.” Our opinion is, that the assessments were not duly made, because the stock was not all subscribed, and that the action cannot be maintained. We need not, therefore, examine the other questions raised and argued by the counsel. It may be remarked, however, that the counsel for the defendant contended that his client was deceived by the representation of the agent, that they calculated the capital stock to be thirty thousand dollars. The agent procured the subscription of the defendant, but it was to a paper which stated the capital stock to be fifty thousand dollars, and the presumption is, that the defendant knew the contents of the paper he had signed. But whether the amount of the capital stock were fifty thousand, or thirty thousand dollars, is immaterial in the view we take of the case, for only one hundred and thirty-eight shares were subscribed, and the result must be the same in either event. Judgment for the defendant.