Johnston v. Allis
Decision Date | 29 November 1898 |
Citation | 71 Conn. 207,41 A. 816 |
Court | Connecticut Supreme Court |
Parties | JOHNSTON v. ALLIS. |
Appeal from superior court, Hartford county; Ralph Wheeler, Judge.
Action by Frank H. Johnston, trustee in insolvency, against Fortis H. Allis, to recover an unpaid stock subscription. From a judgment for defendant, plaintiff appeals. Error, and new trial granted.
The complaint alleged that the plaintiff is the trustee in insolvency of the Yale Brick Company, a corporation organized under the joint-stock laws of this state with a capital of $100,000, divided into 1,000 shares of $100; that the defendant subscribed to 500 shares of this stock; that he had not paid for them, although payment had been demanded; and that the Yale Brick Company had been duly declared insolvent by the probate court,— and claimed to recover the amount of the subscription. The defendant made two defenses, the first being, in substance, a denial of the complaint. The second set out that, of the said shares, the defendant had paid in full for 50; 10 had been paid for in another way. And, as to the remaining 500 shares, the defense averred that "they were subscribed for by him, not in his individual capacity, but as a trustee for said corporation, by and with the authority of said corporation, and were never held by the defendant otherwise than as such trustee, and subject to the vote of the stockholders of said corporation." This defense was demurred to by the plaintiff. The court overruled the demurrer. Thereupon the plaintiff made replication "that the creditors represented by him had no notice of any kind that said subscription was for said corporation," and that: There was a demurrer to this replication, which the court sustained. There was no further pleading. There was a hearing on the issues of fact, and the court found them in favor of the defendant, and rendered judgment that the defendant recover his costs. From this judgment the plaintiff appealed. The third fourth, fifth., and sixth, paragraphs of the finding of facts are these:
Noble E. Pierce and Bernard F. Gaffney, for appellant.
Frank L. Hungerford, for appellee.
ANDREWS, C. J. (after stating the facts). The defendant subscribed for 500 shares of the capital stock of the Yale Brick Company, idding to his name the word "Trustee." Nothing has ever been paid on these shares by the defendant or any one else. Afterwards the company was formally organized, and the defendant was chosen one of the directors and its secretary and treasurer, and he has at all times been active in the affairs of the company. This subscription and the organization of the company took place on the 14th day of October, 1892. On the same day the defendant (the other directors of the company acting with him) made, subscribed, and swore to a certificate of the organization of the said company, and filed the same in the office of the secretary of state of this state and with the town clerk of the town of Berlin, and also caused the same to be published in a newspaper in Berlin. In that certificate this subscription is stated to be one of the subscriptions to the capital stock of said company,—as, indeed, it must be, because otherwise the whole of the capital stock is not subscribed for. In his defense the defendant averred that he made the said subscription as the trustee for, and with the authority of, the said corporation, and that he was not personally liable on the same. The court, on demurrer, held this to be a good defense to the action brought by the plaintiff. This subscription was made before the corporation was organized. It is a little difficult to see how it could at that time appoint a trustee for any purpose.
But as to the trusteeship of this subscription there is another and still stronger objection: It was not a bona fide subscription. The statute (Gen. St. § 1947) forbids any Jointstock corporation to commence business until all its capital stock shall be subscribed for by bona fide subscribers. A "bona fide subscriber" means a bona fide subscription; that is, a real subscription,—one that will in fact bring to the corporation the amount of capital which the subscription denotes, and upon which its creditors and all persons dealing with the corporation can rely. Any subscription that will not do this is not a bona fide one. A corporation has at its organization no property other than the subscriptions to its capital stock. From the nature of things, it can have no property of its own, separate from the subscriptions. A subscription to its capital stock made by a trustee, if it does not bind the trustee, but only the corporation itself, would not be a bona fide one. Such a subscription could not bring to the corporation any real capital. This subscription was one which the corporation, as matter of fact, could not have made, because at the time it was not organized so that it could appoint a trustee. And, besides, it was a subscription which, as matter of law, it was forbidden to make. It did not and does not bind the corporation. Crandall v. Lincoln, 52 Conn. 94; Cook, Stock & S. §§ 199-251. Did it, then, bind the defendant? It is said in 1 Swift, Dig., side page 330, that: "Whenever a person signing a contract makes use of an addition such as Treasurer of the Jocky Club, Guardian, Executor, or the title of any office civil or military, in which he has no power to bind another the contract will be binding on himself and the addition rejected as surplusage." When an agent contracts...
To continue reading
Request your trial-
In re Taijha H.-B.
...of the power, then there can be no implied prohibition of the power, or to the way it is to be enforced." Johnston v. Allis , 71 Conn. 207, 217, 41 A. 816 (1898) ; see also 3A S. Singer, supra, § 69:13, pp. 933–34 (with respect to termination of parental rights statutes, purely procedural l......
-
Lavell v. Bullock
...an action at law, and it is not proper practice to join all delinquent stockholders as defendants in one action." See also Johnston v. Allis, 71 Conn. 207, 41 A. 816. the contrary the probability or even the possibility of a multiplicity of suits is negatived by the facts in the case, nor a......
-
Beach v. Beach Hotel Corp.
... ... It is in its nature essentially a trust ... fund for their benefit. Crandall v. Lincoln, 52 ... Conn. 73, 95, 52 Am.Rep. 560; Johnston v. Allis, 71 ... Conn. 207, 217, 218, 41 A. 816; Buck v. Ross, 68 ... Conn. 29, 31, 35 A. 703, 57 Am.St.Rep. 60; Barber v. Morgan, ... < ?> Conn ... ...
-
Edwards v. Johnston
...the stock was subscribed after January 1st, 1912, for which notes were given and which was not a bona fide subscription. (Johnson v. Allis, 71 Conn. 207, 41 A. 816.) organization without good faith subscriptions for the entire stock is invalid. (Holman v. State, 105 Ind. 569, 5 N.E. 702; St......