§ 3242. Corporations for profit to give notice of opening books for subscription-Notice may be waived— The persons named in the articles of incorporation of a corporation for profit, or a majority of them, shall order books to be opened for subscription to the capital stock of the corporation, at such time or times and at such place or places as they may deem expedient, and of the time and place of opening which books at least thirty days' notice shall be given by publication in a newspaper published or generally circulated in the county or counties where books of subscription are to be opened; provided, that such notice may be waived in writing by all the incorporators, and such waiver shall be entered or copied in the records of said corporation. 88 O. L. 280.

Not necessary to make stock subscriptions in a book opened by the company for the purpose. Railroad Co. v. Smith, 15 Ohio St. 328. The omission to pay ten per cent at the time of subscription does not release subscribers from liability to pay their subscriptions. Henry v. Railroad Co., 17 Ohio, 187. It is not even necessary that the subscription provide for the payment of the amount in hand. Chamberlain v. Railroad Co., 15 Ohio St. 225. And an agreement, by which a right was attempted to be secured by a stockholder to pay his stock subscription in anything else than money, will be treated as a fraud on the other stockholders, and the payment of the subscription in money enforced. Henry v. Railroad Co., supra; Noble v. Callender, 20 Ohio St. 199.

A subscriber may insert in his subscription any conditions precedent he may choose, and, until they are performed, his relation as stockholder does not arise. Chamberlain v. Railroad Co., supra. Conditional subscriptions become absolute on the performance of the conditions. Railroad Co. v. Smith, 15 Ohio St. 328. And where such a subscription was delivered to the company before the election of directors, and, after the election of directors, the condition was performed, the subscription took effect at the time of performance. Ib. A condition that the road shouid "pass through" a given locality is performed by the location of the road on the route designated. Railroad v. Smith, supra; Railroad Co. v. Stout, 26 Ohio St. 241. A condition in the words "provided the road is built" in a certain locality, is performed when the road is permanently located at that place, although, from failure of funds, it is never completed. Warner v. Callender, 20 Ohio St. 190. And a condition in the words "provided the road is located" on a given route, "and that a freight-house or depot be built” at a point named, is performed on the permanent location of the road in accordance with the condition, and the provision in relation to the erection of buildings is a stipulation merely, and not a condition precedent. Chamberlain v. Railroad Co., supra. But a subscription upon the condition that the same should be expended upon a certain line of road to be thereafter located by the company cannot be enforced, unless the company shows that the road has been con

structed on that line, or offers, and is ready, to expend the money according to the condition. Trott v. Sarchett, 10 Ohio St. 241. And when the maker of a conditional subscription pays a part of it, and for the balance gives his note, and accepts from the company a receipt stipulating that when the note is paid the amount should be applied on his stock he thereby waives the conditions precedent. Chamberlain v. Railroad Co., supra.

It is no defense to an action upon a stock subscription that the defendant, with others, was guilty of a violation of law in assuming to do business under the act of incorporation under which the organization of the company was effected, or intended to be effected. Voorhees v. Receivers, 19 Ohio, 463. Nor will a member of a mutual fire insurance company, when sued upon an assessment on his deposit note, be permitted to set up, by way of defense, that he and his associate corporators have neglected to comply with the provisions of their charter. Insurance Co. v. Horner, 17 Ohio, 407. But a subscriber to stock may defend against an action on his stock subscription by showing that there never was any such corporation. Navigation Co. v. Eagle, 29 Ohio St. 238. But whether a stockholder, who for years has dealt with the corporation, can, when sued for unpaid subscriptions, set up technical defects in the certificate of incorporation, quære. Warner v. Callender, supra.

A note given for stock subscribed, without any intention to pay it, and merely for the purpose of pretending to the public that the stock was greater than it really was, or for the purpose of preventing the predominance of certain stockholders, is valid, and its payment will be enforced. Bates v. Lewis, 3 Ohio St. 459. And an assignment of stock to a fictitious person is a nullity. Turnpike Co. v. Ward, 13 Ohio, 120.

An immaterial change in the route of a turnpike company does not release a subscriber. to the stock of the company from his obligation to pay his subscription. Turnpike Co. v. Brush, 10 Ohio, I. But where, after a subscription to stock in a corporation, the powers of the corporation were extended, and it was authorized to engage in a business not contemplated by the original charter, it was held that the subscription could not be enforced. Railroad Co. v. Elliott, 10 Ohio St. 57.

Where a married woman makes a subscription to the capital stock of a railroad company, by which she agrees to take and pay for a certain number of shares of the stock, but makes default in payment, and action is brought to charge her separate property with the amount of such subscription: Held, that in the absence of any proof that either party dealt on the credit of her separate property, equity will not imply or enforce a charge against the same. Rice v. Railroad Co., 32 Ohio St. 380. But see Williams v. Urmston, 35 Ohio St. 296.

Verbal promise to take shares is not binding, unless on principle of estoppel. Fanning v. Insurance Co., 37 Ohio St. 339.

Subscribers to the stock of a de facto corporation cannot release themselves from payment of their subscriptions. Gaff v. Flesher, 33 Ohio St. 107. Ouster in quo warranto proceedings is no defense to such liability, and there is no difference between corporations de jure and de facto in that respect. Ib., and Rowland v. Meader Furniture Co., 38 Ohio St. 269.

§ 3243. When subscriptions payable

An installment of ten per cent on each share of stock shall be payable at the time of making the subscriptions, and the residue thereof shall be paid in such installments, and at such times and places, and to such persons, as may be required by the directors of the corporation. 50 v. 274, § 6; S. & C. 296.

Where partners organize a corporation and transfer partnership property at inflated valuation to the corporation in payment of stock, if the corporation becomes insolvent the transaction will be regarded as a fraud, and each partner will be held liable for difference between stock issued to him and the actual value of his interest in the partnership property transferred. Gates, Adm'r, v. The Tippecanoe Stone Co., 57 Ohio St. 60, affirming 9 C. C. 99. See also Ford, Rec., v. Lamson, 17 C. C. 539.

Before an action can be maintained by a railroad company to recover unpaid subscriptions to its stock, its board of directors must have required the same to be paid in certain installments, and at a certain time and place. Railroad Co. v. Hall, 26 Ohio St. 310. And under the general corporation act assessments on subscriptions to the capital stock of railroad companies might be made and enforced, although the whole amount of such stock mentioned in the certificate of incorporation may not have been subscribed. Jewett v. Railway Co., 34 Ohio St. 601.

A notice to pay installments to the treasurer of the company implies that the payment is to be made at his office, and is sufficient. Turnpike Co. v. Ward, 13 Ohio, 120. And where the law required "at least sixty days' notice," a single notice, published at least sixty days before the day of payment, is all that is required. Ib.

A subscription to a railway company, payable when the road is completed, does not pass by a sale of the road, subscriptions, etc., to another company which completes the road. R. R. Co. v. Hinsdale, 45 Ohio St. 556.

Subscribers cannot release themselves by refusal to pay when subscriptions are necessary for payment of corporate debts. Gaff v. Flesher, 33 Ohio St. 107, and Royce et al. v. Tyler, 2 C. C. 175. Nor will stockholders be permitted to show that subscriptions were made prior to filing articles of incorporation. Ib.

§ 3244. Certificate of subscription to stock, and notice of election of directors

As soon as ten per cent. of the capital stock is subscribed, the subscribers of the articles of incorporation, or a majority of them, shall so certify, in writing, to the secretary of state, and thereupon shall give notice to the stockholders, as provided in section three thousand two hundred and forty-two, to meet at such time and place as they may designate, for the purpose of choosing not less than five nor more than fifteen directors, who shall continue in office until the time fixed for the annual election, and until

their successors are chosen and qualified; provided, that in case all subscribers are present in person, or by proxy, such notice may be waived in writing, and the incorporators of the company shall be liable to any person affected thereby, to the amount of any deficiency in the actual payment of said ten per cent at the time of so certifying. 77 O. L. 266; S. & C. 276; 91 O. L. 304.

Liability of incorporators is for amount of deficiency in actual payment of ten per cent of authorized capital stock; and creditors need have no knowledge of certificate to entitle him to its benefit. Hessler v. Cleveland, etc., Co., 61 Ohio St. 621.

It is not necessary that this notice be given by the persons named in the certificate of incorporation, and the provision in regard to notice is directory merely; if, after the necessary amount of stock has been subscribed, the stockholders meet and elect directors, the acts of the directors cannot be questioned collaterally, on account of irregularity in their election. Chamberlain v. Railroad Co., 15 Ohio St. 225.

This section requires only that the fact of ten per cent being subscribed be certified; but the entire section and section 3243 show that before elecing directors ten per cent., at least, of the capital stock shall be paid.

When in a petition it is averred that directors of a railroad company had been duly elected by the stockholders, in pursuance of notice, it is to be presumed that the requisite amount of stock has been subscribed to authorize such election, and also to authorize the location of the road, and the making of assessments by the directors so elected. Railroad v. Smith, 15 Ohio St. 328.

See 17 B. 130, for article on power to remove directors for cause. See note to Trust Co. v. Floyd, 47 Ohio St. 525, under sec. 3248.

3245. Conduct of election

At the time and place appointed, directors shall be chosen, by ballot by the stockholders who attend for that purpose, either in person or by lawful proxies; at such election and at all other elections of directors, every stockholder shall have the right to vote in person or by proxy the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate said shares and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them on the same principle among as many candidates as he shall think fit; and such directors shall not be elected in any other manner. A majority of the number of shares shall be necessary for a choice, but no person shall vote on any share on which any installment is due and unpaid. At such first election the subscribers of the articles of incorporation, or any of them as may be present, shall be inspectors of such election, and shall

certify what persons are elected directors, and shall appoint the time and place for holding their first meeting.

See note to form No. 34.

See 104 Pa. St. 150-154; 109 Pa. St. 560; 103 Cal. 357.

93 O. L. 230.

One receiving majority of votes so cast is elected, though he does not receive the votes of the holders of a majority of the shares. Schwartz v. State, 61 Ohio St. 497.

Directors cannot appoint inspectors. State v. Merchant, 37 Ohio St. 251. Under former statute stockholders could not cumulate their votes in election of directors or officers. State ex rel. Baumgardner v. Stockley, 45 Ohio St. 304.

Stockholders may place their stock in the hands of a depositary with direction to vote as directed by a committee appointed by themselves and subject to their control. The validity of the election of a director does not depend on what he may contemplate doing when elected. Railway Co. v. State, 49 Ohio St. 668.

§ 3245a(1). Corporations may limit votes of stockholdersA corporation may provide in its articles of incorporation that each stockholder, irrespective of the amount of stock he may own, shall be entitled to one vote, and no more, at any election of directors or upon any subject submitted at a stockholders' meeting, and when such provision is made it shall be governed thereby.

§3245b(1). Provisions to which subject

Every corporation where articles of incorporation contain the limitation mentioned in section thirty-two hundred and fortyfive (a), shall be subjected to the following provisions:

1. No person shall hold or own stock in excess of one thousand dollars face value.

2. The directors shall annually, within thirty days after the thirty-first day of December, make and file with the recorder of the county in which the corporation is doing business, a statement of its financial condition upon the said thirty-first day of December, plainly setting forth its assets and liabilities in detail, the amount of its paid up capital stock, the names of its stockholders, and the number of shares owned by each, and said statement shall be signed and sworn to by a majority of the directors, including the treasurer, before any officer authorized to administer oaths in this state. If the board of directors fail to make the annual statements required by this section, or if they make a false state