Topeka Bridge Co. v. Cummings

By the Cowrt,

Crozier, C. J.

This was an action upon the following agreement subscribed by the defendant and five others, each of the six subscribers taking one share of one hundred dollars.

*75“Topeka, K. T., Nov. 21, 1857.
“ "We, the subscribers, agree to take the number of shares in the Topeka Bridge Company, set opposite to our respective names, and pay installments upon the same as may be required by the rules and regulations of the company.”

The petition also incorporates the rules and regulations of the company, and avers that the company built a bridge and made calls for the payment of the whole amount of the stock subscribed, in accordance with their rules and regulations, and default of payment on the part of defendant.

The defendant filed a demurrer specifying several grounds, among others that the petition did not state facts sufficient to constitute a cause of action. Upon issue joined, the demurrer was sustained upon this ground.

The plaintiff excepted and brings the case to this court.

From the petition it nowhere appears by direct averment or by inference that more than six hundred dollars of the stock of the Bridge Company was ever taken.

The question therefore presented in this case, is whether a party subscribing shares in this corporation is liable to pay the same before the whole capital, stock is subscribed,

The first and second sections of the law (act approved Feb. 14th, 1857,) under which the company was organized, are as follows:

“Seo. 1. The right and privilege of building and maintaining a bridge across the Kansas Biver at any point upon said river not less than five nor more than ten miles above the village of Tecumseh, is hereby granted for the period of twenty-one years, to F. L. Crane, Thomas G. Thornton, M. C. Dickey, S. T. "Walkley and L. G. Cleave-land, or their assigns, or such persons as may be associated with them for that purpose.
“ Sec. 2. Said Crane and other persons named in the foregoing section, or a majority of them, are hereby au*76thorized to form a' company to be known as the Topeka Bridge Company, the capital stock of which shall be one hundred thousand dollars, to be divided into shares of one hundred dollars each, and shall have power to prescribe by-laws for the regulation of said company, receive and collect subscriptions to such capital stock, establish and collect tolls for crossing said bridge, sue and be sued, hold aud convey real estate, so much as may be necessary for the construction of said bridge, and do all other acts and things, and exercise all the rights and privileges, appertaining to corporations.”

An examination of these sections and of the instrument on which this suit is brought, will show that unless the whole amount of stock was subscribed, there could be no obligation to pay. The law provides that the capital stock shall be $100,000, to be divided into shares of one hundred dollars each. The defendant took one of the shares and agreed to pay installments thereon as required by the rules and regulations of the company. What company? A company having a stock of one hundred thousand dollars. That is, he took one-thousandth part of the stock and agreed to pay such assessments upon that part of the stock as 'might be necessary to build the bridge.

If the cost of the bridge was only ten thousand, then an assessment of ten per cent, only would be necessary, and the defendant when he subscribed would make his estimates of the cost of building the bridge and'calculate how much he would have to pay on the share he subscribed, and if he should estimate the cost at $10,000 and that sum should be found sufficient, then the only assessment he would be called on to pay would be ten dollars. If his estimates were too low, then he would have to pay more, if too high, less. That was all he undertook to do in any event. This being all admitted, it would only limit the amount which the plaintiff had a right to recover, not his right of action. But the defendant took stock in a com-*77party having a capital of $100,000. The plaintiff seeks to make him responsible in a company having a capital of only $600. Defendant agreed to pay assessments on the share he took. A share of what ? A share of the capital stock of the company, and this capital stock is ascertained by reference to the act of incorporation to be one hundred thousand dollars.

He took no stock in a company having a subscribed capital of $600; is under no legal obligations to pay to such a company.

As the petition presents the case, six shares only have been subscribed, and yet the bridge was built. If the six shares were sufficient to build the bridge, then, as we Lave seen, the defendant only undertook to pay his share of one in a thousand in that amount, and before he could bo compelled even to pay that, he had a right to have the other nine hundred and ninety-nine shares subscribed in good faith, so that he could enjoy his interest in the corporate stock in his due proportion, unburthened with debts which he had not contemplated when he subscribed his stock. Under the act of incorporation in this case a Iona fide subscription of the whole amount of the capital stock was an indispensible condition precedent before the corporation could be authorized to act. Each subscriber undertakes to pay the amount of his subscription only upon the condition that the whole amount required to be taken to enable the company to organize and act in its corporate capacity shall be subscribed.

These conclusions are not only in conformity with a rational interpretation of the contract and the act of incorporation, but are upheld and illustrated by a uniformity of decisions seldom observable in a question of law.

Such an organization as the law required being necessary to enable the company to enforce their demand in this case, an averment of the facts necessary to show such organization should have been made in the petition in or*78der that if controverted they might have been proven. This not having been done the demurrer was properly sustained.

All the justices concurring.