The Connecticut Agricultural Exchange, Incorporated, filed its certificate of incorporation with the Secretary of State and he approved the same on May 2d 1921. Its corporate existence thereupon, under General Statutes, § 3510, began, and we held in Chieppo v. Chieppo, 88 Conn. 233,237, 90 A. 940, that it then became "not only a de facto but a de jure corporation."
General Statutes, § 3511, provides: "After the approval of the certificate of incorporation as aforesaid and until the directors are elected, the incorporators shall have charge of the affairs of the corporation, and may take such steps as are necessary or proper to obtain subscriptions to its stock." This statute contemplated the obtaining by the incorporators of subscriptions *Page 225 to the capital stock of the corporation and the incurring of expense in so doing. The statutes empower the incorporators to act for the corporation, to take charge of its affairs and to take the necessary or proper steps to obtain subscriptions to the stock. Whatever the incorporators do to this end they do for the corporation, and so long as they act within the legitimate exercise of the authority vested in them by this statute they are not liable for their acts any more than any other agent acting similarly in any other business matter would be liable. The subscribers whom they obtain do not become indebted to them. Subscriptions to stock fall within the class of business matters which the incorporators may transact for the corporation, which is as much the business of the corporation as any of the classes of business matters which the corporation may transact when its organization has been perfected. Organization contracts and debts of this character the incorporators may incur in behalf of the corporation until the majority of its directors shall duly file a certificate of the organization of the corporation. General Statutes, § 3514. Thereafter, the corporation may make any contracts within its power to make.
When the incorporators actually engage in business undertakings before the certificate of organization is thus filed, the contracts are not necessarily void. We say in Chieppo v. Chieppo, supra, at pages 238, 239: "Whether any such contract is enforceable or not depends in each case upon balancing considerations of public policy against the equitable rights of the parties. . . . The result which we reach is that in cases where the contract would otherwise be enforceable on principles of ratification or estoppel, § 69 of the Corporation Act [of 1903, now General Statutes, § 3514] will not prevent a business contract, made before the *Page 226 certificate of organization was filed, from being enforced against the corporation after such certificate is filed." The two classes of contracts to which we have referred are described in Naugatuck Water Co. v. Nichols,58 Conn. 403, 20 A. 315, our statute at that time being different, but the two classes being existent then as now. The provisions of §§ 3510 and 3511, according corporate power to a corporation as soon as its certificate of incorporation is filed with the Secretary of State as approved by him, was a departure from the former conception of corporation liability existing in this jurisdiction prior to the passage of these statutes, and we think generally at that time. The majority opinion fails to note the change made in our law, first by the Corporation Act of 1901 and then by the Revision of 1902, and later by the Corporation Act of 1903, having the same provisions as §§ 3510 and 3511
The corporation secured subscriptions for a substantial amount, which were paid for in whole or part in cash, or in whole or part in notes. By order of the Superior Court the cash and notes so collected were turned over to the receiver and he was directed to collect all the outstanding assets of the corporation, of which the note in suit was a part. The subscription was taken in the name of the corporation, the note was made to the corporation, and all this was done under the express authority of General Statutes, § 3511. To deny the right of the receiver of this corporation to collect a note given in payment of a subscription, or to maintain an action directly upon a subscription made and unpaid, is to deny an authority vested in this receiver, in virtue of his office, to collect an asset of the corporation which came into being by express authority conferred upon the incorporators by statute.
This is not an action by a receiver to collect an *Page 227 unpaid stock subscription under the statute (§ 6083), and the discussion in the majority opinion of the liability of subscribers to pay "calls" is, it seems to me, beside the point. The defendant has paid his subscription partly in cash and partly by the note in suit, which latter is an asset of the corporation in the hands of the receiver. Upon the pleadings, the only question before us is whether the abandonment of the corporate enterprise, after the filing of the certificate of incorporation but before its organization was completed, is a defense to the action. An original subscription to corporate stock is in the nature of an agreement to combine a portion of one's assets with the assets of others in a business enterprise, rather than a contract for the purchase of shares of stock. The consideration for the subscription is the formation of the company and the admission of the subscriber to membership therein. The majority opinion assumes that the consideration for the contract of subscription is the stock to be issued, and consequently fails to note the difference between a contract with a promoter to subscribe for stock in a corporation to be formed, and an original subscription to the stock of a corporation already formed and legally existing. It cites authorities in support of the proposition that one who has subscribed for the stock of a corporation is not liable upon his subscription and may recover back the money he has paid if the contemplated enterprise is abandoned or the company fails to be incorporated, and states that a note given in payment of such a subscription is subject to the same defense. That is undoubtedly the law in the case of a subscription made prior to and in anticipation of incorporation. In that case the subscriber has paid or agreed to pay money to a promoter to become a stockholder in a corporation and no corporation is formed. There is a *Page 228 clear failure of consideration. Here the situation is quite different. The certificate of incorporation had been filed, and by virtue of the provisions of § 3510 of the General Statutes corporate existence had begun and the defendant's subscription became immediately a valid and binding contract. Chieppo v. Chieppo,supra. The consideration of his contract was his membership in the corporation and his consequent right to have stock issued to him if and when the organization of the corporation was completed. The fact that the stock was worthless, or that the certificates were not or could not be issued because of the subsequent abandonment or failure of the enterprise, does not constitute a failure of consideration for his note, since the stock was not the consideration for which it was given. It is unquestioned law that in such a situation the abandonment or failure of the enterprise subsequent to incorporation is no defense to an action upon a note given in payment of a stock subscription. 14 Corpus Juris, p. 212; 1 Cook on Corporations (8th Ed.) §§ 184, 189, 190; 7 Ruling Case Law, pp. 107, 258.
The receiver has paid all expenses of the receivership thus far incurred together with all claims against the corporation, except those contested, out of the cash so received and assets so collected. He has paid two dividends totaling twenty-five per cent of the amount of the subscriptions so paid and there is likely to be available funds sufficient to pay other dividends to these subscribers. There will necessarily be an unequal and inequitable burden placed upon the subscribers in the settlement of the receivership.
The receiver is entitled upon this record to the judgment upon the note which the trial court rendered in this action. The equities between the subscribers may be worked out in the Superior Court in the settlement of the receivership. Whether the Superior Court could *Page 229 have ordered the collection of a part of this note is a question not raised upon the record.
In this opinion WHEELER, C.J., concurred.