Athens Apartment Corp. v. Hill , 1923 Ga. LEXIS 259 ( 1923 )

Hines, J.

(After stating the foregoing facts.)

Did the court err in refusing to vacate its order reinstating this case? When upon .the call of this case, the plaintiff not appearing, counsel for the defendant moving to dismiss the same for want of prosecution, the trial judge announced orally that the case was dismissed for want of prosecution, and struck the case from the trial calendar, and made the following entry in pencil on such calendar on Nov. 4, 1921, opposite the case: “Dismissed for want of prosecution,” but no order was taken at the September term, 1921, of said court, and said entry was not placed on the minutes thereof, these proceedings, without more, were insufficient to accomplish'the dismissal of the suit. Dixon v. Minnesota Lumber Co., 132 Ga. 347 (64 S. E. 71). During the term of court at which a judgment is rendered the court has power, on its own motion, to vacate the same for irregularity, or because it was improvidently or inadvertently entered. The court has plenary control of its judgments, orders, and decrees during the term at which they, are rendered, and may amend, correct, modify, or supplement them for cause appearing, or-may, to promote justice, vacate them as may in its discretion seem necessary; and the exercise of his discretion ■ by the trial judge in reinstating a case dismissed for want of prosecution will not, unless flagrantly abused, be disturbed. The order of reinstatement is evidence of the improper dismissal of the ease and of the propriety of its reinstatement. Davis v. Alexander, 27 Ga. 479; Wallace v. Cason, 42 Ga. 435; Strachan v. Wolfe, 2 Ga. App. 254 (58 S. E. 492); Jones v. Garage Equipment Co., 16 Ga. App. 596 (85 S. E. 940). Under the facts, the court did not abuse its discretion in reinstating this case.

Persons who organize a company and transact business in its name before the minimum capital stock has been subscribed for are liable to creditors to make good the minimum capital stock'with interest. Civil Code (1910), § 2220; Burns v. Beck & Gregg Hardware Co., 83 Ga. 471 (10 S. E. 121); John V. Farwell Co. v. Jackson Stores, 137 Ga. 174 (73 S. E. 13); Smith v. Citizens &c. Bank, 148 Ga. 764 (98 S. E. 466). What kind of subscriptions will comply with the requirements of this section of the Code, and free persons, who organize and transact business in the name of a corporation, from liability to its creditors? In the absence of waiver or estoppel, is it proper to include subscriptions which are for any reason invalid and unenforceable, subscriptions by fictitious persons, idiots, lunatics, persons non compos mentis, paupers, of persons known to be insolvent and "not answerable for their engagements, conditional subscriptions whore the conditions have not been performed so as to make them absolute, subscriptions on special terms which reduce the amount to be paid upon them below par, or for any other reason render the subscriptions invalid, and such like subscriptions? The exact question involved in this ease has not been decided by this court. While we do not find among our decisions one on all-fours with the one we make in this case, the governing and controlling principle has been ruled and settled. This court has held that, in determining whether the capital stock of a corporation has been subscribed, in a case where the whole capital stock must be subscribed in order to bind a subscriber, conditional subscriptions can not be counted unless it is shown that the conditions have been complied with so as to make them absolute. Brand v. Lawrenceville Branch R., 77 Ga. 506 (1 S. E. 255). In Memphis Branch R. Co. v. Sullivan, 57 Ga. 240, this court said: “ If the sum fixed by the charter had been subscribed, and yet subscriptions had been’ released so as to reduce the capital largely and materially, without the consent of the subscriber, the effect would be the same as if the stock released had never been subscribed. A mere nominal subscription, to fulfill the letter and break the spirit of the contract, is no substantial compliance with the charter, and when released because it was nominal, it becomes equivalent to no subscription ah initio.” On the effect of an invalid guarantee of a sufficient amount of stock to make up the amount which would bind subscribers, see Branch v. Augusta Glass Works, 95 Ga. 573 (6) (23 S. E. 128).

These decisions of this court are in line with the authorities in other jurisdictions. Stone v. Monticello Construction Co., 135 Ky. 659 (117 S. W. 369, 40 L. R. A. (N. S.) 978); Penobscot R. Co. v. White, 41 Me. 512 (66 Am. D. 257); Lewey’s Island R. Co. v. Bolton, 48 Me. 451 (77 Am. D. 236); Morgan v. Landstreet, 109 Md. 558 (72 Atl. 399, 130 Am. St. R. 531); Troy &c. R. Co. v. Newton, 8 Gray, 596; Oskaloosa Ag. Works v. Parkhurst, 54 Ia. 357 (6 N. W. 547); California So. Hotel Co. v. Russell, 88 Cal. 277 (26 Pac. 305); 1 Morawetz on Priv. Corp. § 141; 14 C. J. § 811. So we are of the opinion that subscriptions must be bona fide, unconditional, and not colorable and .illusory; and unless such subscriptions are obtained, persons who organize a corporation and do business in its name will be liable to creditors of the corporation. Subscriptions to meet the letter but break the spirit of the statute are in effect no subscriptions. Under the facts of this case, the jury were authorized to find that the subscriptions to the capital stock of this company did not measure up to this standard.

But if, at the time credit was extended, the creditor knew that the requisite amount of capital stock had not been subscribed, he would not have been misled, and as to him the subscribers to the stock would not be estopped from pleading such knowledge as a defense to a suit brought under this section of the Code. Lowe v. Byrd, 148 Ga. 388 (96 S. E. 1001); Farmers Warehouse Co. v. Macon F. Works, 150 Ga. 429 (104 S. E. 207). It is insisted that under the application of this principle the verdict is contrary to law and the evidence. We can not, as a matter of law, hold that the evidence demanded a finding that the plaintiff knew that the requisite amount of capital stock had not been subscribed. There is some evidence to sustain the finding of the jury on this point.

Judgment affirmed.

All the Justices concur, except Atkinson and Hill, JJ.3 disqualified. Gilbert, J., concurs specially.