Mr. Justice Eakin
delivered the opinion of the court.
Two principal questions are presented: (1) Does the recital in the writ show that plaintiff has a paid-up, unimpaired cash capital equal to $100,000 gold coin of the United States? (2) Are the securities to which defendant objects such as are required by the statute? The term “capital” is used in varying senses by text-writers and in the decisions of the courts, which are well defined and distinguished in the text and notes in 5 Am. [398]*398& Eng. Enc. Law (2 ed.), p. 134, et seq., in which it is said, at page 137:
“ ‘Capital’ and ‘capital stock’ are frequently used interchangeably; ‘capital stock’ sometimes referring to the property and assets of the corporation, and ‘capital’ to the amount paid in or to be paid in by the stockholders. In general, profits and surplus earnings do not constitute ‘capital stock,’ or ‘capital,’ when the latter term is used in the sense of the capital stock of the corporation.”
In Mechanics’ & Farmers’ Bank of the City of Albany v. Townsend, 5 Blatchf. 315 (Fed. Cas. No. 9,381), it is said that “capital” means the amount of capital fixed by charter, and does not include surplus earnings. Boon, Corporations, § 105, says that the word “capital,” as used with respect to corporations, primarily signifies the aggregate of the sums subscribed for and either paid in, or agreed to be paid in, by the stockholders.
In People ex rel. Union Trust Co. v. Coleman, et al., 126 N. Y. 433 (27 N. E. 818: 12 L. R. A. 762), it is said:
“The capital stock of a company is one thing; that of the shareholders is another and different thing. That of the company is simply its capital existing in money or property, or both; while that of the shareholders is representative, not merely of that existing and tangible capital, but also of surplus, of dividend earning power. * * While the nominal or par value of the capital stock and of the share stock are the same, the actual value is often widely different. The capital stock of the company may be wholly in cash or in property, or both, which may be counted and valued. It may have in addition a surplus, consisting of some accumulated and reserved fund, or of undivided profits, or both, but that surplus is no part of the company’s capital stock. * * The capital cannot be divided and distributed; the surplus may be. But that surplus does enter into and form a part of the share stock, for that represents and absorbs into its own value surplus as well as capital.”
[399]*399It is said in Kohl v. Lilienthal, 81 Cal. 385 (22 Pac. 691: 6 L. R. A. 522), that:
“ ‘Capital stock,’ as used in this section, is frequently otherwise and as well expressed by the simple word ‘capital,’ and means the money and property with which the company carries on its corporate business. * * It is vested in the corporation as a sacred trust for the protection of its creditors. * * This money and property of the corporation constitutes the actual capital of the company, to which all persons having dealings with the corporation, by means whereof they may become its creditors or become personally liable for its debts, * * look, and have a right to look, to determine the measure of the company’s responsibility and of their security.”
In Bailey v. Clark, 21 Wall. (U. S.) 286 (22 L. Ed. 651), it is said by' Mr. Justice Field:
“When used with respect to the property of a corporation or association, the term [capital] has a settled meaning; it applies only to the property or means contributed by the stockholders as the fund or basis for the business or enterprise for which the corporation or association was formed.”
In Farrington v. Tennessee, 95 U. S. 679, 686 (24 L. Ed. 558), it is said:
“The capital stock is the money paid, or authorized or required to be paid, in as the basis of the business of the bank, and the means of conducting its operations. * * If a large surplus be accumulated and laid by, that does not become a part of it. The amount authorized cannot be increased without proper legal authority. If there be losses which impair it, there can be no formal reduction without a like sanction. No power to increase or diminish it belongs inherently to the corporation. It is a trust fund, held by the corporation as a trustee.”
In State v. Morristown Fire Association, 23 N. J. Law, 196. it is said:
[400]*400“The phrase ‘capital stock,’ as employed in acts of incorporation, is never, that I am aware, used to indicate the value of the property of the company. It is very generally, if not universally, used to designate the amount of capital to be contributed by the stockholders for purposes of the corporation. * * The value of the stock may be greatly increased by surplus profits or be diminished by losses, but the amount qf the capital stock remains the same.”
The case of Sun Mutual Ins. Co. v. Mayor of NeW York, 4 Selden (N. Y.) 241, 250, holds that profits are not capital, except where, by contract or legislative act, they are directed to accumulate, as a basis of credit, and cannot be withdrawn. Undivided profits and surplus are part of the assets of the corporation while they remain, and in that sense are capital until withdrawn, but are subject to be withdrawn at any time; not so with the capital proper, which cannot be withdrawn. It is a trust fund, to stand as security to policyholders and to other creditors of the company.
1. Applying the law as thus stated to the facts in this case, the statute under consideration (Section 4610, L. O. L.) provides that the corporation shall not be permitted to do business “until such corporation shall have a paid-up unimpaired cash capital equal to $100,000 United States gold coin, which shall be invested in this State * * in State or United States bonds, bonds or notes secured by first mortgage upon first-class, otherwise improved, unincumbered real estate, the market value of which shall be at least double the amount invested in or loaned thereon. * * ” This language clearly indicates that the term “capital” means the capital stock of the corporation, as fixed by its articles, which must not be impaired, but which is to be safely invested and remain as a fund for the security of policyholders, and therefore does not include surplus or profits, unless specially [401]*401made a part of the capital or set apart as a basis of credit, and not subject to withdrawal, and it clearly contemplates that the corporation shall have $100,000 of its capital stock fully paid up that cannot be thereafter impaired by withdrawals.
Plaintiff admits that its capital stock has not all been subscribed or paid up, and seeks to show a compliance with the statute by the fact that the stock actually sold has been sold for sums above par, and that the amount realized therefrom was largely in excess of $100,000, constituting a paid-up capital of $100,000.
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Mr. Justice Eakin
delivered the opinion of the court.
Two principal questions are presented: (1) Does the recital in the writ show that plaintiff has a paid-up, unimpaired cash capital equal to $100,000 gold coin of the United States? (2) Are the securities to which defendant objects such as are required by the statute? The term “capital” is used in varying senses by text-writers and in the decisions of the courts, which are well defined and distinguished in the text and notes in 5 Am. [398]*398& Eng. Enc. Law (2 ed.), p. 134, et seq., in which it is said, at page 137:
“ ‘Capital’ and ‘capital stock’ are frequently used interchangeably; ‘capital stock’ sometimes referring to the property and assets of the corporation, and ‘capital’ to the amount paid in or to be paid in by the stockholders. In general, profits and surplus earnings do not constitute ‘capital stock,’ or ‘capital,’ when the latter term is used in the sense of the capital stock of the corporation.”
In Mechanics’ & Farmers’ Bank of the City of Albany v. Townsend, 5 Blatchf. 315 (Fed. Cas. No. 9,381), it is said that “capital” means the amount of capital fixed by charter, and does not include surplus earnings. Boon, Corporations, § 105, says that the word “capital,” as used with respect to corporations, primarily signifies the aggregate of the sums subscribed for and either paid in, or agreed to be paid in, by the stockholders.
In People ex rel. Union Trust Co. v. Coleman, et al., 126 N. Y. 433 (27 N. E. 818: 12 L. R. A. 762), it is said:
“The capital stock of a company is one thing; that of the shareholders is another and different thing. That of the company is simply its capital existing in money or property, or both; while that of the shareholders is representative, not merely of that existing and tangible capital, but also of surplus, of dividend earning power. * * While the nominal or par value of the capital stock and of the share stock are the same, the actual value is often widely different. The capital stock of the company may be wholly in cash or in property, or both, which may be counted and valued. It may have in addition a surplus, consisting of some accumulated and reserved fund, or of undivided profits, or both, but that surplus is no part of the company’s capital stock. * * The capital cannot be divided and distributed; the surplus may be. But that surplus does enter into and form a part of the share stock, for that represents and absorbs into its own value surplus as well as capital.”
[399]*399It is said in Kohl v. Lilienthal, 81 Cal. 385 (22 Pac. 691: 6 L. R. A. 522), that:
“ ‘Capital stock,’ as used in this section, is frequently otherwise and as well expressed by the simple word ‘capital,’ and means the money and property with which the company carries on its corporate business. * * It is vested in the corporation as a sacred trust for the protection of its creditors. * * This money and property of the corporation constitutes the actual capital of the company, to which all persons having dealings with the corporation, by means whereof they may become its creditors or become personally liable for its debts, * * look, and have a right to look, to determine the measure of the company’s responsibility and of their security.”
In Bailey v. Clark, 21 Wall. (U. S.) 286 (22 L. Ed. 651), it is said by' Mr. Justice Field:
“When used with respect to the property of a corporation or association, the term [capital] has a settled meaning; it applies only to the property or means contributed by the stockholders as the fund or basis for the business or enterprise for which the corporation or association was formed.”
In Farrington v. Tennessee, 95 U. S. 679, 686 (24 L. Ed. 558), it is said:
“The capital stock is the money paid, or authorized or required to be paid, in as the basis of the business of the bank, and the means of conducting its operations. * * If a large surplus be accumulated and laid by, that does not become a part of it. The amount authorized cannot be increased without proper legal authority. If there be losses which impair it, there can be no formal reduction without a like sanction. No power to increase or diminish it belongs inherently to the corporation. It is a trust fund, held by the corporation as a trustee.”
In State v. Morristown Fire Association, 23 N. J. Law, 196. it is said:
[400]*400“The phrase ‘capital stock,’ as employed in acts of incorporation, is never, that I am aware, used to indicate the value of the property of the company. It is very generally, if not universally, used to designate the amount of capital to be contributed by the stockholders for purposes of the corporation. * * The value of the stock may be greatly increased by surplus profits or be diminished by losses, but the amount qf the capital stock remains the same.”
The case of Sun Mutual Ins. Co. v. Mayor of NeW York, 4 Selden (N. Y.) 241, 250, holds that profits are not capital, except where, by contract or legislative act, they are directed to accumulate, as a basis of credit, and cannot be withdrawn. Undivided profits and surplus are part of the assets of the corporation while they remain, and in that sense are capital until withdrawn, but are subject to be withdrawn at any time; not so with the capital proper, which cannot be withdrawn. It is a trust fund, to stand as security to policyholders and to other creditors of the company.
1. Applying the law as thus stated to the facts in this case, the statute under consideration (Section 4610, L. O. L.) provides that the corporation shall not be permitted to do business “until such corporation shall have a paid-up unimpaired cash capital equal to $100,000 United States gold coin, which shall be invested in this State * * in State or United States bonds, bonds or notes secured by first mortgage upon first-class, otherwise improved, unincumbered real estate, the market value of which shall be at least double the amount invested in or loaned thereon. * * ” This language clearly indicates that the term “capital” means the capital stock of the corporation, as fixed by its articles, which must not be impaired, but which is to be safely invested and remain as a fund for the security of policyholders, and therefore does not include surplus or profits, unless specially [401]*401made a part of the capital or set apart as a basis of credit, and not subject to withdrawal, and it clearly contemplates that the corporation shall have $100,000 of its capital stock fully paid up that cannot be thereafter impaired by withdrawals.
Plaintiff admits that its capital stock has not all been subscribed or paid up, and seeks to show a compliance with the statute by the fact that the stock actually sold has been sold for sums above par, and that the amount realized therefrom was largely in excess of $100,000, constituting a paid-up capital of $100,000. It is alleged that 7,541 shares have been sold and fully paid up, and that other shares have been sold, though not fully paid for; but it is not shown how much has been paid, so we will assume that the 7,541 shares sold for $100,000, $24,590 of which was profit and neither capital nor capital stock within the meaning of the statute, because it is profits accumulated in the sale of stock, and subject to withdrawal at any time in dividends. The two items of interest mentioned in the statement of the assets of the company are of the same class and cannot be included as part of the $100,000 paid-up capital, which must be invested. This $100,000, mentioned in the statute, must be the trust fund that cannot be withdrawn or in any manner diverted by the corporation. It is the fund with which the corporation transacts its business, and stands as security to the policyholders. It does not include profits or surplus until they have been made capital in some legal way.
2. As to the five loans secured by mortgage, to which the Commissioner objects, we think in each case they should be counted as assets or valid loans to the amount of one-half of the value of the property included in the mortgage. For the reason that plaintiff has not a paid-up, unimpaired cash capital equal to $100,000 in United States gold coin, we -find that defendant was not entitled-[402]*402to a certificate or license at the time the application was made therefor.
Decided March 25, 1913.
(130 Pac. 978.)
The judgment, of date November 7, 1912, and the peremptory writ of mandamus issued on January 3, 1913, are reversed, and the action is dismissed.
Reversed: Dismissed.