Bing v. Bank of Kingston

Powell, J.

(After stating the foregoing facts.)

1. The first special exception appearing in the record is that the court allowed a witness to testify that the notes were given for eight-shares of stock in the gin and warehouse company; the objection being that the parol testimony was incompetent to add to the terms of the notes. The notes contained no recital as to consideration, other than the general language "value received." It is elementary that the consideration of a writing may be inquired into and established by parol, where the object of the inquiry is not to contradict or vary a specific consideration actually agreed on and expressed in the writing.

2. Another point made is that the notes were without consideration because the charter was not applied for or obtained until after the notes were given, and that as no common contract of subscription under the Civil Code, §3661, was shown, there was no consideration for the contract when it was made. A contract may be valid though based on no consideration presently supplied, if there is a promise that one shall be supplied.

3. It is said, however, that the Bank of Kingston gave no present consideration for the notes, and did not agree to supply, and, under the charter and the purposes of its creation, could not agree to supply-in the future, the consideration contemplated, — that it had no authority to organize other corporations and to agree to deliver shares of the capital stock of corporations to be organized in the future. The fallacy of this argument is that it overlooks the proposition that the consideration of a contract need not flow directly from the promisee, but may be the promise or undertaking of one or more third persons. Civil Code, §3664. The consideration for the contract was not an agreement on the part of the bank to organize the corporation and deliver the capital stock, but was the agreement of the promoters of the proposed corporation that there would be issued to him and he might own eight shares of the capital stock of the corporation when it was duly organized.

4. The notes were negotiable in form, recited that they were given for "value received," and were also under seal. Exception is taken to the following instruction of the court to the jury: "Negotiable notes similar to these are implied to have a consideration, but that implication may always be rebutted by proper pleading and evidence in support thereof." There was certainly m* *581 error as against the defendant in this charge. Civil Code, §-3656,; Joyce on Defenses to Commercial Paper, §§183, 186; Purcell v. Armour Packing Co., 4 Ga. App. 253 ( 61 S. E. 138 ).

5. Exception is also taken to the following instruction of the court to .the jury: “If these notes were given as subscription to stock in a company organized or being organized, whose name had not yet been determined upon, and if the executor, the maker thereof, the defendant here, knew of it, agreed to it, subscribed in good faith to this stock hereafter to be delivered, it was a good and sufficient consideration to support these notes.” Prior to the organization of a corporation certain preliminaries are, in the nature of things, necessary. Frequently, and indeed almost generally, an agreement to organize, containing a subscription to the capital stock, is prepared and signed. Sometimes another course is pursued and the parties to the transaction pay into the hands of some person, designated or agreed upon, the capital to be employed. Again, they may not pay in the capital in cash, but may give notes, and these notes, being deposited with some person in the nature of a trustee, evidence the subscriptions of the respective parties to the stock. Any one of these arrangements, or even a combination of them, is permissible and lawful. The present case does not involve am of the propositions arising from changes made in the nature or form of the proposition after a subscriber or proposed future stockholder has agreed to become a member of the corporation. Of course, if a person subscribes for stock in a corporation to be organized on .a certain basis or for certain purposes, and the things thus agreed upon are changed or never come into existence, he is not to be held to his contract. See Hendrix v. Academy of Music, 73 Ga. 437 ; Memphis Branch R. Co. v. Sullivan, 57 Ga. 240 . Nor is there in the present ca?e any such point as there was in the case of Allen v. Hastings Industrial Co., 2 Ga. App. 291 ( 58 S. E. 504 ), .that the proposition to subscribe was withdrawn before the agreed amount was subscribed .or before it became a completed contract. We think that as applied to the facts of the present transaction .the charge .of the court was correct. See generally, on this subject, Branch v. Augusta Glass Works, 95 Ga. 573 ( 23 S. E. 128 ).

6. It is said, however, that the proposed corporation never obtained a valid charter, because the application for .charter did not *582 state tbe amount of capital stock actually paid in. A. copy of this-application is found in. the brief of evidence and contains the following declaration ■ “The capital stock of said corporation is to-be ten thousand dollars.” Among the things which the code requires to be stated in an application for charter is “the amount of capital stock to be employed by them actually paid in.” Civil Code, §2350, par. 1. This, however, must be construed in pari materia with the. provision of the third paragraph of this same •section, that “No corporation created under this section shall commence to exercise the privileges conferred by the charter until ten per cent, of the capital stock is paid in.” The words “actually paid in” do not relate to the time of the filing of the application for charter, but to the time when the organization is completed. The words are inserted into the context as a legislative declaration that the amount of capital stock which the applicants state is to-be employed shall be the same as that which they shall be subsequently bound to pay in before the personal liability of the incorporators is discharged. It is merely a reminder of the law’s prohibition against the organization of a corporation with a fictitious amount of capital stated in the charter. The law does not require any part of the capital stock to be paid in before the charter is granted and the corporation begins business, as a legal entity.. Branch v. Augusta Glass Works, supra. Hence a statement in the-application of the amount of capital which the corporators propose to employ is sufficient. The law fixes the responsibility for a failure to pay in that amount on or after organization. See Walters v. Porter, 3 Ga. App. 73 ( 59 S. E. 452 ). Just as was the case in the Augusta Glass Works case, supra, this is an effort to compel payment from one of those who had become bound by his promise-to pay in a portion of the necessary capital. The suit properly proceeds for the use of the corporation in the name of the bank which was the designated or agreed trustee to hold the notes or funds pending the obtaining of the charter and the organization-thereunder.

7. If the defendant was not released from his contract by reason, of his drunkenness at the time of its creation, he has been properly held to it. Upon the subject of drunkenness as a reason for avoiding the contract, the court instructed the jury as follows: “Voluntary drunkenness, not induced by the party of the other part, and. *583 which is not sufficient to deprive a man entirely of his reason, will not avoid his liability.on a contract, provided there is no fraud or imposition on the part of the party of the other part.” The defendant excepts in general terms to this charge. As there was no contention that the defendant’s alleged drunkenness was in any wise induced by the opposite party, we think it correctly stated the rule of law applicable to the case. See Civil Code, §3654. The jury was fully authorized to find, under the evidence, that the defendant was perfectly sober when he signed the notes.

8. The notes contained the following language: “With interest from 8 at 8 per cent, per annum.” The witness who drew the note was permitted to testify, over objection, that under the agreement ■all the notes Were to bear interest from July 30, 1906, to which time they were' antedated on their face, and that, intending to write the word “date,” as the period from which interest was to-run, by inadvertence he wrote “8” in the blank space left in the note. As thus written, the note was ambiguous- and subject to parol explanation. Even if this is not correct, the court, in the absence of explanation, by construction would have to look to the fact that the figure “8” is an abbreviation in common use, in giving dates for the month of August, the eighth month in the year; and since the computation from July 30 would not give a result materially different from a computation made from August ^ 1, no serious harm has been done the defendant in any event. See Leffler Co. v. Dickinson, 1 Ga. App. 63 ( 57 S. E. 911 ). No error appears, and the evidence fully supports the verdict.

Judgment affirmed..