Bolling v. Le Grand

• Decision Date: 11 June 1889
• Citation: Bolling v. Le Grand, 6 So. 332, 87 Ala. 482 (Ala. 1889)
• Parties: BOLLING ET AL. v. LE GRAND.
• Court: Alabama Supreme Court

6 So. 332

87 Ala. 482

BOLLING ET AL. v. LE GRAND.

Supreme Court of Alabama

June 11, 1889

Appeal from circuit court, Montgomery county; JOHN P. HUBBARD Judge.

Action by R. E. Bolling & Son against M. P. Le Grand, on a bill of exchange drawn by the Southern Railway Construction & Land Company on one C. W. Schofield, as president of said company payable to one McKenzie, and which was indorsed to the plaintiffs before maturity. The defense interposed was by special pleas, two in number. The plaintiff demurred to these pleas, the court overruled the demurrers, and the plaintiffs duly excepted. The ruling of the court in overruling these demurrers is now assigned here as error.

E P. Morrissett, for appellants.

Sayre, Stringfellow & Le Grand, Tompkins & Troy, and Roquemore & White, for appellee.

McCLELLAN J.

The theory upon which this suit was instituted, and this appeal prosecuted, is that the efforts of the defendant below, (appellee here,) and others acting with him, to organize a corporation were so far abortive that the would-be corporators, instead of forming a body corporate, in law and in fact constituted a partnership, or voluntary association of individuals, and, as individuals, became bound on the contracts purporting to be made by the corporation, and in its name. Two defenses were relied on in the court below- First, that the corporation, whose existence as such is thus attempted to be impeached, was duly and regularly organized, and is alone liable on the contract sued on; and, second, that this contract was made with it as a corporation, and the plaintiffs are now estopped to deny its corporate existence and capacity. Manifestly, the consideration of this second defense will be important only in the event that it shall be determined that there was a failure on the part of the declarants to attain corporate existence, and that question will be first considered.

The infirmity in the proceedings had and taken by and at the instance of the defendant and his associates, which is relied on as defeating their purpose to organize a corporation, is alleged to result from non-compliance with two acts of the general assembly passed at the session of 1882-83, amending, respectively, sections 1803, 1804, 1807, Code 1876. By an act of December 6, 1882, sections 1803, 1804, Code 1876, were amended so as to read as follows, respectively:

"Sec. 1803. Declaration Filed with Probate Court. Contents. Two or more persons desiring to form themselves into a private corporation for the purpose of carrying on any manufacturing, mining, immigration, industrial, or other lawful business, not otherwise specifically provided for by law, may file with the probate court of the county in which it is proposed that such company shall have its only or principal place of business a written declaration, signed by themselves, setting forth (1) the names and residences of the petitioners; (2) the name of the proposed corporation, the place at which it proposes to have its principal or only place of business, the general purpose of the corporation, and the nature of the business which it proposes to do; (3) the amount of the capital stock, and the number of shares into which it is to be divided, showing the par value of each share; (4) any other matters which it may be desirable to set forth in the organic law.

"Sec. 1804. Commission Issued to Board of Corporators. Books of Subscription. When and Where Opened. Upon filing of the declaration as above, the probate judge of the county shall issue to the parties, or to any two or more of them, a commission, constituting them a board of corporators, giving them authority to open books of subscription to the capital stock of the proposed company, at such time and place as they deem fit."

By an act "to amend section 1807 of the Code," approved February 5, 1883, that section was made to read as follows:

"Sec. 1807. Certificates of Organization. Upon the completion of the organization of the company, and the payment to the treasurer of the company, or some officer designated for that purpose, in cash, of at least 20 per cent. of the capital subscribed, payable in money, and the payment of the remainder of the capital so subscribed for, payable in money, being secured to be paid in such installments and at such times as may be provided in the written declaration required by section 1803 of the Code, and also the delivery to such officer of at least 20 per cent. of the property so subscribed to the capital of said corporation, with security for the delivery of the remainder of said property so subscribed to the capital as may be promised in said written declaration required by section 1803, the board of corporations shall, in writing, over their signatures, certify the same to the probate judge of the county, who shall issue to the company a certificate that they have been fully organized according to the laws of Alabama, under the name and for the purpose indicated in their written declaration, and that they are fully authorized to commence business under their charter."

By the first of the acts copied above, section 1803 of the Code of 1876 was amended by inserting the words, "or other lawful business, not otherwise specifically provided for by law;" and section 1804 was amended, so as to take away from the probate judge the power and duty of requiring the board of corporators to give such notice of the time and place of opening the books of subscription as he might deem fit, and, in lieu thereof, require that officer to authorize the corporators to open books for subscription "at such time and place as they deem fit." The amendment of section 1807 of the Code attempted to be made by the second statute set out is indicated by the italicization in the body of the act as quoted.

While these statutes were in force, and, with the amended section of article 1, c. 1, tit. 1, pt. 2, Code 1876, constituted the law under which certain classes of corporations were required to be organized, the defendant in this action, with others undertoek to organize a corporation to be called "The Southern Railway Construction & Land Company," and to that end filed in the office of the judge of probate of Montgomery county, where it was proposed that the said company should have its principal or only place of business, a declaration in strict compliance with the statute quoted first above, as amendatery of section 1803, and setting forth, under clause 4 of that section, "that said corporation shall have the power to purchase, own, sell, and deal generally in real estate, to improve the same, and to sublet any contract it may have for the construction of railroads." This declaration nowhere attempts to provide for or specify the installments in which that part of the capital stock of the proposed corporation which...