This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The courts are divided as to whether an infant can be a member of a mutual or assessment corporation.1 So there is a conflict of authority as to whether an infant can be an incorporator of an ordinary stock corporation. It has been held that he might be an incorporator as far as collateral attack was concerned ;2 but on direct attack it has been held that he could not be an incorporator.3 As between vendor and vendee, there is no difference between a sale of corporation stock and other chattels, but the minor may disaffirm.4 This is true even if the vendor is the corporation itself, which issues its shares to the infant to take up shares in a dissolved corporation whose property has been transferred to the corporation issuing stock.5 It has been held that the directors may refuse to allow a transfer to a minor to be made on the books of the company ;6 but if they do, the transfer is merely voidable,7 is good until avoided,8 and cannot afterward be ignored by the corporation ;9 and a corporation which makes transfer on its books of shares of stock sold by a minor is not liable therefor.10 Under the English statutes, an avoidance by a minor relieves him from liability for calls on his stock bought or subscribed for by him,11 if in a reasonable time,12 and subject to the rule that he cannot retain the shares and repudiate his liability for calls.13 He must avoid the whole contract to escape this liability.14 Of course if he ratifies his contract after majority he cannot escape liability.15 It may undoubtedly be provided by statute that the property of a minor in the hands of his guardian may be taken on his stock-liability; and under such a statute his real estate may be levied on.16 Of course one subscribing for stock in name of minors, who himself receives the benefit of stock is personally liable for debt.17
1 Gray (Mass.) 455, in which the infant was sent to California for a third of his earnings; but the result was exactly opposite.
1 In Chicago, etc., Association v. Hunt, 127 111. 257; 2 L. R. A. 549; 20 N. E. 55, it was held that he could be a member of such a corporation. In In re Globe, etc., Association, 135 N. Y. 280; 17 L. E. A. 547; 32 N. E. 122, affirming 63 Hun (N. Y.) 263, it was held that the statutes contemplated only members who could not avoid their contracts; and hence an infant could not be a member or incorporator.
2 In re Nassau Phosphate Co., 2 Ch. Div. 610; In re Saxon & Co. (1892), 3 Ch. 555; but in these cases the validity of the corporation was not directly attacked by the state, but collaterally.
3 In Hamilton, etc., Co. v. Town-send, 13 Ont. App. 534; 16 Am. & Eng. Corp. Cas. 645, it was held that a statute authorizing five persons to form a corporation meant five persons of full age, and that if one was a minor, even if he ratified his act after majority, the incorporation was defective.
4 Indianapolis, etc., Co. v. Wilcox, 59 Ind. 429; Robinson v. Weeks, 56 Me. 102.
5 White v. Cotton-Waste Corporation, 178 Mass. 20; 59 N. E. 642.
6 Symon's Case, L. R. 5 Ch. App. C. 298.
7 Maguire's Case, 3 De Gex & S. 31; .Lumsden's Case, L. R. 4 Ch. App. C. 31; Ebbett's Case, L. R. 5 Ch. App. C. 302; Baker's Case, L. R. 7 Ch. App. C. 115.
8 In re Nassau Phosphate Co., 2 Ch. Div. 610.
9 Hart's Case, L. R. 6 Eq. 512; Wilson's Case, L. R. 8 Eq. 240; Mitchell's Case, L. R. 9 Eq. 363; Creed v. Bank, 1 O. S. 1.