2. A Subscriber Can Not Withdraw

The question has been asked, why can not a subscriber withdraw his promise after the requisite number have subscribed, the same as before? Why should the signing or promising by the entire number have the effect of binding a subscriber? Surely he has received no consideration for signing; the act is purely voluntary. The answer is that a subscription for shares, or promise to take and pay for a specified number, is not a common law contract; if it were, then this objection would be more weighty. The validity of a subscription depends on the character or statute under which it is made. If a subscriber has complied with the statutory terms, his subscription is binding. In other words, he is bound because the statute says he is; and there is no denial to an imperative.

1 Hudson Real Estate Co. v. Tower, 156 Mass. 82.

A subscriber can not escape fulfilling his obligation on the ground that some other subscription is not legal. Each subscriber is individually liable, and if he is stud for not keeping his promise, his only defense, if he has any, is some matter relating to his own individual case, for example, that he has failed in business and gone into bankruptcy.

3. The Directors Can Not Release Him

Nor can he be discharged from fulfilling his obligation by any act of the directors. As soon as the subscriptions for the stock are completed, an obligation has been created which is quite beyond the power of the directors afterward elected to change. Though directors may, and often do, discharge a claim that their corporation may have against a debtor, or take less than the full amount, the)' can not deal in this way with a subscriber or shareholder. All must pay, and if perchance any one fails before he has paid for his shares, the law prescribes what must be done in his ease, and this must be strictly followed.

4. Mode Of Proceeding When A Subscriber Fails To Pay

The national bank act provides that when a subscriber fails, or is unable to pay, although promising in perfectly good faith, the fact shall be duly advertised, and an endeavor be made to get subscribers for the amount. Of course the other subscribers are not required to increase their subscriptions. Very likely they would do so rather than fail to organize the bank. If none of them, 01 any other person, is able or willing to take the stock, the law provides for diminishing the amount of capital, and of organizing the bank with less than was first intended. If the reduction thus caused should be so great as to bring the remaining amount below the minimum limit required by law, a receiver must be appointed to wind up its affairs.

5. The Right Of A Subscriber To Transfer His Shares

One of the incidents of all shares is their transferability; but what are the rights of a subscriber to transfer them before they are issued, before his bank is formed? All that now exists is a paper containing the promises of individuals that they will take and pay for the shares set opposite to their names. This promise, however, possesses a transferable character, but not so completely as to relieve him from his subscription. This indeed can not be done until a corporation is duly formed which assents to the change. When the corporation has come into full life, then the original subscriber is relieved, and the purchaser stands in his place.