Coit v. North Carolina Gold Amalgamating Co

• Decision Date: 06 December 1886
• Citation: 119 U.S. 343,30 L.Ed. 420,7 S.Ct. 231
• Parties: COIT, Adm'r, etc., v. NORTH CAROLINA GOLD AMALGAMATING CO. and others. 1
• Court: U.S. Supreme Court

119 U.S. 343

7 S.Ct. 231

30 L.Ed. 420

COIT, Adm'r, etc., v. NORTH CAROLINA GOLD AMALGAMATING CO. and others.¹

December 6, 1886.

E. F. Hoffman, for appellant, Coit, Adm'r, etc. R. C. McMurtrie and Pierce Archer, for appellee, North Carolina Gold Amalgamating Co. and others.

FIELD, J.

The defendant the North Carolina Gold Amalgamating Company was incorporated, under the laws of North Carolina, on the thirtieth of January, 1874, for the purpose, among other things, of working, milling, smelting, reducing, and assaying ores and metals, with the power to purchase such property, real and personal, as might be necessary in its business, and to mortgage or sell the same. The plaintiff is the holder of a judgment against the company for $5,489, recovered in the court of common pleas of Philadelphia on the eighteenth of May, 1879, upon its two drafts, one dated June 1, 1874, and the other August 15, 1874, each payable four months after its date. Unable to obtain satisfaction of this judgment upon execution, and finding that the company was insolvent, the plaintiff brought this suit to compel the stockholders to pay what he claims to be due and unpaid on the shares of the capital stock held by them; alleging that he had frequently applied to the officers of the company to institute a suit for that purpose, but that, under various pretenses, they refused to take any action in the premises.

By its charter the minimum capital stock was fixed at $100,000, divided into 1,000 shares, of $100 each, with power to increase it, from time to time, by a majority vote of the stockholders, to two million and a half of dollars. The charter provided that the subscription to the capital stock might be paid 'in such installments, in such manner, and in such property, real and personal,' as a majority of the corporators might determine, and that the stockholders should not be liable for any loss or damages, or be responsible, beyond the assets of the company. Previously to the charter, the corporators had been engaged in mining operations, conducting their business under the name and title which they took as a corporation. Upon obtaining the charter the capital stock was paid by the property of the former association, which was estimated to be of the value of $100,000, the shares being divided among the stockholders in proportion to their respective interests in the property. Each stockholder placed his estimate upon the property, and the average estimate amounted to $137,500. This sum they reduced to $100,000, inasmuch as the capital stock was to be of that amount.

The plaintiff contends, and it is the principal basis of his suit, that the valuation thus put upon the property was illegally and fraudulently made at an amount far above its actual value, averring that the property consisted only of a machine for crushing ores, the right to use a patent called the Crosby process, and the charter of the proposed organization; that the articles had no market or actual value, and therefore that the capital stock issued thereon was not fully paid, or paid to any substantial extent; and that the holders thereof were still liable to the corporation and its creditors for the unpaid subscription.

If it were proved that actual fraud was committed in the payment of the stock, and that the complainant had given credit to the company from a belief that its stoc was fully paid, there would undoubtedly be substantial ground for the relief asked. But where the charter authorizes capital stock to be paid in property,...