160 Ill. App. 506 | Ill. App. Ct. | 1911
delivered the opinion of the court.
The clause in the certificate that it was transferable only to some person first approved by the board of directors was an illegal restriction upon the right of a stockholder to transfer his stock and one which the corporation had no right to make; hence the appellants cannot urge any valid defense based upon that provision in the certificate.
The answer alleges that the original certificate was issued to Douglas, an employe of the Aurora Daily News, as a gratuity, with the object of making the employes of the paper feel a personal interest in the welfare of the Company. The acceptance of it by the employe was subject to the conditions expressed on the face of the certificate, so far as they were not contrary to law.
Since the enactment of section 52 of chapter 77 of the Statutes of Hlinois, shares of stock in a corporation partake of the nature of negotiable instruments. A purchaser of stock taking it in good faith and without notice of the rights of other parties, will hold it clear of any lien to the extent of the money advanced. This certificate however gave notice to Copley of the rights of Frazier, the president of the corporation, to repurchase the stock on the terms expressed on its face. Frazier was president of the company both when the stock was issued, when the money was paid to Douglas and when this suit was begun. The option in the certificate was not alone for the benefit of Frazier, the president. While Douglas was an employe he had the right to vote the stock and draw the dividends on it, but upon his employment ceasing, the president of the company, whoever he might be, had the option to resume the ownership of the stock, as president on making the payment expressed. Clearly this provision was for the benefit of the company. It is not against the law for a company acting in good faith to buy and sell its own stock, where no right of creditors is affected. Republic Life Ins. Co. v. Swigert, 135 Ill. 150; First National Bank of Peoria v. Peoria Watch Co., 191 Ill. 128.
Copley, having notice of the option of the president of the company, could obtain no greater rights in the certificate than Douglas possessed. Douglas had no right to retain the stock after the payment to him of the face of the stock with the agreed premium, and had no right to assign the certificate to any one except the president of the company, and Copley could acquire no greater right in the certificate than Douglas possessed.
It is contended on the part of appellants that the court should have carried the demurrer back to the petition and have dismissed the petition. This could not be done for the reason that a demurrer had been overruled to the petition. Heimberger v. Elliot Switch Co., 245 Ill. 448; Fish v. Farwell, 160 Ill. 236; Stearns v. Cope, 109 Ill. 340.
There are some other matters argued by appellants which we do not consider it necessary to discuss, further than to say that the demurrer is general and admits the truth of all facts that are well pleaded.
The judgment is reversed and the cause remanded with instructions to the trial court to overrule the demurrer to the answer.
Reversed and remanded with directions.
