Bole v. Fulton

Citations

• 233 Pa. 609
• 82 A. 947
• 1912 Pa. LEXIS 879

Syllabus

<p>Corporations — Stock subscription — Suit by receiver.</p> <p>1. There is a well-recognized distinction between original subscriptions for stock in a corporation to be formed, and subscriptions for shares in an existing corporation. In the one case the engagement between the subscribers is created directly by the act of subscription, which, when once the corporation has been created by letters patent issued on the strength of the subscription, becomes absolute, not subject to recall and dischargeable only by actual payment. By the act of incorporation, without more, the original subscribers become members of the corporation, entitled to all the rights and privileges of membership, including the right to vote, the right to share in the profits and the right to compel specific performance of the contract of membership. In the other case the contract is not between the subscribers, except as it is shown that the subscriptions were mutual considerations for each other, but between each individual subscriber and the corporation as it exists, and is simply a contract of purchase and sale.</p> <p>2. Where a person subscribes for a certain number of the shares of the capital stock of an existing corporation, and shortly thereafter notifies the corporation that he will not pay the subscription, the company may then tender him the stock and upon his refusal to accept and pay for it, sue him and recover the difference between the amount which he agreed to pay for the shares, and the value of an equal number of shares in the market. If it makes no such tender and demand, he cannot be included in a bill in equity against the stockholders of the company to compel the payment of their subscriptions, and this is the .case because the subscriber never became a stockholder. Any claim for damages for breach of contract cannot be adjudicated against the subscriber in such a suit in equity.</p>