Gordon v. Cummings , 78 Wash. 515 ( 1914 )

Gose, J.

(dissenting) — I do not think that the classification of the capital stock of a corporation into preferred and common stock violates either the letter or the spirit of the statute. It is true that all such stock is capital stock, but it is capital stock of different classes. It follows of necessity that there can be no overissue of either class. It being conceded that the common stock held by the respondents is an overissue, they never became stockholders or subscribers, and hence incurred no liability. It is said in the majority opinion that this view “would defeat the very purpose of the law, for it would then be possible, by adopting the very plan that was adopted in this case, to make all but the nominal number of the shares of the capital stock unresponsive to the liability put upon it by law.” It seems to me no such result would follow. In the instant case, the par value of the stock of both classes was fixed at $10 per share. Each class of stock would, therefore, be required to meet its own obligation. Moreover, the statute, Rem. & Bal. Code, § 3679 (P. C. 405 § 3), requires that the articles of every corporation shall state the amount of the capital stock of the corporation ; that they be executed in triplicate; that one of such articles shall be filed in the office of the secretary of state, and another in the office of the county auditor of the county in which the principal place of business of the company is intended to be located, and the third shall be retained in the possession of the corporation. If the statute is complied with, the public record will disclose to all persons dealing with the corporation the amount of its capital stock; and, if the capital is divided into classes, the articles should show the several classes and- the amount of capital assigned each class. If the record speaks the truth, no one would be misled. If the articles do not speak the truth, other principles of law would apply.

I therefore dissent.