People v. Stockton & Visalia Railroad

By the Court, Crockett, J.: Waiving the question whether this proceeding was properly instituted against the defendant by its corporate name, or should have been brought against the individuals assuming to exercise corporate powers, we proceed to inquire whether, on the facts established at the trial, the defendant was duly incorporated and is entitled to exercise corporate powers.

Its authority to act as a corporation is assailed on the ground, first, that the affidavit annexed to the certificate of incorporation omits to state that ten per cent of the amount subscribed had been paid in cash “ingood faith;” second, that the ten per cent was not, in fact, paid in cash, but in checks which were never presented or paid, and which were subsequently returned to the drawers; third, that the company did not, within one year after filing its certificate of incorporation, commence to transact business as a corporation.

We shall notice these points in their order. Section two of the Act of May 20th, 1861 (Stats. 1861, p. 607), provides that there shall be annexed to the articles of incorporation an affidavit “ setting forth in substance that said amount of stock has been subscribed, and that ten per cent in cash thereon has been actually and in good faith paid in as aforesaid.”

In this case the affidavit conforms strictly to the requirements of the statute, in stating that the ten per cent “in cash has been actually paid in,” but omits the words “in good faith.”

In the body of the certificate, however, it is stated that [313]more than ten per cent of the amount subscribed “ has been actually, in good faith, paid thereon,” in cash; and the certificate, together with the affidavit, are in all respects regular, except, as already stated, the latter omits the words “in good faith.” But we think this was a substantial compliance with the statute, which is all that was necessary.

A literal compliance is never required in such cases. (Mokelumne Hill C. & M. Co. v. Woodbury, 14 Cal. 424; Ex Parte Spring Valley Water Co., 17 id. 136; Spring Valley Water Co. v. San Francisco, 22 id. 440; Thompson v. The People, 23 Wend. 537.)

On the second point the case shows that the ten per cent was paid by bank checks drawn by the subscribers to the stock, on banks located in the City of Stockton, and were payable in presentí, and that before accepting the checks the Treasurer of the company inquired at the several banks whether they would be paid on presentation, and was assured "by the bank officers that they would be; and on the faith of this assurance he accepted the checks as cash, and receipted for the amount represented by them as so much cash. It further appears that the checks would have been paid on presentation at any time whilst they remained in the hands of the Treasurer; but as the company had no immediate use for the money, the Treasurer deemed it unnecessary to demand payment for the time being, and shortly thereafter the drawers of the several checks paid to him in cash the amount represented by the checks, whereupon the latter were returned to the respective drawers.