Inter Mountain Pub. Co. v. Jack , 5 Mont. 568 ( 1885 )

Coburn, J.

This is an action brought by the Inter Mountain Publishing Company to recover the amount of the assessments made by the company against the defendant as one of the stockholders. The defendant demurred to the complaint:; the demurrer was overruled, and judgment rendered in favor of the plaintiff for the sum of $100-, the amount of the two assessments. The defendant appeals to this court.

It appears by the complaint that the plaintiff is, and has been for some time past, a corporation organized under the laws of Montana; that, in contemplation of the incorporation of said company, and of establishing and conducting its business, the defendant, with others, on or about the 16th day of March, 1881, became a subscriber to the stock of said corporation by signing and delivering an agreement in writing as follows:

“ We, the undersigned, agree and promise to take and pay for, at the rate of $10 per share, as the assessments may be lawfully made, the number of shares of the capital stock of the Inter Mountain Publishing Company set opposite our respective names.”

That defendant, when he signed this agreement, set opposite to his name the sum of $1,000, which amount he thereby agreed to pay to the company. That after-wards the defendant accepted said stock and paid thereon the sum of $100 upon an assessment and call duly made by the trustees of the company.

That, on the 21st day of May, 1881, the plaintiff, by its trustees, called in and demanded from the stockholders of said incorporation twenty per cent, of all money subscribed by them respectively, and, by such call and demand, required the defendant to pay on his subscription the sum of $200, being twenty per cent, of the amount subscribed by him. It is further averred that, on the 9th day of December, 1881, the trustees made another call, in like manner, for an equal amount, being twenty per cent, of the subscription. That the defendant was duly notified of these calls, and that he has not paid any part of them, and that the plaintiff has performed all the conditions on its part.

It is insisted by the appellant, the defendant below, that this agreement set out in the complaint is not a contract, for the reason that there are no parties to it, the corporation not being in existence at the time. This agreement is in the nature of a promise between the subscribers “to take< and pay for” certain shares in the company when it should be formed, and could only be enforced when it had been legally incorporated. And when it had been organized, then, under proper circumstances, the contract was capable of being enforced.

Among these circumstances is one set out in the complaint, and that is, the ratification of this agreement by the defendant in accepting §1,000 in stock and paying §100 to the company thereon. By this acceptance of ' stock and payment of money, the defendant has placed himself in a position where he cannot deny the existence and validity of the contract of subscription, which is to pay §1,000 upon shares in the Inter Mountain Publishing Company at the rate of $10 a share as the assessments should be lawfully made. In addition, there is a sufficient consideration for this promise.

In a similar case, Athol Music Hall Company v. Corey, 116 Mass. 471-474, the court say: “The corresponding agreements of the other subscribers; the organization of the corporation, and the allotment to the defendant of the shares for which he subscribed, furnish sufficient consideration for his promise to take and pay for those shares. Although his promise was originally voluntary, or in the nature of a mere open proposition, yet having been accepted and acted on by the party authorized so to do, before he attempted to retract it, he has lost the right to revoke. His proposition has become an accepted mutual contract, and is binding upon him as well as upon the corporation.”

In looking at the subscription, it will be seen that it is not for any number of shares, but for $1,000. Is this subscription such an one as the agreement contemplated? By its terms, each share was to be paid for with $10; the promise was to pay this sum, no more and no less, for each share. The act to be performed by the subscriber was to pay money; the act to be performed by the company was to issue and deliver to him the shares which he agreed to take. The essence of the subscriber’s contract was to pay money for shares. When, therefore, he agreed to pay $1,000, he had done the important and essential part incumbent on him in making the subscription. It was, in effect, under the terms of the agreement, subscribing for one hundred shares; these shares being equivalent to the money, and vice versa. His subsequent conduct in accepting the stock confirms this contract of subscription. But if this is a defect, it is the subject of special demurrer only. Moak’s Van Santvoord’s Pl. 756; Richards v. Edick, 17 Barb. 260.

A further objection is made to the complaint that it does not allege the number of shares into which the capital stock of the corporation was divided, and that the whole number of shares had been subscribed for. It does not appear in the contract that the subscription was made upon the condition that a certain number, or all, of the shares should be subscribed for before calls could be made. At the time of making the contract the number of shares had not been determined; but it is to be presumed that this had been done at the time of the organization, inasmuch as the averment is found in the complaint and admitted by the demurrer, that the plaintiff was a corporation legally organized. And the payment of an instalment by the defendant without objection is a sufficient recognition of the legal existence of the corporation to .enable it to recover subsequent assessments. The acceptance of the stock and the payment of the assessment thereon is a waiver of the objection that otherwise might have been urged upon the ground that all the shares had not been taken, if such was the fact. See Thompson’s Liability of Stockholders, sec. 120.

The appellant further insists that the complaint is defective in not alleging that the assessment made on the 21st day of May, 1881, of twenty per cent., was the only assessment or call made during that month; since the statute (E. S. sec. 251, p. 452) provides that not to exceed twenty per cent, in any one month shall be called in upon any subscription from the stockholders. As to this, it is to be presumed that the plaintiff acted in accordance with the law, and within the scope of the authority conferred by the statute. The defendant would, in such a case, have equal knowledge with the plaintiff of the facts, and if more than one call had been made in the month of May, that was a proper matter of defense.

We think the demurrer was properly overruled.

Judgment affirmed.