Hale v. Sanborn & Follet
| Decision Date | 29 May 1884 |
| Parties | D. A. HALE, PLAINTIFF IN ERROR, v. SANBORN & FOLLET, DEFENDANTS IN ERROR |
| Court | Nebraska Supreme Court |
ERROR to the district court for Madison county. Tried below before BARNES, J.
REVERSED AND REMANDED.
H. D Kelly and Brome & Durland, for plaintiff in error, cited Livesey v. Omaha Hotel Co., 5 Neb. 50. McCann v American Central Insurance Co., 4 Neb. 256. Parker v. Thomas, 19 Ind. 213. Fanning v. Insurance Co., 37 Ohio St. 339.
N. A. Rainbolt, for defendants in error, cited: Angell & Ames on Corp., § 530. 2 Pars. Notes and Bills, 501. 1 Daniels Neg. Inst., § 80. O'Donald v. Evansville R. R., 14 Ind. 259. Lane v. Brainerd, 30 Conn. 579. Emmitt v. Railroad Co., 31 Ohio St. 23. Peoria v. Preston, 35 Iowa 118. I. & M. R. R. Co. v. Perkins, 28 Iowa 281. Const., Art. 12, § 4. Comp. Stat., 200, § 138.
This is an action upon a promissory note, of which the following is a copy:
Which was endorsed as follows:
Judgment in favor of Sanborn & Follett.
The proof shows that the note was endorsed and delivered to the defendants in June, 1877. The principal defense is, that the note was given on the subscription of the plaintiff for stock in a corporation organized at Battle Creek for the erection of a flouring mill at that place.
Sec. 4 of the articles of incorporation, given in evidence, reads as follows:
"The capital stock of this corporation shall be forty thousand dollars ($ 40,000), which stock shall be divided into eight hundred (800) shares of fifty dollars ($ 50) each, and shall be paid in at the time and on the condition following, to-wit: Ten per cent shall be paid in on the issuing of the certificates of stock, and five ($ 5) dollars on each share within thirty days thereafter, until the whole of each share so taken shall be fully paid."
The exact amount of stock subscribed does not appear, but the testimony tends to show that it did not exceed $ 20,000 probably but little more than $ 12,000. The testimony shows that the corporation commenced the erection of the mill in 1874, and in June, 1877, from financial embarrassment, was compelled to sell the corporate property. The plaintiff was not called as a witness, nor is there any proof that he waived the conditions of the articles of incorporation. The case therefore is similar to that of Livesey v. Omaha Hotel Co., 5 Neb. 50, in which it was held that where the capital stock is fixed at a given sum, divided into shares of a certain amount each, the capital so fixed must be fully subscribed before an action will lie against a subscriber to recover assessments levied on the shares of stock, unless there is a clear provision in the contract to proceed with the accomplishment of the main design with a less subscription than the whole amount of capital specified, or there is a waiver of the conditions precedent. Salem Mill-dam Cor. v. Ropes, 6 Pick. 23. Salem Mill-Dam Corp. v. Ropes, 9 Pick. 187. Cabot v. Chapin, 6 Cush. 53. Shurtz v. S. & T. R. R. Co., 9 Mich. 269. Topeka Bridge v. Cummings, 3 Kan. 55. Somerset v. Clarke, 61 Me. 384. N. H. C. R. v. Johnson, 30 N.H. 390. P. & R. I. R. v. Preston, 35 Iowa 115. Fox v. Clifton, 6 Bing. 776. Pitchford v. Davis, 5 Mees & Welsb. 2. Fry v. L. & B. S. R. R., 2 Met. (Ky.) 323. Estabrook v. Hotel Co., 5 Neb. 76. Boehme v. Hotel Co., 5 Neb. 80. There is reason in this requirement. An enterprise that would require $ 40,000 to carry it on successfully would not in all...
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