Crow River Valley Creamery Co. v. Strande

JAGGARD, J.

(after stating the facts as above).

The complaint in this action expressly states that the plaintiff is a duly organized corporation. The answer is a general denial. In the absence of a specific averment of the defendant that the plaintiff was not a corporation, no proof of that fact was required. Section 4148, R. E. 1905. For purposes of this case, and for these purposes only, it follows that the plaintiff was a corporation.

*48That corporation was in existence at the time this suit was brought. The cause of action on which it is based was not an assessment or call on stockholders. It did not undertake to impose an additional liability on the stockholders by virtue of their ownership of shares of stock. The liability, if any, was predicated upon the previously described agreement between the subscribers. That was not a contract to subscribe to stock in a company to be formed in the future, as in Minneapolis Treshing Machine Co. v. Davis, 40 Minn. 110, 41 N. W. 1026, 3 L. R. A. 796, 12 Am. St. 701. See 2 Clark & Marshall, Priv. Corp. 1407. Its nature must be determined by a construction of its terms in the light of the circumstances- surrounding its execution. Here a number of farmers met and organized a creamery company. To raise money, they agreed to contribute a certain sum and to bond themselves “for -the true payment of” money the officers were authorized to borrow for starting the business, and to pay the amount borrowed in such manner as might be thereafter agreed with the lenders in such manner that each should be liable for his share of the loan, with interest, until the same was paid in full. They did not bind themselves merely to pay the debt if the company did not pay it. It was, moreover, the obvious intention of the instrument to start the corporation into existence by means of this loan of credit and agreement to pay the loan negotiated on the strength thereof. To render effective that agreement, it must be construed to make this promise an asset on which the company could realize. It would defeat the plain purpose of the instrument to hold that the persons from whom the money was borrowed shotild be compelled to resort to the subscribers on a sureties’ liability only. Doubts as to the effect of the agreement must, be construed in the light of the familiar rule that an agreement is to be interpreted so as to carry out the purposes for which it was executed. Such construction justifies the view taken of it by the trial court, that it was in effect an agreement between the subscribers to pay, for the benefit of a corporation thereafter to be formed, the pro rata share of stockholders of a debt thereafter to be contracted with a third person. The corporation came into existence, and the money was borrowed, and the credit was used. The obligation matured. The beneficiary had the right to sue. See article on “The Limitation of the Action of As*49sumpsit. as Affecting the Right of Action, of the Beneficiary,” by Mr. Hening, in 53 American Law Reg. 197, and 56 University of Pennsylvania Law Rev. 75.

Affirmed.