Citations
- 16 N.Y. 451
Full opinion text
Brown, J.
The plaintiff is a railroad corporation, organ ized or claiming to have been organized under the act of the 2d April, 1850, to authorize the formation of railroad corporations, and to regulate the same. (Laws of 1850, 211.) The defendant is one of the subscribers to the articles of association, for twenty shares of the capital stock, and the action is brought to recover the sum of $1000, the subscription price thereof being $50 the share.
The principal question involved is the construction to be put upon the second section of the act; for it is claimed by the plaintiff that the company was duly organized, and the defendant became a stockholder with the burdens and obligations incident thereto. Section one provides for the organization of companies by articles of association, “in which shall be stated the name of the company, the number of years the same is to continue, the places from which and to" which the road is to be constructed, or maintained and operated, the length of such road as near as may be, the name of each county in this state through or into which it is made or intended to be made, the amount of the capital stock of the- company, which shall not be less than $10,000 for every mile of road constructed or proposed to be constructed, and the number of shares of which the said capital stock shall consist, and the names and places of residence of thirteen directors of the company, who shall manage its affairs for the first year. Each subscriber to such articles of association shall subscribe thereto his name, place of residence, and the number of shares of stock he agrees to take in said company.” On complying with the provisions of section two, such articles are to be filed with the secretary of state, and thereupon the incorporation of the company becomes complete. This section provides that the articles “ shall not be filed and recorded in the office of the secretary of state until at least $1000 of stock for every mile of the road proposed to be made is subscribed thereto, and ten per cent paid thereon in good faith, in cash, to the directors named in said articles of association, nor until there is indorsed thereon or annexed thereto an affidavit, made by at least three of the directors named in the said articles, that the amount of stock required by this section has been in good faith subscribed, and ten per cent paid thereon, as aforesaid, and that it is intended in good faith to construct, or maintain and operate the road.” The articles of association, with the affidavit annexed, were filed and recorded in the office of the secretary of state on the 23d August, 1852, and the defendant’s subscription to the articles for twenty shares of the stock was admitted upon the trial. The length of the proposed road was seventy-three miles; and the defendant proved the total amount of subscription for stock to the articles of association at the time they were filed was $390,000 ; that at that time ten per cent had been paid upon no more than $75,000 thereof. It was also proved that the defendant did not pay ten per cent upon the amount subscribed by him before the articles were filed with the secretary of state. Here, then, we have the point.in controversy distinctly presented. The requisite number of shares were subscribed, but ten per cent upon each of the shares was not paid. There was, however, actually paid ten per cent upon more than $1000 of the stock for every mile of the road proposed to be made.
If we look for the object to be attained by requiring these subscriptions to the capital stock of the company, and the payment of the ten per cent upon the amount demanded, it appears to me it. is obvious it was to insure the organization of real, substantial companies in good faith, animated by an honest purpose, and having some degree of ability at least to undertake the proposed improvement. Preliminary to the act of incorporation, and as a condition precedent thereto, for every mile of road proposed to be constructed there must be not less than $1000 of the stock subscribed, and ten per cent paid thereon in good faith. Not ten per cent upon each separate share subscribed, for the word “thereon” does not refer to the shares separately, but ten per cent upon such a sum of subscriptions as in the aggregate would make a total subscription of $1000 for every mile oi road proposed to be made. The subscriptions might exceed this sum by as much more as the associates might be able to obtain; but unless they rose up to the prescribed amount, and unless ten- pei cent upon that amount was actually paid in cash, the incorporation of the company could not be effected. This is the plain import of the language employed,