I am unable to concur in the affirmance of this cause, and believe it not improper to express as briefly as I may my views. The Constitution prohibits the issuance of stock except for money paid or labor done. A contract to purchase stock to be paid for before the stock is issued is not, as I conceive it, illegal. Neither do I think it to be unlawful to treat one as a stockholder who has not paid for his stock. To constitute one as a stockholder some sort of subscription or contract is required whereby the subscriber obtains the right upon some condition to demand and exercise the right of a stockholder. R.C.L. vol. 7, Corporations, §§ 182 to 212.
I believe our statute recognizes a subscriber as a stockholder who has a contract for stock. By the statutes a corporation may receive a charter without having all its capital stock fully paid. Subscribers to capital stock may be required by the directors to pay their respective subscriptions in such manner and in such installments as may be required by the by-laws. If a creditor of a corporation cannot make his execution out of property belonging to the corporation, then execution may issue against "any stockholder to an extent equal to the amount unpaid." If the corporation is dissolved a stockholder is liable to the creditors thereof to the amount of his unpaid stock. If a stockholder shall neglect or fail to pay any installment as required, his stock may be declared forfeited upon statutory notice to the stockholder.
These several statutes clearly recognize as stockholders those who have not paid for their stock, and as such they should appear on the books of the corporation and be entitled to vote, receive dividends, and are entitled to all the privileges and immunities as such, as well as for its liabilities. It does not appear to have been the purpose of the Constitution or the laws to deprive a stockholder of the right to a voice in the affairs of the corporation because he has not paid his subscription. It is evident, I think, from the statutes, that a subscriber who has not paid for his stock has a qualified ownership in the stock. I therefore conclude that the mere fact that the name of such stockholder appears upon the books of the corporation, that he voted his stock, or gave a proxy, and participated in the affairs of the corporation, received dividends, and was conmunicated with as a stockholder, should not have any evidentiary value in establishing that stock has been issued to him, or that there was a contract to issue to him stock which had not been paid for as required by law. Our Supreme Court recognized as stockholders in a limited sense persons who have not paid for their stock. O'Bear, etc., v. Antiexplo Co., 101 Tex. 431,108 S.W. 967, 109 S.W. 931, 16 L.R.A. (N. S.) 520, 130 Am. St. Rep. 865; Mathis v. Pridham, 1 Tex. Civ. App. 58, 20 S.W. 1015. It is contended in this case by appellees that because article 1168, R.C.S., provides that stock shall be deemed personal estate, and is transferable only on the books of the corporation, that no certificate is contemplated, and hence I presume it is contended when a stockholder stands on the books as a stockholder, there has been an issue within the meaning of the Constitution.
Our Supreme Court has determined this question adverse to appellee's contention. That court held the provision for the record of the transfer upon the books was intended for the benefit of the corporation, so that by ready reference it could determine who were the legal stockholders, who entitled to vote, receive dividends, etc., and to whom it could safely issue new stock. "Although the certificate was not shares of stock itself it was what the company constituted the visible representation of it, and as between the shareholders and his assignee the equitable, if not the legal, title to the stock would pass by a transfer of the certificate and this without being recorded on the books of the company." The transfer of the certificate is prima facie evidence of the right of the holder. This construction of the legal effect of a certificate of stock is now required as a matter of necessity. As against the shareholder the transferee would, whether his transfer be recorded on the books or not, have a good title, and as against the company enable him to demand that he be recognized as a shareholder. Strange v. Railway Co., 53 Tex. 162; Baker v. Wasson, 53 Tex. 150; Rio Grande Cattle Co. v. Burns, 82 Tex. 50,17 S.W. 1045 (2). A certificate of stock is generally recognized as a representation of property and as occupying much the same status as a chose of action. Thompson on Corporations, § 2348. "The issue of stock generally means the issue of the certificate. In most of the states and in the federal courts, trover lies for the conversion of stock." Cook on Corporations, § 12.
It seems to me the issue of this "visible representation" of stock is the thing prohibited by the Constitution. The certificate represents the stock. Its issuance carries the title to the thing itself. This issue of stock, without money paid, is void, and no title or interest in the company's capital stock passes thereby under the laws and Constitution.
As I understand the opinion in this case, because the receipt provided the stock should be held as collateral to the note, that such would establish a contract to "issue." Such an agreement required no more than the statute itself provided. The statute recognized that the corporation holds the stock *Page 603 subject to be forfeited for nonpayment of the subscription. Article 1170. I do not think the remedy by the statute exclusive, but it is merely cumulative. R.C.L. vol. 7, Corporations, § 230. The parties could therefore lawfully agree the stock should secure the subscription, and the fact that the company so held the stock did not render the contract illegal. In the construction of a contract where it is susceptible of two constructions, one which would render it illegal and the other lawful, that construction which would conform it to law must be adopted, and that both parties are presumed to know the law and intended to obey it. Foard County v. Sandifer, 105 Tex. 420, 151 S.W. 523.
In this case appellee while he testifies it was agreed, when he subscribed that the stock should be "issued" to him, he yet repeatedly stated and admitted that the stock was not to be delivered to him until he paid for it, that he never saw the certificate, never had possession of it, and did not at any time demand it, because he had not paid for it, and understood he was not entitled to it until he paid for it. It was at all times in the possession and under the control of the company. In order to be issued in the sense of being sent forth there must have been a delivery. This is universally the rule as to notes, bonds, and the like. No liability was created until its delivery. The statement of Swearingen that there was to be no delivery, contradicts his conclusion that it was to be issued to him.
The collateral contract attached to the renewal notes is much the same as that in the case of Farmers' Merchants' State Bank v. Falvey, 175 S.W. 833, and the testimony on delivery also has common features with this case. See, also, Cope v. Pitzer, 166 S.W. 447, and many other cases on the question of issue. There could have been, in my judgment, no constructive delivery when it was expressly agreed and understood there should be none until paid for, and when in accordance with that agreement it was never delivered.
There was no merger as the trial court held. The surrender of the old note does not show the debt was paid when evidenced by a renewal. The intention of the parties to discharge the debt must be shown on an express agreement of the parties to have the effect of extinguishment. A delivery or surrender of the old note upon its being renewed does not in itself raise a presumption of the extinguishment by the new. The creditor may elect to sue upon the original indebtedness or upon the new note. The right of action is only suspended upon the original consideration until the new note becomes due. Otto v. Halff, 89 Tex. 384, 34 S.W. 910, 59 Am. St. Rep. 56.
There was no extinguishment of the debt by accepting as collateral security or a contract evidencing collateral security. Graves v. Allen,66 Tex. 589, 2 S.W. 192. If the original debt was valid, the subsequent issuance of stock would not defeat that debt.
For the reasons above given, with others, I respectfully dissent.