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(Delaware, 1930)
HELD 1: All the no par value stock that were issued both before and after the
amendment was invalid because therefore was never fixed as required by law.
HELD 2: No proper and lawful consideration was given for the common
shares of stock issued to the Dillmans and Solly at the first board meeting.
4) C’ receiver (Langdeau) files a suit agint McCarty for the recovery of the
sum ($379,280).
5) McCarty’s defense: the contact between him and the C was void since it
was against the Texas constitution, hence the receiver cannot recover from him.
2) Said stockholder only paid 25cents for a 1$ on the par value of the of
stocks.
ISSUE: WON the defendants are required, because of the creditor’s claim,
to make up any difference which may exist between what was actually paid on
their stock and its par value.
2) BOD issued a call to Poizat. Notice of the resolution was given to Poizat.
3) Poizat replied that he was willing to lose the 25% he invested because of
the unreliable position of the C.
3) BOD issued a call to 50% of all unpaid subscriptions. The BOD call
was not published, although Baltazar received a notice of said call.
5) Since Baltazar ignored the call, C sued him for the balance.
6) Baltazar’s defense:
a) C’s action was premature because there was no valid call (because
no publication).
b) he was released by the BOD
c) claims from the C a reasonable compensation as president
HELD 1: Call should not only be sent by letter but also published.
HELD 2: The release attempted in the Resolution 17 was not valid for lack of
a unanimous vote. Release from such payment must be made by all SH.
De Silva v. ABOITIZ & COMPANY (1923)
1) De Silva subscribed for 650 shares of stock (P500/share) of ABOITIZ.
2) He paid only for 200 shares, so that 450 remained unpaid for which he
was indebted to the sum of P225,000 .
3) April 1922- he was notified of the call for payment for unpaid
subscribed stocks and that it will be declared delinquent and sold if not
paid.
The B-Ls provide that “Provided however, That from this 70% of the
profit obtained the BOD may deduct such amount as it may deem fit
for the payment of the unpaid subscriptions to the capitals stock and
not pay any dividend to the holders until said shares were paid in full.”
Thus, when C made a call and declared the unpaid subscribed stocks
of complainant to be delinquent, C violated the right of the SH as
stated in the B-Ls.
HELD: The said provision may be resorted to in the discretion of the BOD.
Said B-L provision does not give the shareholder the right.
If the BOD does not wish to make, or does not make, use of said authority,
it has 2 other remedies for accomplishing the same purpose. As stated in
Velasco v. Poizat: sale of delinquent shares or court action.
ISSUE: WON the stipulation contained in the subscription to the effect that
the subscription is payable from the first dividends declared on the shares has
the effect of relieving the subscriber from personal liability in an action to recover
the value of the shares?
5) Chua Soco’s interest n the 500 shares subscribed for was attached
and the receipt seized by the sheriff.
6) The attachment was levied after the defendant Bank had received
notice of the fact that the receipt had been endorsed over to the
plaintiff.
b) praying that his, the plaintiff’s, lien on said shares, by virtue of the
chattel mortgage, be declared to hold priority over the claim of the
defendant Bank.
the interest held by Chua Soco was merely an equity w/c could not be
made the subject of a chattel mortgage
HELD 1: At common law, a C has no lien upon the shares of SHs for any
indebtedness to the C.
2) It is alleged that it has always been the practice and procedure of the
Corporation, to issue certificates of stock to its individual subscribers for unpaid
shares of stock.
5) Of the 400 shares of stock subscribed by Rose, he had 375 shares of fully
paid stock, duly covered by certificates of stock issued to him.
c) Resolution No. 4 (Exh. C) resolved that "any and all shares of stock
of the Lingayen Gulf Electric Power Co., Inc., issued as fully paid-
up to stockholders whose subscription to a number of shares has
been declared delinquent with the accrued interest on the unpaid
thereof per Resolution No. 42, S. 1954, of the Board of Directors
which has been duly published in the `Manila Chronicle,' are hereby
incapacitated to utilize or avail of the voting power until such
delinquency with the accrued interest is fully paid-up as indicated in
Resolution No. 3, S. 1955."
10) In their complaint, Baltazar and Rose prayed that a writ of preliminary
injunction be issued against the defendants, enjoining them to desist and refrain
from carrying out the objects and purposes of the three resolutions aforestated,
and commanding them to allow plaintiffs and companions to vote in the
stockholders' meeting on May 1, 1955, their fully paid-up shares of stocks, as
evidence by stock certificates issued to them and outstanding on the stock book
of the defendant Corporation, on or before January 30, 1955, to declare said
three resolutions illegal and invalid, and to pay plaintiffs the sum of P10,000.00
each, as damages.
11) Defense:
HELD 1: The cases at bar do not come under the aegis of the principle
enunciated in the Fua Cun vs. Summers case, because it was the practice
and procedure, since the inception of the corporation, to issue certificates
of stock to its individual subscribers for unpaid shares of stock and gave
voting power to shares of stock fully paid.
And even though no agreement existed, the ruling in said case, does not
now reflect the correct view on the matter, for better than an agreement or
practice, there is the law, which renders the said case of Fua Cun-Summers,
obsolescent.(Note: does not agree with Sec. 64 of current Code).
Then the decision discussed how the principle applies differently for par
and no par stocks.
HELD 2:
3) Po sold to Ricardo A. Nava for two thousand pesos twenty of his eighty
shares. In the deed of sale Po represented that he was "the absolute and
registered owner of twenty shares" of PEERS MARKETING CORP.
4) Nava requested the officers of the corporation to register the sale in the
books of the corporation.
5) C denied the request because Po has not paid fully the amount of his
subscription. Nava was informed that Po was delinquent in the payment of the
balance due on his subscription and that the corporation had a claim on his entire
subscription of eighty shares which included the twenty shares that had been
sold to Nava.
6) Nava filed a Petition for Mandamus to compel the corporation and its EVP
and secretary, respectively, to register the 20 shares in Nava's name in the C's
transfer book contending that:
Nava argues that under section 37 a certificate of stock may be issued for
shares the par value of which have already been paid for although the entire
subscription has not been fully paid. He contends that Peers Marketing
Corporation should issue a certificate of stock for the twenty shares,
notwithstanding that Po had not paid fully his subscription for the eighty shares,
because section 37 requires full payment for the subscription, as a condition
precedent for the issuance of the certificate of stock, only in the case of no par
stock.
Nava relies on Baltazar vs. Lingayen Gulf Electric Power Co., Inc., L-162,36-38,
June 30, 1965, 14 SCRA 522, where it was held that section 37 "requires as a
condition before a shareholder can vote his shares that his full subscription be
paid in the case of no par value stock; and in case of stock corporation with par
value, the stockholder can vote the shares fully paid by him only, irrespective of
the unpaid delinquent shares".
7) C Defense:
HELD: In this case no stock, certificate was issued to Po. Without the stock
certificate, which is the evidence of ownership of corporate stocks; the
assignment of corporate shares is effective only between the parties to the
transaction.
[Campos Notes: Section 64 of the Code clearly supports the Fua Cun case and
its prohibitory language seems to rule out an agreement contrary to its
provisions. The rule applies to par and no par stocks leaving no room for the
application of the Lingayen Gulf case.]