Haskell v. Worthington

• Decision Date: 19 March 1888
• Citation: 7 S.W. 481,94 Mo. 560
• Parties: HASKELL v. WORTHINGTON.
• Court: Missouri Supreme Court

7 S.W. 481

94 Mo. 560

HASKELL v. WORTHINGTON.

Supreme Court of Missouri.

March 19, 1888.

1. CORPORATIONS — STOCKHOLDERS — LIABILITY ON SUBSCRIPTION.

Where a stock company, incorporated under a general law, requiring that the amount of its stock be stated in the recording certificate, enters into active business with a less capital subscribed than the amount thus stated, a subscriber to the stock, who is not estopped by words or acts of his own from making such defense, cannot be held to his subscription.

2. SAME.

Defendant subscribed to the stock of a corporation, the name of which was given in the subscription paper. When the company organized the words "of St. Louis" were added. Held, no defense to an action on the subscription.

3. SAME.

It is no defense to an action on stock subscription by a company organized to carry on the business contemplated in the subscription paper, and engaged in that business only, that it might, under the act of incorporation, have carried on other business.

4. SAME.

It is no defense to an action on stock subscription that defendant was induced to sign by the false representation that certain of his neighbors and friends had agreed to take stock in the company, there having been ample opportunity to ascertain the truth of the assertion.

Appeal from St. Louis circuit court.

Action by Calvin Haskell, respondent, assignee of the Missouri Cotton-Seed Oil Company, of St. Louis, against Charles T. Worthington, appellant, to recover on stock subscription.

Hough, Overall & Judson, for appellant. J. P. & J. D. Johnson, for respondent.

BRACE, J.

This action was instituted by the plaintiff as assignee of the Missouri Cotton-Seed Oil Company, of St. Louis, to recover the sum of $2,500, the par value of 25 shares, which, it is alleged in the petition, the defendant subscribed to the capital stock of said company by the following written contract:

"We, the undersigned, hereby severally subscribe for the number of shares set opposite our respective names to the capital stock of the `Missouri Cotton-Seed Oil Company,' a company to be organized under the laws of the state of Missouri, and we severally agree to pay the said company the sum of one hundred dollars on each share. Twenty-five per cent. to be paid on organization of the company. Twenty-five per cent. to be paid on 1st day of September. Fifty per cent. to be paid on the 1st day of October, or as soon thereafter as the board of directors shall call for it to be paid in. Dated this 28th day of July, 1879.

                                             SHARES
                200. Wm. V. Kay, -     -     -     -     -     -    -    $20,000
                 50. John B. Tilden, -    -     -     -     -     -        5,000
                 50. H. C. McNeil, Friars P., Miss., -    -    -    -      5,000
                 50. Calvin Haskell, -   -     -     -      -     -        5,000
                     Miles Sells, -    -    -     -     -      -    -      1,000
                     G. J. Shaw, -    -    -     -     -    -     -        1,000
                 10. Web. M. Samuel,    -     -     -     -    -    -      1,000
                 20. W. H. Waters,    -    -     -     -    -    -         2,000
                 10. Given Campbell, -   -    -      -    -    -    -      1,000
                 25. Chas. T. Worthington, Loata, Miss., -   -    -        2,500"
                

The defendant admitted that he signed the subscription paper, but denies that a company was ever, in pursuance thereof, organized under the laws of the state of Missouri; avers that the corporation pretended to have been organized was not the corporation contemplated by the subscribers to said paper, and that his signature thereto was obtained by fraud. To show that plaintiff's assignor was incorporated and organized under the laws of Missouri, and was the company contemplated by the subscription paper, and entitled to recover thereon, the following certificates of association and incorporation, and proceedings thereunder, were introduced in evidence:

"It is hereby certified by the undersigned, William V. Kay, John B. Tilden, and John Goodin, with the purpose of having, for themselves and those who may hereafter become associated with them, all the powers of a corporation under the laws of the state of Missouri, for carrying on a manufacturing and business company, as follows: First. The name of the company, being created, shall be a body corporate, by the name of the Missouri Cotton-Seed Oil Company of St. Louis. Second. The objects for which this company is formed are the manufacture of oils from cotton seed and other substance, the refinement and purchase and sale of oils, and materials for making the same, and generally for manufacturing oils and such substances as may be made therefrom, and the dealing in the same; also to manufacture and deal in all articles that may be made from cotton and cotton seed. Third. The amount of the capital stock of said company shall be fifty thousand dollars. Fourth. The stock of said company shall be divided into shares, to-wit, five hundred shares of one hundred dollars each. Fifth. The affairs of said company shall be managed by a board of five directors, and William V. Kay, John B. Tilden, John Goodin, Web. M. Samuel, and John Q. Hart shall constitute the first board of directors, and manage the affairs of said company for the first year. Sixth. The business operations of said company shall be carried on in St. Louis city. Seventh. This corporation shall have succession by the name aforesaid for a period of fifty years. In witness of all which we have hereunto signed our names, and given our true residence, this 23d day of September, A. D. 1879.

                                                       "WILLIAM V. KAY, Chicago, Ills
                                                       "JOHN B. TILDEN, St. Louis, Mo
                                                       "JOHN GOODIN, St. Louis, Mo."
                

The document was duly acknowledged and filed for record on the 23d of September, 1879.

"CERTIFICATE OF CORPORATE EXISTENCE.

"Whereas, William V. Kay, John B. Tilden, and John Goodin have filed in this office a certificate in writing, as provided by law, and have in all respects complied with the requirements of the law governing the formation of private corporations for manufacturing and business purposes, now, therefore, I, Michael K. McGrath, secretary of state, of the state of Missouri, in virtue and by authority of law, do hereby certify that said parties, their associates and successors, have become a body politic and corporate, and are duly organized under the name of "The Missouri Cotton-Seed Oil Company of St. Louis," and have all the rights and privileges granted to manufacturing and business corporations under the laws of this state. In testimony whereof I have hereunto set my hand, and affixed the great seal of the state of Missouri. Done at Jefferson City this 27th day of September, 1879.

                [Seal.]                        "MICHAEL K. McGRATH, Secretary of State."
                

On the 29th of September, 1879, Messrs. Kay, Tilden, Goodin, and Hart, a majority of those designated to constitute the first board of directors in the certificate, met, elected Kay president and Hart secretary pro tem., read the recorded certificate and certificate of incorporation, and declared the association perfected, and thereupon proceeded to adopt a series of by-laws, among others the following: "Art. 10. The capital stock shall be paid in upon such assessments and at such place as the board of directors may order, a written or printed notice of which shall be given each stockholder by the secretary, and any subscriber who fails to pay any assessments so ordered, after thirty days' notice, shall forfeit to the company the amount (if any) already paid on his stock." After the adoption of the by-laws the directors proceeded to ballot for officers, and William V. Kay was elected president and treasurer. The election of secretary was postponed, and "on motion it was ordered that the call of the stock of this corporation be made as follows: 50 per cent., payable on the first day of October, 1879; 25 per cent., payable on the 15th day of October, 1879; 25 per cent. on the 1st day of November, 1879; and that the secretary pro tem. notify the subscribers to that effect." In October, 1879, the company leased premises, and commenced business with second-hand machinery, brought by Kay from Chicago, with which his capital stock and part of Tilden's was paid for. Some of the other subscribers paid for their stock, some did not. The company continued in business untill January, 1881, when it became insolvent, and made an assignment. Plaintiff is the assignee. There was no evidence tending to show that either Goodin or Hart were subscribers for stock or stockholders in the company except their participation in the proceedings recited: one as a signer to the certificate for incorporation, and both as directors of the company, and who, with Kay and Tilden, were the men, so far as the proceedings show, who alone organized the company, passed the by-laws, and made the call. Kay and Tilden were the promoters of the enterprise. The defendant, who was a planter, being in Mississippi, signed the...