Ventura & Ojai Valley Railway v. Hartman
Before: Harrison
Synopsis
Corporations—Subscriptions to Stock—Power op Assessment.—A corporation cannot levy an assessment until after one-fourth of its capital stock has been subscribed, where the terms of the agreement of subscription do not otherwise provide.
Id.—Terms op Subscription—Measure op Liability—Construction op Agreement.—A subscriber to the stock of a corporation may, by the terms of his subscription, vary his liability to calls or assessments from that imposed by the statute, but the liability of the subscriber in such case is measured by the terms of his agreement, and is to be determined by a construction of the language used in the agreement.
Id.—Pleading—Exhibit— Legal Effect of Subscription Contradicting Allegation—Demurrer.—Where a copy of the agreement of subscription, annexed to the complaint as an exhibit, shows a mere subscription to the shares set opposite the names of the subscribers, and to pay ten per cent in cash to the treasurer of the corporation, which cash payment appears to have been made, the legal effect of the subscription is to make further payments not otherwise than as assessments therefor might be legally made, and such legal effect of the agreement will prevail over an allegation that the defendant agreed to pay his subscription “when and as it might be demanded by said plaintiff,” and such allegation must be disregarded; and where the complaint shows that one-fourth of the capital stock had not been subscribed when the assessment sued upon was levied, a demurrer to the complaint, upon the ground that it states no cause of action, should be sustained.
Harrison, J. The Ventura & Ojai Valley Railway Company was incorporated under the laws of this state April 21, 1892. Its capital stock, as provided in its articles of incorporation, was $250,000, divided into 2,500 shares of $100 each. Of this amount only 260 [262]shares were subscribed at the commencement of this action. Prior to its incorporation a preliminary agreement therefor had been entered into between several individuals, which was to become operative in the event that $20,000 should be subscribed to its capital stock. This amount having been subscribed, the necessary-steps for its incorporation were taken, and subsequently thereto the defendant, with others, subscribed the following agreement, which appears to have been annexed to the original subscription paper:
“Whereas, under and pursuant to the foregoing agreement and subscription there was incorporated the Ventura & Ojai Valley Railway Company, to the capital stock of which there was subscribed the amounts above named by the parties named respectively.
“Now, therefore, we, the undersigned, subscribe and agree to take the number of shares set opposite our names respectively, and thereon pay the amount in cash named, to wit, ten per cent of the amount of stock by us subscribed, to A. Bernheim, treasurer of such corporation:
“SUBSCRIBERS.
STOCK
SUBSCRIBED.
AMOUNT OF CASH.
“F. Hartman. $2,000. $200. Pd.”
Of the amount thus subscribed by the defendant, he paid to the plaintiff two installments of $200 each. It is alleged in the complaint that the plaintiff had incurred certain obligations in building its road above the amount received by it from its stockholders, and that to provide funds to meet the same, it had demanded from each of its stockholders an additional payment of forty per cent of the amount of their several subscriptions respectively; and that on or about the sixth day of June, 1895, it demanded from the defendant the payment of the sum of $800, being said forty per cent of the amount of the capital stock for which he had subscribed, and that the defendant had refused to pay the same. The present action was brought to recover this amount. The defendant demurred to the com
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