(after stating the facts as above). Two grounds are urged by defendant in error in support of the ruling below. It is.insisted, first, that, the full amount of the capital stock of the Thresher Company not having been subscribed, the contract of subscription of defendant in error never became enforceable, and, for the same reason, the additional liability provided by the Minnesota Constitution did not attach; and, second, that the act of defendant in error in subscribing for and taking stock in the Thresher Company was ultra vires the defendant in error, and therefore void. We will consider these propositions in their order.
1. “It is a general rule that all subscriptions are made upon the *33implied, if not express, condition that they shall become binding- and enforceable only upon the entire capital stock of the corporation being-subscribed for; hence, in an action against a subscriber, it is usually a complete defense that the capital stock has not been fully subscribed.” 26 Am. & Eng. Ency. of Law, 934, and cases cited. In Masonic Temple Association of Minneapolis v. Channell, 43 Minn. 353, 45 N. W. 716, the Supreme Court of Minnesota announced the general doctrine in the following words:
“The chief matter of defense was that the whole capital stock of the plaintiff lias not been subscribed. No question is made that at the common law, when the charter or articles of incorporation, or terms of 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. * » * 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 he subscribed for.”
Plaintiff in error does not dispute the rule as above stated, but contends that the subscribers may agree among themselves to waive the rule that all the capital stock should be subscribed for, and that the subscribers to the stock of the Thresher Company, including defendant-in error, did thus agree, and, further, that defendant in error by its agreement to take the stock, and by taking and holding certificates for shares of the stock for more than 20 years, is estopped from now urging this defense. It is well settled that a subscriber to stock may waive the defense that the full capital stock of the corporation has not been subscribed. This waiver may be either express or implied from the acts or declaration of the subscriber. Cook on Corporations (5th Ed.) § 181. The agreement relied upon by the plaintiff in error as a waiver is averred in the declaration as follows:
“That the number of shares of said stock outstanding, as herein alleged, was duly subscribed for and paid for in full, with the understanding and agreement by and between the stockholders that said Thresher Company was to commence business as soon as it could acquire tlie property of the Northwestern Manufacturing & Car Company, including the manufacturing plant owned by said company, and which at the date of the organization of said Thresher Company was in the hands of and being operated by the receiver of said Northwestern Manufacturing & Car Company; that there was never any understanding or agreement of any sort or nature between the defendant and the other stockholders, or any of them, or between the defendant and tin* Thresher Company, that the commencement of business by said Thresher Company should he postponed until such time as all of the stock of said Thresher Company should he subscribed for."
This falls far short of an averment that the defendant in error expressly agreed to waive the rule that all the capital stock should be subscribed for. Nor is there any sufficient averment of an implied waiver by defendant in error, or of an estoppel. So far as the aver-ments of the declaration go, the defendant in error did nothing except to exchange its claim against the Northwestern Company for shares of preferred stock in the Thresher Company. There is no act averred of any participation in the management or conduct of the business of the Thresher Company, and no act or representation of defendant in error upon which any creditor of the Thresher Company acted or relied.
2. Was the act of defendant in error, in becoming a party to the *34formation of the Thresher Company and assigning to it its claim against the Northwestern Company in exchange for the shares of preferred stock, ultra vires; and, if so, can the illegality of its act constitute a defense to the present action for the enforcement of the stockholders’ liability created by the Minnesota Constitution ?
It is conceded by plaintiff in error that the Gardner Governor Company was organized under the laws of Illinois as a manufacturing corporation, and that it had no power under its charter or the Illinois law to invest in the capital stock of another corporation; but it is insisted that under the facts pleaded in the declaration the stock was acquired and held as security for or in settlement of a pre-existing indebtedness, and therefore the power exercised in acquiring the stock was properly incidental to its power as a manufacturing corporation to transact business, enter into contracts, and become a creditor.
The case of First National Bank v. Converse, 200 U. S. 425, 439, 26 Sup. Ct. 306, 311, 50 L. Ed. 537, grew out of the same transactions as the case at bar. The bank was a creditor of the Northwestern Company for money loaned in the usual course of its banking business. The bank became a party to the reorganization agreement, and assigned its claim to and received in exchange therefor preferred stock of the Thresher Company in the same manner as the Gardner Governor Company did with respect to its claim for merchandise sold and delivered. The essential facts in that case are identical with the facts pleaded in the declaration here, except that a manufacturing corporation is here involved, instead of a national banking corporation. The Supreme Court of the United States held that the act of the First National Bank in acquiring the stock was ultra vires, and that -there could be no recovery in a suit to enforce stockholders’ liability. It is said by Mr. Justice White, who> delivered the opinion of the court in that case:
“As no authority, express or implied, has ever been conferred by the statutes of the United States upon a national bank to engage in or promote a purely speculative business or adventure, accepting the view of the articles of -association by which the bank was denied the benefit of the exemption accorded by the Constitution of Minnesota, it follows that the bank had no power to engage in such business by taking stock or otherwise. The power of a national bank to engage in the character of business which the articles of association of the Thresher Company manifested, as defined by the Supreme Court of Minnesota, cannot be inferred to have been possessed by the bank as an incident of securing a present loan of money or as a means of protecting itself from loss upon a pre-existing indebtedness. To concede that a national bank has ordinarily the right to take stock in another corporation as collateral for a present loan or as security for a pre-existing debt, does not imply that because a bank has lent money to a corporation it may become an organizer and take stock in a new and speculative venture; in other words, do the very thing which the previous decisions of this court held cannot be done. The speculative venture, therefore, which the bank undertook, as held by the Minnesota court, when it engaged in taking the stock in the Thresher- Company, being ultra vires, it follows, under the settled rules hitherto applied by this court, that the bank, despite the subscription, was entitled to plead its want of authority as a defense to the claim of the receiver.”
It was held by the court below that the decision in First National Bank v. Converse, supra, is decisive of the question' raised here by demurrer. Plaintiff in error argues that the rule there applied to a *35national bank is not applicable to a manufacturing corporation organized under a state statute. It is also contended that a national bank is a public, and the defendant in error a private, corporation. These contentions are without merit. The Supreme Court applied the rule to a manufacturing corporation organized under the'law of New York in the case of De La Vergne Co. v. German Savings Inst., 175 U. S. 40, 20 Sup. Ct. 20, 44 L. Ed. 65, cited in First National Bank v. Converse, supra. It follows that the subscription of defendant in error was ultra vires, and unenforceable.
The decree of the Circuit Court is affirmed.