111 Wis. 1 | Wis. | 1901
The case presented by this complaint is a very simple one, and not in accord with the situation discussed in First Ave. L. Co. v. Hildebrand, 103 Wis. 530, of which we are told that this is a sequel. As now before us, it merely appears that there were issued two certificates of stock, each for $5,000 par value, without any consideration; that is, neither for money, nor for labor or property, actually received by the corporation, equal to the par value thereof, as required by sec. 1753, Stats. 1898. This being so, no reason is apparent upon which to escape, the further provisions of the same section that “ all stocks and bonds issued contrary to the provisions of this section shall be void.” Indeed, counsel for appellant concedes effective applicability of that section to the stock originally issued, but contends that, certificates of stock having been issued by the corporation asserting the ownership of stock by the parties named, upon due consideration therefor, the corporation is estopped to deny, as against one innocently purchasing such stock in reliance upon the facts so certified to be true, that the persons named did own such shares of stock. As a result of this estoppel, he contends that the innocent purchasers have become entitled to the same rights as if the certificates were true, namely, to a share in the ownership of the corporation itself, and all other rights incident to the actual ownership of stock. This is the damage to the corporation claimed to have resulted from Babcock’s breach of his official duty. It is, of course, obvious that, if this position is sound to its full extent, sec. 1753 is very much emasculated, for that doctrine
As already stated, appellant plants his contention on the doctrine of estoppel, and cites numerous authorities asserting applicability of that doctrine to corporations in issuing certificates of stock. The cases cited present several phases of the effect of the doctrine. Thus courts have refused affirmative relief by way of cancellation of outstanding certificates improperly issued but held in good faith and for value (Machinists' Nat. Bank v. Field, 126 Mass. 345; Manhattan B. Co. v. Harned, 27 Fed. Rep. 484; Cincinnati, N. O. & T. P. R. Co. v. Citizens’ Nat. Bank, 56 Ohio St. 351); also by way of compelling payment of unpaid subscription or assessments where certificates falsely declared stock full paid (Steacy v. L. R. & Ft. S. R. Co. 5 Dill. 348, 372; Rood v. Whorton, 67 Fed. Rep; 434; Re British Farmers’ P. L. C. Co. 26 Weekly Rep. 334). In other cases the false certification of stock has been held to support action for damages on the ground of fraud. Holbrook v. N. J. Z. Co. 57 N. Y. 616; Shaw v. Port Philip & C. G. M. Co. 13 Q. B. Div. 103. In one case the supreme court of Michigan held the holder of a certificate issued upon a forged transfer of valid stock entitled to the rights of a stockholder, but based its decision on a peculiarly drastic statute of that state. Mandlebaum v. North American M. Co. 4 Mich. 465.
We are not inclined to dispute the propositions that, when
It thus appearing that the corporation has not suffered the damage pointed out and principally insisted on by appellant, it remains to be considered whether any other damage to it appears with reasonable certainty from the allegations of the complaint. There is a suggestion that in some way the corporation has lost its opportunity to collect from those who subscribed for this stock by reason of the wrongful delivery of the certificates, followed by their transfer and issue of new certificates to others. No such loss is apparent. The liability of Babcock and Wilhelm upon their respective subscriptions was not thereby impaired, and there is no allegation that the solvency or collectibility of either of them diminished subsequently to the ’stock issue, if that fact were in any wise material. We can discover no damage in that connection resulting from the secretary’s acts. There is, however, a possible injury to the corporation, which may result from the issue and transfer of the void certificates by the officers having general power and authority to issue certificates of capital stock, so that their acts, whether valid or invalid, must be deemed to be the acts of the corporation itself. The consensus of decision is well-
“ Although it is settled law that overissued stock is void and valueless, and that no action lies either to compel the corporation to recognize the holder as a stockholder, or to issue in place thereof a valid certificate, yet where overissued certificates of stock, signed or purporting to be signed by the corporate officers having the authority to issue stock, and actually issued by such officers, are purchased by any person, or are taken in any manner in good faith and for value, such tona fide holder may sue the corporation in tort and recover damages.”
Some of the more important cases supporting this view are the following: New York & N. H. R. Co. v. Schuyler, 34 N. Y. 30; Bank of Ky. v. Schuylkill Bank, 1 Pars. Eq. Cas. 180; People's Bank v. Kurtz, 99 Pa. St. 344; Kisterbock's Appeal, 127 Pa. St. 601; Holbrook v. N. J. Z. Co. 57 N. Y. 616; Cincinnati, N. O. & T. P. R. Co. v. Citizens’ Nat. Bank, 56 Ohio St. 351; Bridgeport Bank v. N. Y. & N. H. R. Co. 30 Conn. 231; Fifth Ave. Bank of New York v. Forty-Second St. & G. St. F. R. Co. 137 N. Y. 231, 19 L. R. A. 331, note; Moores v. Citizens’ Nat. Bank, 111 U. S. 156; Allen v. South Boston R. Co. 150 Mass. 200. The result of the view above stated is that by the secretary’s breach of'
By the Court.— The order appealed from is affirmed.