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A showing that written notices were sent to all the directors of a corporation of a meeting of the board at which an issessment was levied upon the stock, and minutes show other facts necessary to prove meeting was regularly and legally held, and that assessment was properly levied, is sufficient. (Younglove v. Steinman, 80 Cal. 375, 22 Pac. 189. To same effect: Stockton etc. Works v. Houser, 109 Cal. 10.)
Remedies of Stockholders Against Void Assessments.--A stockholder wrongfully deprived of his shares under a void assessment may either sue the corporation in trover for the value of his shares, or may mandamus the corporation to allow the registry of his shares, or to pay damages if registry is impossible, or he may sue in equity to vacate the sale, and to have the shares sold ordered to be delivered up and canceled. A court of equity has jurisdiction to give full relief to the stockholder in such case. (Herbert Kraft Co. Bank v. Bank of Orland, 133 Cal. 64, 65 Pac. 143.)
Sec. 332, C. C. No one assessment must exceed ten per cent of the amount of the capital stock named in the articles of incorporation, except in the cases in this section otherwise provided for, as follows:
1. If the whole capital of a corporation has not been paid up, and the corporation is unable to meet its liabilities or to satisfy the claims of its creditors, the assessment may be for the full amount unpaid upon the capital stock; or if a less amount is sufficient, then it may be for such a percentage as will raise that amount;
2. The directors of railroad corporations may assess the capital stock in installments of not more than ten per cent per month, unless in the articles of incorporation it is otherwise provided;
3. The directors of fire or marine insurance corporations may assess such a percentage of the capital stock as they deem proper. En. March 21, 1872.
See sec. 331, C. C., ante.
Santa Cruz R. R. Co. v. Spreckels, 65 Cal. 194, 199, 200, 202, 201, 209, 210, 3 Pac. 661, 802; Marysville etc. v. Johnson, 93 Cal. 549, 550, 27 Am. St. Rep. 215, 29 Pac. 126; Kohler v. Agassiz, 99 Cal. 14, 33 Pac. 741; Pacific Fruit Co. v. Coon, 107 Cal. 451, 40 Pac. 542.
Assessments Exceeding Ten Per Cent.-An action will not lie by a commercial and manufacturing corporation to enforce an assessment exceeding ten per cent of the capital stock, unless it is shown by the corporation that the subscribed capital stock had not been fully paid. (Pacific Fruit Co. v. Coon, 107 Cal. 447, 40 Pac. 542.)
Unpaid Subscriptions.- Agreement to subscribe to stock prior to incorporation, and to pay twenty per cent of the amount subscribed to designated person five days after filing of acts of incorporation to be by such person paid to agents of the corporation for investment, is valid, and binds such subscriber regardless of his refusal to participate in final organization of incorporation, and regardless of the limits of the power of the corporation to levy assessments in excess of ten per cent of value of stock. (West v. Crawford, 80 Cal. 19, 12 Pac. 1123.)
An agreement by a subscriber to the stock of a proposed corporation to pay the amount of his subscription upon the formation of the company, and the issuance of its stock, and not as the same might be called for under section 332, Civil Code, is valid, and the measure of his liability is not fixed by that section of the code, but by the term of his subscription. (Marysville etc. Co. V. Johnson, 93 Cal. 538, 27 Am. St. Rep. 215, 29 Pac. 126.)
A stockholder may be lawfully called upon and required to pay assessments upon his stock to the extent of ten per cent of the par value thereof, except where the whole capital is not paid up, in which case he may be required, if the liabilities of the corporation demand it, to pay by way of assessment the full amount unpaid upon the capital stock. (Kohler v. Agassiz, 99 Cal. 9, 33 Pac. 741.)
Purchaser and transferee of unpaid stock is substituted for origi. nal subscriber as a stockholder of the corporation, and thereafter holds the stock on the same conditions, and subject to the same obligations as the original stockholder; and is liable for an assessment upon the unpaid shares, of which liability he cannot devest himself by assignment of shares subsequent to the levy of the assessment. (V. & T. R. R. v. Hyde, 110 Cal. 632, 52 Am. St. Rep. 136, 43 Pac. 10.)
Assessment is valid against stockholder, notwithstanding obligations which it is levied to meet were incurred before he became such, and corporation has sufficient property to meet such obligations. The liability of a stockholder for unpaid portion of a subscription rests upon the contract of subscription, and the necessity or propriety of requiring him to pay it rests in the discretion of the board of directors. (V. & T. R. R. v. Hyde, 110 Cal. 632, 52 Am. St. Rep. 136, 43 Pac. 10.)
Subscriber for shares of stock of corporation is responsible as a stockholder, although he has not paid for his stock or received certificate therefor. A corporation may give subscriber credit for his stock, as for any other property. Certificates of stock are nrere evidences of property. The property may exist without the certificates. (Mitchell v. Beckman, 64 Cal. 117, 28 Pac. 110. To same effect: Lankershim Ranch etc. Co. v. Herberger, 82 Cal. 603, 23 Pac. 134; California etc. Co. v. Callender, 94 Cal. 127, 28 Am. St. Rep. 104, 29 Pac. 859; San Joaquin etc. Co. v. er, 101 Cal. 79, 35 Pac. 349; Pacific etc. Co. v. Coon, 107 Cal. 452, 40 Fac. 542.)
Stockholder in an insolvent corporation cannot avoid his lia. bility for an unpaid subscription upon stock held by him by assignment without consideration to an insolvent person; and a judgment creditor, who has had execution issued against the corporation and returned nulla bona, may attack the bona fides of such assignment, and enforce the subscription. (National etc. Co. v. Story etc. Co., 111 Cal. 531, 44 Pac. 157.)
Creditor's Bill.- A creditor's bill may be filed against one any number of the stockholders upon insolvent corporation to compel payment of their unpaid subscription to stock. Ordinarily, such a bill is brought for the benefit of all the creditors who may choose to come in, and the court will, without formality of a call not made by the corporation, order the payments to be made to a receiver for the benefit of the creditors, and the fund realized therefrom is distributed ratably among the crditors. (Welch v. Sargent, 127 Cal. 72, 59 Pac. 319.)
LEVY OF ASSESSMENT-OLD ASSESSMENT REMAINING UN
PAID. Sec. 333, C. C. No assessment must be levied while any portion of a previous one remains unpaid, unless :
1. The power of the corporation has been exercised in accordance with the provisions of this article for the purpose of collecting such previous assessment;
2. The collection of the previous assessment has been enjoined; or
3. The assessment falls within the provisions of either the first, second, or third subdivision of section 332. En. March 21, 1872.
See see. 331, C. C., ante.
Santa Cruz R. R. Co. y. Spreckels, 65 Cal. 195, 201.
Limitation Upon Power to Assess. This section is limitation upon the power conferred by section 331, Civil Code. (Santa Cruz R. R. Co. v. Spreckels, 65 Cal. 193.)
WHAT ORDER SHALL CONTAIN.
Sec. 334, C. C. Every order levying an assessment must specify the amount thereof, when, to whom, and where payable; fix a day subsequent to the full term of publication of the assessment notice on which the unpaid assessments shall be delinquent, not less than thirty nor more than sixty days from the time of making the order levying the assessment; and a day for the sale of delinquent stock, not less than fifteen nor more than sixty days from the day the stock is declared delinquent. En. March 21, 1872.
See sec. 331, C. C., ante.
NOTICE OF ASSESSMENT-FORM.
Sec. 335, C. C. Upon the making of the order, the secretary shall cause to be published a notice thereof, in the following form:
(Name of corporation in full. Location of principal place of business.) Notice is hereby given, that at a meeting of the directors, held on the (date), an assessment of (amount) per share was levied upon the capital stock of the corporation, payable (when, to whom, and where). Any stock upon which this assessment shall remain unpaid on the day fixed) will be delinquent and advertised for sale at public auction, and, unless payment is made before, will be sold on the day appointed), to pay the delinquent assessment, together with costs of advertising and expenses of sale.
(Signature of secretary, with location of office.) En. March 21, 1872.
See sec. 331, C. C., ante.
San Joaquin L. & W. Co. v. Beecher, 101 Cal. 81, 35 Pac. 349.
Form of Notice.— The legislature had authority to designate the form of notice to be given, and having done so, and the secretary having given the notice provided by statute, it was sufficient, al. though the notice describes the assessment as levied upon the “capital stock" instead of upon the subscribed capital stock." (San Joaquin L. W. Co. v. Beecher, 101 Cal. 81, 35 Pac. 349.)
PUBLICATION AND SERVICE OF NOTICE.
Sec. 336, C. C. The notice must be personally served upon cach stockholder, or, in lieu of personal service, must be sent through the mail, addressed to each stockholder at his place of residence, if known, and if not known, at the place where the principal office of the corporation is situated, and be published once a week, for four successive weeks, in some newspaper of general circulation and devoted to the publication of general news, published at the place designated in the articles of incorporation as the principal place of business, and also in some newspaper published in the county in which the works of the corporation are situated, if a paper be published therein. If the works of the corporation are not within a state or territory of the United States, publication in a paper of the place where they are situated is not necessary. If there be no newspaper published at the place designated as the principal place of business of the corporation, then the publication must be made in some other newspaper of the county, if there be one, and if there be none, then in a newspaper published in an adjoining county. En. March 21, 1872. Amd. 1873-74, 206.