Masonic Temple Ass'n of Minneapolis v. Channell

• Decision Date: 02 June 1890
• Citation: 43 Minn. 353,45 N.W. 716
• Parties: MASONIC TEMPLE ASS'N OF MINNEAPOLIS v CHANNELL.
• Court: Minnesota Supreme Court

43 Minn. 353

45 N.W. 716

MASONIC TEMPLE ASS'N OF MINNEAPOLISvCHANNELL.

Supreme Court of Minnesota.

June 2, 1890.

(Syllabus by the Court.)

1. When a subscriber to the stock of a corporation is sued on his written subscription, it is incompetent to prove an oral condition to the subscription.

2. The statute (section 4, c. 34, Gen. St. 1878) does not abrogate the common-law rule that, where the charter or articles of a corporation, or the terms of subscription to its capital stock, do not provide otherwise, payment of a subscription cannot be required till the whole capital stock is subscribed.

3. But the subscriber may waive that defense. Acts done by him, as stockholder or director, which constitute a part of the business for which the corporation is formed, and which from their nature assume it to be ready for business, and evince a willingness to enter upon that business, with the stock already subscribed, will amount to a waiver.

4. Certain acts of defendant as a director held a waiver.

Appeal from district court, Hennepin county; LOCHREN, Judge.

Gillfillan, Belden & Willard, for appellant.

Ankeny & Merrill and Little & Nunn, for respondent.

GILLFILLAN, C. J.

The action is upon defendant's subscription to the capital stock of the plaintiff. Upon a trial without a jury, the court below ordered judgment for the plaintiff, and from an order denying defendant's motion for a new trial he appeals.

The appellant makes the points that the plaintiff never accepted his subscription, it having been made before the corporation was organized; that one of the calls or assessments upon the subscribers was not properly made, because it was ordered at a meeting of the directors at which there was not a quorum present; and that appellant had not due notice of four of the calls. Upon all these points the court found the facts against him, and the evidence sustains the findings.

He also complains that the court below excluded evidence offered by him that, at the time of subscribing, he orally made it a condition that the corporation should incur no debt. As the contract of subscription was in writing, of course the evidence was incompetent.

The chief matter of defense was that the whole capital stock of the plaintiff has not been subscribed. No question is made that at the common law, when the charter or articles of incorporation, or terms of the subscription, make no different rule, payment of subscription to the capital stock of a corporation cannot be required until the whole amount of stock has been subscribed. There were solid reasons for the rule,-reasons based not only on considerationsof public policy, but on the presumed understanding and intention of the subscriber to stock. The amount of capital stock of a corporation is presumed to be fixed at what the parties interested suppose will be required for the successful prosecution of the enterprise or business for which it is formed; and, while one might be willing to take stock if such amount is to be raised before the enterprise is to be entered upon, he might not be willing to take and pay for it, leaving it uncertain that the requisite amount will be raised. It is therefore implied in the contract of subscription, as a condition precedent to its being of force, that the entire amount of stock shall be subscribed for. Of course, if the articles of incorporation provide that payment of subscriptions may be called for before the whole stock is subsscribed, that, as between the parties, is binding. We do not think the clause in section 4, c. 34, Gen. St. 1878, (being in the part of the chapter pursuant to which this plaintiff was organized,) “when articles are filed, recorded, and published as aforesaid, the persons named as corporators therein become a body corporate, and are authorized to proceed to carry into effect the objects set forth in said articles in accordance with the provisions of this title,” was intended to abrogate, as between the corporation and the subscribers to its stock, the wholesome rule of the common law we have referred to. Whether it bar the right of the state to object to a corporation proceeding with its enterprise before its stock is fully subscribed for, need not be considered in this action.

It may be regretted that there has been any relaxation of that rule. But it is so thoroughly established that a subscriber to stock may by his acts debar his right, when called upon to pay for his stock, to object on the ground...