§ 1691. Statutes and Constitutional Provisions on the Subject. A recent statute of Minnesota prohibits the issuing of false, part-paid and unpaid shares of the stock of railroad companies, under penalty of fine and imprisonment in the State penitentiary, or both.1 Why such a statute should be confined to railroad companies, leaving the rule in regard to mining companies, elsewhere referred to, in force, is a mystery. The statute of Florida, providing for corporations, etc., has been amended in respect of the division of capital stock into shares,3 payment of shares, etc. An 2 original issue of shares in a corporation at less than one half their par value, on credit, is in violation of the constitution of Alabama.4 Under the provision of the constitution of Colorado 5 which declares that no corporation shall issue stock except for labor done, services performed, or money or property actually received, and that all fictitious increase of stock shall be void, persons to whom stock is issued, for which they do not pay or agree to pay anything, do not thereby become shareholders of the corporation in any sense, and cannot sue as such. § 1692. Right to Vote before Shares Paid For. - Unless the charter, governing statute, or a valid constating instrument otherwise provides, a subscriber to stock, to whom regular certificates therefor have been issued, is a bona fide stockholder, entitled to transfer his stock and to vote at elections, although he has paid nothing for his stock." 1 Minn. Gen. L. 1887, c. 12, p. 68. 2 Ante, § 1674. 3 Fla. Laws, 1889, p. 127. 4 Ala. Const. Art. 14, § 6; Perry v. Tuscaloosa Cotton-Seed Oil Mill Co. 93 Ala. 364; s. c. 9 South. Rep. 217; 33 Am. & Eng. Corp. Cas. 346. Const. Colo., Art. 15, § 9; embodied in Gen. St. Colo., §§ 251, 340, relating to corporations. 6 Arkansas River Land &c. Co. v. Farmers' &c. Co., 13 Colo. 587; s. c. 22 Pac. Rep. 954. 7 Downing v. Potts, 23 N. J. L. 66. § 1693. Time of Payment. Where the officers of a corporation have no power to give an indefinite extension of time for payment for shares, one with whom they contract for such credit is chargeable with knowledge of the limitations upon their authority, and he cannot maintain an action to enforce such a contract while it remains executory.1 Where the charter of a bank reserved to the State the privilege of subscribing to a certain portion of the stock, "to be paid for at such time or times as might be convenient for the State," it was held that it was optional with the State to pay at any time before the termination of the charter.2 § 1694. Place of Payment. Notice to pay installments of a subscription to a treasurer of a company implies that the payment is to be made at his office, and is a sufficient designation of the place of payment. Where an act of incorporation requires that the place of payment of stock shall be designated in the notice requiring payment, a notice directing payment to be made to A. B., residing in the city of D., is prima facie a compliance with the statute.4 § 1695. Index to Cases Turning on Peculiar Circumstances. -Non-liability of stockholders in California mining corporations to pay even the nominal value of their stock.5 A complicated state of facts under which it was held that the plaintiff had no right of action for the value of certain shares in a telephone company consolidated with another, and that the transaction could not be considered as a loan of stock by the plaintiff to the company to be paid for in specie, nor as a sale by him of stock to the company at its reasonable value. Effect of a sale of property to the corporation by a holder of unpaid shares, and of a credit given on the shares, and also upon other shares of the vendor held by the other person as collateral security.7 Right of action as creditor of the corporation 1 McComb v. Credit Mobilier, 13 Phila. (Pa.) 468. 2 Attorney-General v. State Bank, 1 Dev. & B. Eq. (N. C.) 545. 3 Muskingum Valley Turnpike v. Ward, 13 Ohio, 120. Troy Turnpike &c. Co. v. M'Chesney, 21 Wend. (N. Y.) 296. 5 Re South Mountain Consolidated Mining Co., 8 Sawy. (U. S.) 366; s. c. 14 Fed. Rep. 347. 6 Eldred v. Bell Tel. Co., 119 U. S. 513; s. c. 30 Lawyers' ed. 496; 7 Sup. Ct. Rep. 296. 7 Craig v. Hyde, 24 How. Pr. (N. Y.) 313. under a statute, by one stockholder against another, where there has been a fund raised by the stockholder under a vote of the corporation for discharging its debts, to which the defendant has fully paid his proportion.1 Evidence tending to prove an agreement, in a case where A., as mortgagee, had sold certain property to B., and a corporation had been substituted in the place of B., that the corporation would accept from B. his interest in the property and pay all incumbrances thereon held by A., thereby making the stock issued to B. paid-up stock, and protecting the holder thereafter from personal liability for debts of the corporation.2 A manufacturing company was incorporated with a capital stock divided into shares of $50 each, to consist of one thousand shares, with power to increase the number of shares to three thousand. The act of incorporation authorized the payment of subscriptions of stock in real or personal estate appropriate to the corporate business, at a bona fide cash valuation, to be agreed upon by a majority in interest of the subscribers and stockholders. The articles of association provided that the capital should be $140,000, divided into two thousand eight hundred shares of $50 each, and that the subscribers should give their notes without interest for the amounts subscribed by them respectively, which notes should not be liable at any time to an assessment for more than fifty per cent. of their face, nor to an assessment of more than twenty per cent. within eighteen months after the organization of the company. It was held that the legal import of this section was that, with ultimate relation to creditors, the capital was of the full residuary amount of $140,000, but that such calls for payments on stock as might from time to time be made by the corporate authorities, in the course of active business of the company as a solvent concern, should not exceed one-half that amount; and that the articles of association did not exempt the stockholders from liability to creditors for so much of the whole capital of $140,000 as might be necessary for the payment of the debts. The notes of the stockholders, when given, having contained the unauthorized condition that, in the event of the company declaring any dividends out of the profits, the same should be credited on the notes until the full amount of the notes should be paid, when paid up certificates should be issued for the same, it was held that, so far as creditors were concerned, the articles of association could not be altered by this insertion.3 The provisions in the charter of an insurance company required it to take security for its stock to the amount of $100,000. It was held that this provision simply required a certain 1 Fowler v. Robinson, 31 Me. 189. 2 Weber v. Fickey, 52 Md. 500. 3 Wilbur v. Stockholders of the Corporation, 18 N. B. R. 178. amount of cash or secured capital before it commenced business, and after it had that amount it could dispose of its stock upon such terms as it might deem best, as upon a partial payment of twenty per cent., the remaining eighty per cent. to be paid at some future time.1 § 1696. Issuing Unsubscribed Stock at Par where it is Worth More. An effort on the part of directors and officers of a corporation to obtain unsubscribed stock at par, when they know that each share of the stock already issued is worth several times its face value, is a fraud upon the rights of the other stockholders, and a flagrant violation of trust.2 A charter pro § 1697. Construction of Particular Charter. vided "that the capital stock of the company shall consist of five thousand shares of $100 each, of which the lands and mines of " the four persons named, on one part, and those who may associate with them and constitute the aforesaid subscription for stock, payable in money, on the other part." It was held that this did not provide that any given amount or portion of the stock should be in land or in money, the true construction being that the whole of it may have been payable in money, although the four persons named had conferred upon them the privilege of paying their shares of stock by the conveyance of land, such conveyance, however, not being imposed upon them as an obligation. The land was purchased from two of the principal subscribers by the company, at a valuation which was applicable to their subscriptions. They would be liable to the company for the balance of their stock, as would the balance of the stockholders for the whole amount of theirs.3 1 Upton v. Hansbrough, 3 Biss. (U. S ) 417. ' Arkansas Valley Agri. Soc. v. Eicholtz, 45 Kan. 164; s. c. 25 Pac. 3 Frost v. Frostburg Coal Co., 24 How. (U. S.) 278. 1319 III. SUFFICIENCY AND NOTIFICATION OF THE ASSESSMENT, §§ 1746 1711. Assessments authorized under particular statutes. 1712. After a resolution to discontinue business. 1713. Illegality of one assessment will not vitiate subsequent legal assessment. 1704. Assessments for preliminary 1714. Periodicity of the calls: inter § 1700. What are Assessments, and What not.— Assessments, as understood in such contracts, are said to mean a rating by the board of directors, by installments, of which notice is to be given. After notice has been given, and the period for payment has passed, an action will lie for the aggre |