But we

§ 1147. A Writing not in Strictness Necessary. have already seen that shares of corporate stock are not goods, wares and merchandise, within the meaning of the seventeenth section of the English statute of frauds.1 A contract to take and pay for shares in a corporation is hence not a contract for the purchase of goods, wares and merchandise within the meaning of that statute. And it would seem to follow that, in strictness of law, it is neither necessary that there should be a contract in writing to take and pay for shares, nor an actual receipt of themor what is tantamount, a receipt of their symbol, the stock certificate in order to constitute one a shareholder. It has accordingly been held that a person may become a shareholder without signing the stock book or any written agreement to take shares; and that a parol agreement made with the directors of a corporation to take stock may be enforced, when neither the governing statute nor the charter requires such contracts to be in writing. Again, it has been observed in a case in Canada, by Osler, J.: "A person may make himself liable to be treated as a shareholder in many other ways than by subscribing for shares and obtaining a formal allotment; and one who caused his name to be entered on the company's books as a shareholder in respect of shares taken for the purpose of making up the statutory amount would, on principle, clearly be estopped from afterwards saying that he was not the holder of such shares." 4

§ 1148. Oral Promise to Subscribe for Shares and Note Given Therefor. One American court has gone so far in this direction as to hold that an oral promise, pending the organization of a corporation, to take shares of the stock, does not constitute the promisor a stockholder or member, and will not furnish a consideration to support a note given by him to pay for such shares. The court say: "The note was a promise to pay for stock which the maker had verbally agreed to take. Had Mrs. Fanning been a subscriber to the stock she would have been entitled to be treated as a stockholder. This would

1 Ante, § 1068.

Be Central Bank of Canada, 25 Can. L. J. 238; Caston's case, 12 App. (Can.) 486.

3 Colfax Hotel Co. v. Lyon, 69 Iowa, 683; s. c. 29 N. W. Rep. 780.

4 Union Fire Ins. Co. v. O'Gara, 4 Ont. (Can.) 369.

have been a sufficient consideration to have supported a promise, either express or implied, to pay for the stock. The agreement must be mutual and binding upon both parties. If the corporation are not bound to treat her as a stockholder, her promise to pay is a nudum pactum, for want of a mutual promise by the corporation to award her the stock. In the absence of proof that she had received the stock, or of any other consideration to support her promise, or of any acts by her, creating an estoppel, her promise to pay for stock for which she has not subscribed, and which the corporation is not bound to deliver at the proper time, is without sufficient consideration to support it." 1 Another American court has held that where A gives his promissory note to a corporation and receives a receipt for the same, which also states that the note when paid will be in full for a certain number of shares of the capital stock, A does not become a stockholder until the note matures and is paid, and a stock certificate is issued. We may take leave to doubt the soundness of both of these decisions. A promissory note given upon parol agreement to deliver goods, wares and merchandise (invalid under the statute of frauds) is undoubtedly supported by a good consideration; and the receipt mentioned in the second case would take the transaction, if it related to the sale of goods, out of the statute, for both the note and the receipt would be read together as one paper.

-

§ 1149. Subscription Not Varied by Parol Evidence. The general rule which excludes parol evidence to vary writings, applies to subscriptions to the capital stock of corporations. Such a subscription cannot, therefore, be varied by parol evidence of a special agreement made prior to or concurrently with it,3

Evansville &c. R. Co. v Posey, 12 Id. 363; Thigpen v. Mississippi &c. R. Co., 32 Miss. 347; Piscataqua Ferry Co. v. Jones, 39 N. H. 491; McClure v. People's Freight R. Co., 90 Pa. St. 269; Cunningham v. Edgefield R. Co., 2 Head (Tenn.), 23; East Tennessee &c. R. Co. v. Gammon, 5 Sneed (Tenn.), 567.

as to show that the subscription was made upon a condition not expressed in the instrument.1

§ 1150. When Explainable by Parol. -No reason is perceived why the rule which lets in parol evidence to explain ambiguities in written coutracts should not apply to contracts of this kind; and there are decisions which support this view. It has been held that the acts of corporations may be proved in the same manner as acts of individuals; and that, if there be no record evidence of their acts, they may be proved by parol. Accordingly, it has been held that, in a suit on a subscription to the stock of an incorporated company, it was competent for the defendant to show by oral testimony, in the absence of record evidence, that the subscription list, upon which the defendant's name appeared, was annulled and abandoned, and that another subscription was subsequently opened and made the basis of the organization by the stockholders.3

It seems that the form

§ 1151. Form of the Subscription. of the subscription is immaterial so that the intention of the parties can be collected from the writing, unless the charter or governing statute requires it to be made in a particular form or manner, in which case, according to one view, the requirement of the statute must be pursued or the subscription will not be binding.5 Unsubstantial variances from the form prescribed by the statute will not, however, prevent the subscription from being

1 Fairfield County Turnp. Co. v. Thorp, 13 Conn. 173; Wight v. Shelby R. Co., 16 B. Monr. (Ky.) 4; s. c. 63 Am. Dec. 522; Kennebec &c. R. Co. v. Waters, 34 Me. 369; North Carolina R. Co. v. Leach, 4 Jones L. (N. C.) 340; Miller v. Hanover &c. R. Co., 87 Pa. St. 95; s. c. 30 Am. Rep. 349. As to subscriptions made upon parol conditions, see post, § 1311, 1401, et seq.

2 Johnson v. Wabash &c. Plank Road Co., 16 Ind. 389; Sodus Bay &c. R. Co. v. Hamlin, 24 Hun (N. Y.), 390.

3 Southern Hotel Co. v. Newman, 30 Mo. 118.

1 Mor. Priv. Corp., 2d ed., § 69; Nulton v. Clayton, 54 Ia. 425; s. c. 37 Am. Rep. 213; Monterey &c. R. Co. v. Hildreth, 53 Cal. 123; Phoenix Warehousing Co. v. Badger, 67 N. Y. 294.

5 Shurtz v. Schoolcraft &c. R. Co., 9 Mich. 269; Carlisle v. Saginaw &c. R. Co., 27 Mich. 315; Parker v. Northern Central &c. R. Co., 33 Mich. 23; Northern Central &c. R. Co. v. Eslow, 40 Mich. 422.

operative. Thus where the legislature provided that the form of the subscription should be payable to the "president, managers, and company," the contract was held valid although the word "president" was omitted and it was made payable to the managers and company. The court found enough in the other expressions of the instrument to describe the corporation intended and to effectuate the contract.1

§ 1152. In what Kind of Book on what Kind of Paper. Unless the charter or governing statute so provides, it is not necessary to the validity of the subscription that it should be originally made in a book prepared for that purpose. And although the statute requires books to be opened, the use of subscription papers in the first instance instead of a book does not make the subscription void.2 Subscriptions made on a loose sheet of paper, which was afterwards put in a bound book used as a record of the company, were held sufficient, where the contents of this paper, with the names of the subscribers and the amounts subscribed, were entered in the book by the commissioners who were appointed to open books of subscription.3 Where the subscription was made in a small blank book before the regular stock book for subscriptions was opened, and was afterwards accepted by the corporation, it was regarded as unnecessary, in order to a right of action for assessments, that it should be transferred to the stock book of the company.*

§ 1153. Signing in Blank. —A signature to an incomplete paper, wanting in any substantial particular, will not be binding upon the signer without further assent on his part to the completion of the instrument.5 When, therefore, a person subscribed to articles of association for the purpose of organizing a railroad corporation under the General Railroad Act of New York

1 Hagerstown Turnp. Co. v. Creeger, 5 Harr. & J. (Md.) 122; s. c. 9 Am. Dec. 495.

2 Hamilton &c. Plank Road Co. v. Rice, 7 Barb. (N. Y.) 157; Ashtabula &c. R. Co. v. Smith, 15 Oh. St. 328; Stuart v. Valley R. Co., 32 Gratt. (Va.) 146; Brownlee v. Ohio &c R.

Co., 18 Ind. 68; Mobile & Ohio R. Co. v. Yandal, 5 Sneed (Tenn.), 294.

• Woodruff v. McDonald, 33 Ark. 97.

Brownlee v. Ohio &c R. Co., 18

Ind. 68.

5 See, however, note, 13 Am. Dec. 669.

of 1850,1 and, at the time of so signing, the names of the directors were left in blank, it was held that the instrument was incomplete and inoperative as against him; that there was no implied consent on his part to the insertion of the names of any persons as directors; and that, by the insertion of such names without his consent, the instrument was not made binding upon him. But where certain persons signed the subscription book of a corporation, leaving the amounts in blank, intending that they should be represented as subscribers for the purpose of influencing others to subscribe, it was held, in an action by the creditors of the corporation, seeking to compel payment of unpaid subscriptions, that the signers impliedly authorized the filling up of the blanks by thus taking subscriptions.3

§ 1154. Effect of Erasures. The erasure of a subscription for stock does not per se prevent suit upon it, but explanatory parol evidence is admissible."

§ 1155. Explanatory Memorandum Annexed. Where an explanatory memorandum is annexed to the subscription paper, the legal presumption is that it was there when the subscription was made, in the absence of evidence to the contrary.5

§ 1156. Receipt on Margin of Subscription Book.—A mere receipt for a certificate of stock written in the margin of the subscription book has been held a sufficient subscription for stock."

§ 1157. Rule which Requires a Subscription to the Articles of Association. - Where corporations are organized under general laws, by preparing and filing in the general office of the secretary of state, or some other public office, articles of association signed by the co-adventurers, there is more reason for holding that a valid subscription can only be made beneath

1 N. Y. Laws, 1850, ch. 140.

2 Dutchess &c. R. Co. v. Mabbett, 58 N. Y. 397.

8 Jewell v. Rock River Paper Co., 101 Ill. 57.

4 Bordentown &c. . Imlay, 44 N. J. L. 285.

5 Robinson v. Pittsburgh &c. R. Co. 32 Pa. St. 334; s. c. 72 Am. Dec. 792. Lohman v. N. Y. and Erie R. Co.,

2 Sandf. (N. Y.) 39. See also Carrick's case, 1 Sim. (N. s.) 505; Clements v. Todd, 1 Exch. 268.