South Buffalo Natural Gas Co. v. Bain

Plaintiff’s existence as a corporation, whether defective or not, is sufficient to enable it to maintain this action. Railroad Co. v. Carey, 26 N. Y. 75 . The subscription for the stock was made after incorporation, and was in form sufficient to create liability, had there been compliance with the provisions of law respecting payment The statute regulating such subscription provides: “At the time of subscribing, every subscriber, whose subscription is payable in money, shall pay to the directors ten per centum upon the amount subscribed by him in cash, and no such subscription shall be received or taken without such payment.” Defendant subscribed for 10 shares of plaintiff’s stock, paid nothing, and now resists an attempt to enforce liability. It was early held that a failure to pay the per centum rendered the subscription void. Jenkins v. Turnpike Co., 1 Caines, Cas. 86 . This doctrine was subsequently questioned, and held not to apply to a subscription to the capital stock of a company made before incorporation (Railroad Co. v. Mason, 16 N. Y. 457 , 458; Beattys v. Town of Solon, 64 Hun, 120 , 19 N. Y. Supp. 37 ), the construction of the statute being that, if the aggregate payment amounted to the required 10 per cent., it was sufficient. The distinction between such a subscription and one made subsequent to incorporation was recognized. With respect to the latter, the decisions in this state have been uniform that payment must follow subscription, and until both acts concur no valid contract exists. Railroad Co. v. Van Horn, 57 N. Y. 473 ; Beach v. Smith, 30 N. Y. 122 -132; Railroad Co. v. Clarke, 25 N. Y. 210 ; Railroad Co. v. Woolley, * 40 N. Y. 118 ; Binder Co. v. Stayner, 58 How. Pr. 275 , on appeal 25 Hun, 91 ; Perry v. Hoadley, 19 Abb. N. C. 79 . Undoubtedly a different rule obtains in other states.