refusing to enforce a contract for the sale of pig iron when only a small proportion of the capital stock of the corporation agreeing to deliver the pig iron had been bindingly subscribed
How later courts described this case
- refusing to enforce a contract for the sale of pig iron when only a small proportion of the capital stock of the corporation agreeing to deliver the pig iron had been bindingly subscribed
Written by the judges who cited it.
The opinion
Green, C. J.
(dissenting).
With the utmost deference to my associates and to the learned justice delivering the opinion of the court, I must record by dissent.
While the law declared in the- opinion may be wise and salutary, nevertheless it seems to me that certain rather plain statutory provisions were brushed aside in the road to the conclusions announced. The result reached appears to me a judicial repeal of section 26 of chapter 142- of the Acts of 1875, and section 1485 of the Code of 1858.
Section 26 of the Act of 1875 (Thompson’s-Shannon’s Code, section 2026), is as follows:
“The said instrument, when probated as hereinafter provided . . . with application, probates, and certificates, is to be registered in the county where the principal office of the company is situated, and also registered in the office of.the secretary of State; and a certificate of registration given by the secretary of State, under the great seal of the State, shall when registered in the register’s office of said county, with the fac simile of said seal, complete the formation of the company as a body politic; and the validity of the same in any legal proceeding shall not be collaterally questioned.”
*297 It is conceded that the requirements of the section quoted were met by those bringing out the corporation involved, and it follows that the formation of this, corporation as a body politic was “complete.” How can a corporation whose formation is “complete” be denied the right to enter into a lawful contract?
The attempted distinction between the right of a corporation “to be” and its right “to do” is inapplicable to the functions of a corporation whose formation is “complete.” How can such a body be “complete” if it may not move as well as have its being?
The court denies the power of this corporation to enter into a contract in the prosecution of the very business it was chartered to conduct. What is this denial but an attack upon the validity or “complete” formation of this company, the very sort of collateral question the statute in terms forbids?
If it be said that I attach too much significance to the word “complete,” that I give that word too broad a meaning, and that a corporation is not legally organized to contract until its capital stock is subscribed, there remains the other section of our corporation law to be considered.
Section 1485 of the Code of 1858 (Thompson’s-Shannon’s Code, section 2064), is as follows:
“No body of men acting as a corporation under the provisions of this chapter, shall be permitted to set up the want of a legal organization as a defense to an action against them as a corporation; nor shall any person sued on a contract made with such corporation, or sued for an injury to its property, or a wrong done to its interests, *298 be permitted to set up a want of such legal organization in Ms defense. ’ ’
Surely this statute has in mind the capacity of a defective corporation “to do” as well as its capacity “to be.”
James and Ms associates were assuming to act as a corporation under the provisions of tile' act of 1875, and under tbe general provisions of the Code of 1858. They procured a charter, proceeded as a corporation, and contracted, as a corporation, with defendant. Defendant, being sued on its contract “with such corporation,” sets up a want of legal organization as a defense — that the capital stock of the corporation had not been subscribed —that the corporation was not therefore legally organized and empowered to make the contract. I do not see how a defense, expressly prohibited by statute, can be sustained. Yet, stripped of its embellishment, the majority opinion does that very thing.
The acquisition, of subscriptions to the capital stock of a corporation is but a part of its organization, as that word is construed in all the cases I have seen. To deny a corporation the right to sue upon its contract because all its stock has not been subscribed is to repel the corporation because a detail of its .organization was omitted; --
Our statutes may be unwise, but they seem clear. They are certainly quite different from many statutes construed in the decisions cited in the majority opinion.