Ames v. McCaughey
Ames v. McCaughey
Opinion of the Court
The Findlay Foundry & Machine Company recovered a judgment for $2,037.34 against The Vernonview Glass Company at the May term, 1908, of the Knox common pleas. Subsequently William D. McCaughey was appointed and qualified as receiver of the Foundry & Machine Company, and, in December, 1908, brought suit against the Glass Company as an insolvent corporation and all of its stockholders who were discovered, among whom were the five original incorporators, tb enforce payment of the amount remaining unpaid on his judgment, the suit, being brought in behalf of the receiver and all other creditors. Judgment was rendered for. plaintiff in the common pleas. On appeal to the circuit court a like judgment was rendered. This proceeding is brought to reverse the judgment of the circuit court.
The circuit court made a finding of facts from which it appears that the Glass Company was duly incorporated under the laws of Ohio, with an authorized capital stock of $65,000, and that the defendants named were incorporators thereof; that four of the defendants had each subscribed for $50, being one share of the capital stock; that no part of the subscriptions were paid, and that the Glass Company was insolvent. No part of the capital stock was ever paid into the treasury of the company. The court found that the incorporators were liable as guarantors to the plaintiff, who was the sole creditor of the Glass Company, for as much of his claim, interest and costs as should not'be paid by the Glass Company and the stockholders, and entered judgment accordingly.
It is also insisted that the circuit court erred in entering judgment against the incorporators, because it is claimed that no certificate of the subscription of ten per cent, of the capital stock of The Vernonview Glass Company was ever signed by the incorporators and filed with the secretary of state. As already stated, the court found in the original case, and also in the subsequent equity case, that The Vernonview Glass Company was a corporation- duly created and organized under the laws of Ohio, and that it became indebted as such to the Foundry & Machine Company in the amount stated. In such circumstances the presumption is that the organization was made in accordance with legal requirements.
But it is contended by plaintiffs in error that this finding and judgment can create no presumption that anything more was done than was neces
However that may be, in a case in which the question is presented, it cannot avail plaintiffs here. The statute, as it stood at the time of the occurrence of the transactions involved in this proceeding, was included in Section 3244, Revised Statutes, and provided that as soon as ten per cent, of the capital stock was subscribed, the subscribers to the articles of incorporation, or a majority of them, should so certify in writing to the secretary of state, and also contained the provision: “The incorporators of the company shallf be liable to any person affected thereby to the! amount'of any deficiency in the actual payment of j said ten per cent, at the time of so certifying.” j In Hessler v. Cleveland Punch & Shear Works Co., 61 Ohio St., 621, it was held that the liability of the incorporators under Section 3244, Revised Statutes, is for the amount of any deficiency in the actual payment of ten per cent, of the authorized capital stock of the corporation at the time, of their certifying as therein provided, and not merely one-tenth of that amount. In the opinion it is stated that the incorporators are, in effect, made guarantors of the corporation to that amount. The duty of the incorporators, as to the filing of
The constitution confers upon the legislature authority to provide means to secure the creditors of a corporation. Such provisions are necessary to insure good faith and to secure, protection to .persons dealing with such organizations.
The judgment of the court below will be affirmed. ■ -
Judgment affirmed.
Reference
- Full Case Name
- Ames v. McCaughey, Receiver
- Status
- Published
- Syllabus
- Incorporators of corporation for profit—Liable for deficiency of ten per cent, of capital stock, when—Section 3244, Revised Statutes —Liability for debts created prior to incorporation. A corporation for profit was duly created and organized under the laws of Ohio in 1906, and became indebted for personal property purchased for use in its proposed business.. No part of the capital stock was paid into the treasury of the company. Held: Under Section 3244, Revised Statutes, which was then in force, the incorporators are liable to the creditors of the company to the amount of any deficiency in the actual payment of ten per cent, of the authorized capital stock. (Hessler v. The' Cleveland Punch & Shear Works Co. et al., 61 Ohio St., 621, approved and followed.)