Holliday v. Persons

¶1dissenting. While there appears to be a diversity of rulings in other jurisdictions as to whether or not creditors of insolvent corporations can enforce the pa3'ment of unpaid subscriptions to the capital stock where the minimum capital stock has not been subscribed,, in my opinion the rule in this State has been definitely fixed and determined by the Supreme Court in two of the cases which have been referred to in the majority opinion, to wit: Chappell v. Lowe, 145 Ga. 717, and Lowe v. Byrd, 148 Ga. 388. The ruling in the Ghappell case seems to have been unequivocal, and does not appear to have been based upon the theory that the subscription then dealt with was made after the corporation had' been organized, but the ruling appears to rest upon the doctrine, expressed in the opinion (p. 720), that “Creditors dealing with the corporation had a right to presume that the requisite amount of stock had been subscribed. The fact alone of the commencement of business created that presumption.” In the Lowe case the court said: “A subscriber to the capital stock of a corporation chartered by the superior court under section 2823 of the Civil Code may defend against a suit by the corporation upon his subscription -contract, by showing that the minimum amount of capital stock specified in the charter had not been subscribed. [Citing cases.] When, however, the incorporators have organized and commenced business before the requisite amount of capital stock has been subscribed, and third persons have extended credit on the faith of the corporation being legally organized, and, the company becoming insolvent, suit is instituted in behalf of such creditors against subscribers to stock upon unpaid stock subscriptions to compel contribution for payment of such creditors, under application of the doctrine of estoppel the defense above mentioned is not available. [Citing cases.] But if at the time credit is extended the creditor knows the fact upon which the defense is predicated, -namely, that the requisite amount of capital stock had not been subscribed, he can not be said to have been misled, and relatively to him there would be no basis for the estoppel against the subscriber to stock.” Thus, a creditor -in dealing with an active corporation is protected by the legal presumption that all of its stock has been subscribed, and it is only when he has knowledge to the contrary that he is deprived of the status of having extended credit on the faith of the corporation having been legally *789organized. That creditors constitute a favored class in enforcing the payments of unpaid stock subscriptions is recognized in numerous cases holding that as against them the defense that the subscription was obtained by fraud will not avail. A subscriber is not without remedy in order-to protect himself against a premature organization of the corporation, since until its organization his subscription amounts to nothing more than an offer to the corporation not yet in existence, and is subject to be revoked. National Bank of Union Point v. Amoss, 144 Ga. 425 (4), 433 (87 S. E. 406, Ann. Cas. 1918A, 74). It would seem that except as to intervening rights of bona fide creditors, such privilege would continue to exist until an organization which was legal had been effected. If an accepted subscriber does not wish to withdraw, he can still invoke the aid of the courts in preventing the de.facto corporation from subjecting him to unauthorized risks. But where he does not withdraw, and fails to interpose any legal objection to the premature activities of the corporation, but takes his chances of gaining a profit of which he could not be deprived, if the business proves unprofitable and the corporation becomes insolvent, he cannot be heard to dispute his subscription with creditors who in good faith dealt with the corporation on the legal presumption that it had been legally organized and that all the stock had been subscribed. “ If the subscriber had paid his stock subscription, he would not have been entitled to have it paid back, to the loss of creditors who dealt with the coloration on the faith that it was legally organized. There is no material difference between the actual payment of the stock subscription and the stockholder’s liability therefor, relatively to creditors of the corporation.” Chappell v. Lowe, supra (145 Ga. 720).