directors not being present at either meeting, is invalid; in case of such an adjournment, notice of the adjourned meeting must be given.54 In the absence of a provision in the by-laws in regard to notices of special meetings, personal notice must be given to each director,55 or the provisions of section 301 of the Civil Code be followed. If the regular meeting occurs on a holiday and there is no meeting that day, a meeting and assessment the following day is void.56

SUBSCRIPTION CONTRACTS DIFFERENT

In a line of cases where subscriptions were made for the stock of corporations to be formed, in which subscriptions it was agreed that they should be paid in larger amounts and more rapidly than is provided in these sections of the statutes for making assessments, it was held not only that these agreements were upon a good consideration-viz.: The mutual agreements of the subscribers-notwithstanding the corporation was not a party to the agreements and was not named in the subscriptions and was not then in existence,57 which is supported by high authority, but also that the subscriptions could, and really must, be collected according to the terms or conditions contained in the subscriptions and not under these sections of the statutes concerning assessments, and that such subscriptions are not illegal as against public policy, nor do they contravene any

54 Thompson v. Williams, 76 Cal. 153, 9 Am. St. Rep. 187, 18 Pac. 153. 55 Harding v. Vandewater, 40 Cal. 77.

56 Cheney v. Canfield, 158 Cal. 342, 32 L. R. A. (N. S.) 16, 111 Pac. 92. 57 Marysville etc. Power Co. v. Johnson, 93 Cal. 538-546, 27 Am. St. Rep. 215, 29 Pac. 126; cited in Kohler v. Agassiz, 99 Cal. 9, 15, 33 Pac. 741. But if the corporation formed includes additional purposes, the subscriber is not bound, Marysville etc. Power Co. v. Johnson, 109 Cal. 192, 50 Am. St. Rep. 34, 41 Pac. 1016; Horseshoe Pier etc. Co. v. Sibley, 157 Cal. 442, 108 Pac. 308, and cases

statute.58

60

The corporation, subsequently organized, may collect the subscriptions; they inure to the benefit of the corporation.59 If these subscriptions provide for payments in excess of ten per cent at one time, the full amount so agreed to be paid may be collected at once, notwithstanding the limitations in the statutes of assessments to ten per cent. If the subscription is on a separate paper stating that it is to the "project mentioned on the annexed list of subscribers" (the principal and original list), but the original list was not actually annexed to the paper subscribed, the times of payment of the subscription, notwithstanding, are fixed by the terms of the original list. If there is no stipulation in the subscription contract the assessments are limited to the amounts, and the collection to the manner, provided in the sections of the Civil Code, 331 et seq.62

A by-law that 30 per cent of the par value of each share shall be paid up, and that no further calls for payments upon the capital stock shall be made except by a two-thirds vote of all issued and outstanding stock can not, in case of insolvency of the corporation, defeat this power."

63

It was said (dictum) that the subscriber, by the terms of his subscription, may vary his liability from that

58 West v. Crawford, 80 Cal. 19-29, 21 Pac. 1123; Horseshoe Pier etc. Co. v. Sibley, 157 Cal. 442, 446, 108 Pac. 308.

59 San Joaquin Land etc. Co. v. West, 94 Cal. 399-404, 29 Pac. 785; Horseshoe Pier etc. Co. v. Sibley, 157 Cal. 442, 108 Pac. 308; Ferrochem Co. v. Danziger, 23 Cal. App. 584, 138 Pac. 966.

60 West v. Crawford, 80 Cal. 19, 27, 21 Pac. 1123.

61 Beedy v. San Mateo Hotel Co., 27 Cal. App. 653, 150 Pac. 810. 62 Los Angeles Athletic Club v. Spires, 166 Cal. 173, 135 Pac. 298; O'Dea v. Hollywood etc. Ass'n, 154 Cal. 53-69, 70, 97 Pac. 1; Bottle Mining etc. Co. v. Kern, 9 Cal. App. 527-531, 99 Pac. 991.

63 Union Sav. Bank v. Leiter, 145 Cal. 696, 700, 79 Pac. 441.

which exists, by virtue of the statute; that his liability is measured by the terms of his agreement. The facts in the case in which this was said were that the subscribers agreed to "pay the amount in cash named, to-wit: Ten per cent of the stock by us subscribed to the treasurer of the corporation." This amount was paid in but, one-fourth of the capital not having been subscribed, the corporation having incurred debts, forty per cent was demanded further from the subscribers in order to liquidate them. The court held this subscription agreement did not bind the subscribers to pay anything further on the stock, except as assessments might be legally made, and that no assessment could be made by the corporation in this case, though it owed pressing obligations, because one-fourth of its capital had not been subscribed.

In harmony with this view is the language of the court in a case where the amount of the subscription was to be paid in monthly sums "in case it is required, where the court said, "if the subscription paper was signed after the corporation was formed . . the plaintiff (the corporation) has no power to treat the subscribers differently from other stockholders, or to recover from them other than the amounts of assessments duly levied. ''65

9965

Moreover, if the subscription precedes the formation of the corporation, and the name of a subscriber with the amount of his subscription is not inserted in the Articles of Incorporation, the corporation can not enforce the subscription against him by assessment

64 Ventura etc. Ry. Co. v. Hartman, 116 Cal. 260, 263, 48 Pac. 65. 65 California Sugar Mfg. Co. v. Schafer, 57 Cal. 396, 398. In other respects this case is directly opposed to those above referred to, notwithstanding the attempt to distinguish it in Marysville etc. Power Co. v. Johnson, 93 Cal. 538, 550, 27 Am. St. Rep. 215, 29 Pac. 126.

66

proceedings. But it is not necessary that each subscriber for stock sign the Articles of Incorporation; it is enough if his name be inserted in the Articles; those who sign act as the agents of the others.67 This, of course, would be on condition that no additional or different powers from those mentioned in the subscription are inserted in the Articles.68

But, in a case where rights of creditors are involved, it was said by the court that a subscription or contract of purchase, whichever it might be, to pay for the stock one dollar "every month for thirty-four months" was not a contract of purchase but was "designed to relieve the corporation from the necessity of making calls and assessments upon the stock,'69 and, the corporation becoming insolvent, at the suit of creditors, the subscribers were compelled to pay up their shares to par in one assessment.

There are many authorities in other states to the effect that such subscriptions can not be collected until all the stock is subscribed, and the authorities everywhere agree that a condition in a subscription that it shall not bind the subscriber until a stated number of shares are subscribed is valid. These instances differ widely from those we have been describing; but they are either subscriptions or they are not. If they are subscriptions they should be what the law requires of a subscription. They should all be alike, and not be sub

66 Monterey & S. V. R. Co. v. Hildreth, 53 Cal. 123. But this case was distinguished when the subscriber afterwards made partial payments on the stock, Horseshoe Pier etc. Co. v. Sibley, 157 Cal. 442, 444-446, 108 Pac. 308. But see, ante, sub-title "Actual Subscription Not Necessary."

67 San Joaquin Land etc. Co. v. Beecher, 101 Cal. 70, 74-79, 35 Pac. 349.

68 Marysville etc. Power Co. v. Johnson, 109 Cal. 192, 50 Am. St. Rep. 34, 41 Pac. 1016.

69 Tulare Savings Bank v. Talbot, 131 Cal. 45-49, 63 Pac. 172.

ject to any variation of terms and obligations imposed by the subscriber; if they contain such variations they should not be legally acceptable.

The reasoning underlying these decisions is just as applicable to subscriptions made after a corporation is formed as those made in contemplation of its formation. Indeed, they become subscriptions after the corporation is formed if, when the corporation is formed, it adopts or accepts them. This principle would admit of different shares being called upon for payment of different sums and at different times, thus making shares unequal in amount, and creating different liabilities as to assessments and making fair and equal dividends impossible; for it is one of the first principles in the composition of corporations that the shares are equal and identical with each other, and each share is entitled to the same dividend as every other share. The case of a going corporation selling its stock below par is different, for, as to the corporation and the stockholders, they are full paid; the transaction is the act of the stockholders themselves, by or through their officers, and they can not be heard to complain of their own acts; creditors may attack the transaction, but stockholders can not.

UNEQUALLY PAID STOCK

Where a part of the issued stock of a corporation is issued as full paid (for property) and the remainder is issued without any payment thereon, assessments levied by the corporation must be laid first on those shares upon which nothing was paid, until they are paid in full, before any assessments can be levied upon the shares paid up in full at the time of their issue.70 Before the amendment of 1905 to section 323 of the Civil Code, the issue of certificates of stock upon which no state

70 O'Dea v. Hollywood etc. Ass'n, 154 Cal. 53, 97 Pac. 1.