*39Opinion,
Me. Justice Williams:Tbe system provided by the act of 1874, and its supplements, for the organization of joint stock companies, is comparatively new. It is well calculated bo promote the industrial development of the commonwealth, and may be productive of important results, if its provisions are honestly and fully complied with; but it is capable of producing mischief and being made an instrument of fraud, if its provisions are disregarded. But few cases have yet arisen under tile act of 1874, and its construction is, therefore, in several particulars, not well settled.
In its first section the act provides for the formation of associations to conduct any lawful business by “ subscribing and contributing capital thereto, which capital shall alone be liable for the debts of such association.” The mode of organization is the preparation of a statement in writing, signed and acknowledged by all the members, setting forth the following particulars :
1. The full names of the persons forming the association.
2. The amount subscribed by each person.
8. The total amount of the capital, and when and how to be paid.
4. The character of the business to be conducted, and, the location of the same.
5. The name of the association with the word “ Limited ” added thereto as part of the same.
6. The contemplated duration of the association, and tbe names of the officers.
This statement when signed and acknowledged, is to be recorded in the office of the recorder of deeds of the proper county, and when so recorded the association is fully organized.
Section second requires all such associations to keep a “ subscription-list book ” showing the names of the members thereof, and the amount of capital stock due and unpaid from each.
Considering these provisions together it seems very clear that so much of the capital stock as the statement requires to be paid at the signing thereof must be actually paid in before anything further is done; and that the subscription-list book must show what remains unpaid, and from whom it is due. All payments made after the organization must be entered in *40this book, so that an examination of it will show at all times just wbat remains due in tbe aggregate upon the capital stock, and what part of that sum is due from each member of the association. The recorded statement, therefore, and the subscription-list book will give to any one interested full information as to the actual capital in use by the association, and the unpaid capital that can be made available for its business or its debts.
A member of an association, organized in substantial compliance with these provisions of the act, is entitled to the benefit of the exemption from personal liability, beyond the amount of his stock, which is the important privilege conferred by this plan of organization.
In the case in hand, the statement was prepared in proper form, and signed, acknowledged, and recorded in accordance with the act of 1874. It gave the total amount of the capital stock as twenty thousand dollars, and set out that three fourths of that amount was payable “ at the signing of this statement and one fourth four months from the date hereof.” The subscription-list book kept by the association, showed the payment into the treasury of fifteen thousand dollars, at the proper time but not in equal or proportional amounts by the subscribers. The question now raised is whether this is such a disregard of or departure from the provisions of the act as makes the organization ineffectual, and converts the members into general partners who must be individually liable for all debts without regard to the amount of their capital stock. The learned judge of the court below so held, but we think he was mistaken. Such a construction would unnecessarily restrict the movements and cramp the operations of organizations formed and conducted in entire good faith.
The object of requiring the actual payment of a portion of the subscribed capital at the time of the organization is to secure for the association a bona fide cash capital with which to begin its business. It need not be the whole amount subscribed, but it must be the amount set out in the recorded statement as payable or to be paid upon its execution. The subscription-list book to be opened when the association is fully organized and its statement recorded, will show the amount paid in accordance with the statement, and it will show *41the stock account of each member. Any one interested can therefore at any time ascertain the amount of capital then paid in, the amount outstanding, and from whom it is duo.
There were three members of the Wampum Iron Company, viz.: George Lauder, who subscribed ten thousand dollars of the capital, and the two Oliphants, who subscribed the other ten thousand dollars. The statement set out that three fourths of the capital was to be paid in cash on the execution thereof. It was so paid, Lauder paying his subscription in full, and the Oliphants paying each one half of his own subscription. The manner of the payment of the three fourths of the capital was at once entered in the subscription-list book and was subject to the inspection of any one interested in knowing the situation. There was in this no fraud, no evasion, and there was no occasion for any one dealing with the “ Wampum Iron Company, Limited,” to be misled. The cash capital which the statement required should be paid at the outset was actually in the treasury, and the stock book showed from whom the balance was due. There was no concealment of anything about the capital stock, no attempt to do business without the money in the treasury which the statement indicated would be there, no attempt to secure credit upon a false basis, either by withholding from the public the means of information which the act contemplates, or by withholding from the association the money which their statement made payable at the outset.
Wo think there was a substantial compliance with the act, and that Lauder was entitled to its protection.
The judgment is reversed, and a venire facias de novo awarded.