San Joaquin Land & Water Co. v. West
Before: Harrison
Synopsis
Corporations — Agreement to Organize — Subscriptions Payable to Agent — Rights of Corporation. — An agreement to form a corporation for certain specified purposes, and to make a part payment on the shares of stock subscribed by the contracting parties within a specified time after the filing of the articles of incorporation, to a person therein designated as agent, inures, with its advantages and rights, to the benefit of the corporation upon its formation, irrespective of any agreement or want of agreement to that effect, and notwithstanding it may contain special provisions for carrying its own terms into execution.
Id. — Agents to Draw and Invest Money Collected from Subscribers — Agency for Corporation. — Where an agreement to form a corporation constituted a person therein designated as “the agent to collect the amount” which should become “due” under the subscription of the contracting parties, and appointed three persons named as “the agents of the corporation so to be formed,” with authority to negotiate for the purchase of property for the corporation, and to “ draw” from the person first named any or all moneys paid to him, and use the money to pay for the property so purchased, the persons so designated are the agents of the subscribers prior to the organization of the corporation, but after the incorporation is formed, they could only be the corporation’s agents, and their functions as agents of the subscribers must cease.
Id.—Removal of Agents by Corporation. — Such agents having no interest coupled with their agency, it is competent for the corporation to remove them at any time, and appoint other agents in their place or itself assume the custody and disposition of the money.
Id.—Repudiation of Agency — Suit by Corporation for Money Collected.— When the agents appointed to draw and invest the funds repudiated their agency before any money was paid on the subscriptions, and refused to act under their appointment, and wholly abandoned the same, the corporation is entitled, as against their claim, to the custody of the money collected from the subscribers, and may maintain an action to recover the same from the collecting agent.
Id.—Parties—Substitution of Agent for Investment — Third Agent not Substituted. — In an action by the corporation to recover the money which the agent had collected from the subscribers to the stock, it is not necessary to make the parties named as agents of the corporation for the investment of the money in the purchase of land parties to the action, nor is the right of the corporation to recover the money in any respect affected by the substitution of two of such parties as defendants in place of the agent who collected it, and who has paid it into court, nor can such substituted defendants, after having repudiated their agency, claim that the presence of the third agent is essential to a determination of the plaintiff’s right.
Harrison, J. The controversy involved in this ac»tion arises out of the construction to be given to the-terms of an instrument executed between the subscribers thereto for the incorporation of the plaintiff, and preliminary to such incorporation. The instrument itself was before this court in the case of West v. Crawford, 80 Cal. 19, and is there set out at length. It was then held that West was authorized to collect in his own name twenty per cent of the amount that the parties to that instrument had agreed to subscribe to the capital stock of the plaintiff, by reason of their express agreement therein to pay it to him. After that decision, the subscribers paid this twenty per cent to West, and at the commencement of this action, he had in his hands of the amount so collected by him, $35,861.25, [402]for the recovery of which the plaintiff brought this action, as money had and received by him to and for its use and benefit. After the commencement of the action, West, under the order of the court therefor, paid the money to the clerk of the court to be held subject to the order of the court, and the appellants were substituted as defendants in his place, and answered the complaint. Upon the trial of the issues, the court rendered judgment in favor of the plaintiff, from which the defendants who were substituted for West have appealed.
1. The agreement in question is of that character which is not unfrequently made by the subscribers to a corporation prior to its actual incorporation, and as preliminary thereto, — its object being for their mutual benefit and protection until the organization of the corporate body, and also for the ultimate benefit of the corporation. Upon the formation of the corporation, such an agreement, with its advantages and rights, inures to the benefit of the corporation, irrespective of any agreement or want of agreement to that effect, and notwithstanding it may contain special provisions for carry-its own terms into execution.
By the express terms of this instrument, West was simply “ the agent to collect the amount ” which should become due to the plaintiff by virtue of the subscription to its capital stock which the parties to the instrument should make in pursuance of^hein,agreement. By the instrument itself, the subscribers agreed to “ take,” i. e., to subscribe for, the number of shares set opposite their names respectively, and “ to pay twenty per cent of the par value of said shares so subscribed, and that they would pay ‘ the same’ to West in five days after the articles of incorporation were filed. The only money which the subscribers agreed to pay to West was for the stock which they should subscribe for to the plaintiff, and West was simply constituted the ‘agent’ for the corporation, to collect the amount which should become ‘due’ under their subscription, and after its collection to hold
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