Boston & A.R. Co. v. Com.
| Decision Date | 23 June 1892 |
| Citation | 31 N.E. 696,157 Mass. 68 |
| Parties | BOSTON & A.R. CO. v. COMMONWEALTH. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Samuel Hoar, for petitioner.
Geo. C Travis, First Asst. Atty. Gen., for the Commonwealth.
There is an informality in the appeal from the decree overruling the demurrer, and in the appeal from the final decree. The commonwealth is the only party defendant, and the appeals should have been in its name. The appeals taken were not authorized by law. Pub.St. c. 151, §§ 13, 16. But by section 19 a party who has by accident or mistake omitted to claim an appeal within the time allowed for that purpose may be permitted to appeal at any time within one year. Under these circumstances, although the formal objection has not been waived, yet as leave to enter an appeal now might be granted and as the case has been fully argued on the merits, we have considered the substantial question upon which our decision is desired. That question is whether the commonwealth, in levying the corporation tax upon the petitioner, had a right to include the proposed and unissued new shares in estimating the value of the shares in the petitioner's capital stock. The provisions of statute for the taxation of railroad corporations are found in Pub.St. c. 13, §§ 38-40. Under these provisions the aggregate value of the shares in the capital stock is to be taken as a basis. There is no doubt that, for certain purposes, one may be considered as a stockholder of a corporation before he has received a certificate of his shares, or even paid for them. It has been so held under statutes making stockholders liable for debts of a corporation. Hawes v. Petroleum Co., 101 Mass 385, 395. An examination of the various provisions of the statute leads to the conclusion that, for the purpose of levying the corporation tax, only shares which have been fully paid for, and which are either actually issued or at any rate are ready to be issued, can be included in the valuation. There is a general provision that "no corporation, unless specially authorized, shall issue any share for a less amount to be actually paid in thereon than the par value." Pub.St. c. 105, § 17. When the capital stock of a railroad corporation is increased, the new stock, whether taken by the existing stockholders or sold at auction, must be paid for in cash, at not less than par, or no certificate can be issued therefor. Pub.St. c. 112, §§ 58, 59. At all meetings of railroad corporations, each stockholder is entitled to one vote for each share held by him; not exceeding, however, one tenth part of the capital stock. Pub.St. c. 112, § 53. If a railroad corporation issues certificates of stock when the par value of the shares so issued is not first paid in cash to its treasurer, all certificates so issued are void. Pub.St. c. 112, § 61. Where a corporation increases its capital stock, an accepted subscription for new shares constitutes in the first instance a contract between the subscriber and the corporation, which creates reciprocal rights and obligations; but until the time comes for the issue of the new shares according to the terms of the contract, it cannot in any usual or ordinary sense of the words be said that the subscribers became holders of shares. The peculiar rights of share holders, such as the right to vote at meetings and to receive dividends of profits, do not exist until then. It is obvious, under the statute above cited, that one who has subscribed for shares, and paid in only 10 per cent. of the par value thereof, is not entitled to vote at meetings. The provision that each stockholder is entitled to one vote for...
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