Santa Cruz R.R. v. Schwartz (1878) · DecisionDepot

Santa Cruz R.R. v. Schwartz

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Supreme Court Jul 1, 1878 No. No. 5943Published

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Holding. A subscriber to a proposed corporation is released from their subscription obligation when the corporation organizes with less capital than the amount specified in the prospectus without the subscriber's consent.

Issues

Whether a corporation's organization with less capital than specified in the prospectus releases a non-consenting subscriber from their obligation.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“This was a clear departure from the scheme set forth in the “ prospectus ” to which the defendant had become a party, and it operated to release the defendant, at his option, from proceeding further in the business.”

Synopsis

Agreement to Subscribe for Stock.—An agreement to subscribe for shares of a corporation upon a stipulated condition is not binding, unless the condition be complied with.

By the Court : The “ prospectus ” to which the signature of the defendant was obtained contemplated an organization of the proposed corporation only after securing subscriptions for one hundred and fifty thousand dollars. The organization was, however, subsequently, and without the consent of the defendant, effected when subscriptions for only one hundred and thirty thousand dollars had been obtained. This was a clear departure from the scheme set forth in the “ prospectus ” to which the defendant had become a party, and it operated to release the defendant, at his option, from proceeding further in the business.

'Judgment affirmed.

Santa Cruz R.R. v. Schwartz

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