Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/103

 <^ CHAP. VI.] AGREEMENTS TO TAKE STOCK. [§ no. § 110. It remains to consider the rights of the parties to the original agreement as against the corporation. If „. , ° ., . , . ii»i Rights of the corporation when organized is composed or the subscribers subscribers, or if the agreement to subscribe is made corpora- with persons who by statute represent the corpora- tlon " tion while it is being organized, a subscriber acquires by his agreement the right to have the shares subscribed for by him allotted to him, unless his subscription is made after the full amount of the capital stock authorized by the charter of the corporation is subscribed for. 1 It will be remembered that all the parties to the subscription- agreement have agreed to invest certain funds for the accom-,^,,^-,^ plishment of a certain object, and that these funds should bej£>r*++-. managed and applied for the furtherance of that object through^^*-,©^ the medium of corporate organization; suppose that this agree-' ment is violated, citho» through the managers of the scheme procuring a charter different from the one contemplated, or by « gHg^gds aa lly n punpplymff ^ inj^ nlrnnrl y nnn i i il ml JTl l ; that is,> t^*& applV'W^ffLfleii i^ y^m^iieTaTKTfor purposes other than those contemplated by the original agreement. In other words, it becomes apparent that the purposes for which the corporation is actually being organized differ from those justifiably contem- plated ; that another scheme, differing from the original plan, is being gone into. It is plain that any one of the original parties, or his representatives, can say, " I never paid deposits to be used for any such purpose." And it is further evident, that, as between him and any body or individual acting in violation of the terms of the original agreement, he may claim to be released from his contract, and perhaps to have moneys paid or expended by him reimbursed. Thus, as between a party to the original agreement to take shares and the corpora- held that this agreement did not amount to a subscription to plaintiff's stock, and that, being no party to the agreement, the plaintiff could maintain no action on it. See also California Sugar M'f 'g Co. v. Schaf er, 57 Cal. 396; Strasburg R. R. Co. v. Echternacht, 21 Pa. St. 220. Com- pare Eastern Plank Road Co. v. Vaughan, 14 N. Y. 546, 555. 1 This right of the subscriber con- stitutes in the main the consideration by virtue of which the corporation may enforce his subscription; see notes to § 91, and cases in last three notes. See, generally, §§ 515, 516; also Birmingham Nat. Bk. v. Roden, 97 Ala. 404. 83