Garling v. Baechtel

Robinson, J. delivered the opinion of the Court. This suit is brought under the provisions of Art. 26, sec. 52 of the Code, to recover of the appellant individually as a stockholder of the Antietam Manufacturing Company, a debt due to the appellees by said company. The company was organized under Art. 26 of the Code, and by the articles of association the capital stock was fixed at 1500 shares of the par value of $100 per share, of which, however, but 960 shares were taken. We have heretofore decided that in regard to companies of this character, where the capital stock was fixed at a certain number of shares of a certain value per share, no action would lie against a subscriber to enforce the payment of his subscription, until the whole capital stock was taken. ³²⁴ It. appears, however, that the directors undertook to organize this company upon a partial subscription of the capital stock; and it is contended that the appellant having participated in said organization, knowing that the whole capital stock had not been taken, and having attended the meetings of the stockholders at which money was voted and contracts made for the purchase of property and materials necessary to carry on the business of the company, he is now estopped in a suit by a creditor from setting up as a defence, the partial subscription of the capital stock.

Conceding this to be true, the question then arises ás to the extent of the appellant’s liability in this action. The Code provides that the stockholders shall be severally and individually liable to the creditors of the company to an amount equal to the amount of capital stock held by them. Sec. 52, Art. 26, Code. It appears that the appellant, originally subscribed for fifteen shares of the par value of fifteen hundred dollars, but on the 16th July, 1861, at the first meeting of the board of directors at which he attended, and before the debt due to the appellees was contracted, and in fact, so far as this record-discloses, before any debts "had been incurred by the company, the appellant made application to have his subscription reduced from fifteen tó ten shares.

W. M. McDowell then and now one of the firm of the appellees, was a member of the board of directors, and was present when this application was made. It further appears, that this application was assented to without a dissenting voice, whereupon the appellant paid the first instalment due on his subscription of ten shares, and the subsequent instalments as they became due. In addition to this, th.e secretary issued to him a certificate of ten shares, and at the only meeting of the stockholders at which he voted, he was permitted, and only claimed the right as a' stockholder, to vote ten shares: ³²⁵ Now it is too clear for argument, that at the time this application was made by the appellant to reduce his original subscription from fifteen to ton shares, and assented to by the board of directors, he was not liable for one dollar on account of the subscription of fifteen shares, for the reason that the whole capital stock had not been taken, and no debts had been incurred by the company. If then he is to be held liable as stockholder solely upon the ground of having participated in the organization and business of the company, knowing that it was incurring debts for the purchase of property and materials necessary to carry on the business of the company, he cannot he liable for any greater amount than the par value of the stock held by him, and upon the basis of which he participated in the affairs and business of the company.

This being so, the extent of the appellant’s liability in this action must be limited to the ten shares