| Iowa | Jan 20, 1920
At the conclusion of all the evidence, the plaintiff asked the court to instruct the jury to return a verdict for the plaintiff for the sum of $1,200, being the amount which the undisputed evidence shows the plaintiff paid for 12 shares of stock purchased by him from defendants, together with 6 per cept interest per annum, for that the undisputed evidence shows the plaintiff entitled to recover at least that amount from the defendant. This motion was sustained, and the jury directed to return a verdict for the plaintiff for the $1,200 and interest, and for $330, balance due on wages, together with interest thereon, the court saying:
“I want the record to show that, eliminating the question of fraud and false representations, I am deciding this motion of the issue as to whether or not the stock was issued without authority. * * * I want it understood that this case is not decided on the question of false and fraudulent representations, but on the theory that the stock had been authorized by law: that is, that the statute with reference to appraisement was not complied with.”
The jury returned a verdict for thd plaintiff for $1,778.31, and judgment was entered upon that verdict. „
It is not disputed in this case that the plaintiff paid $1,200 for stock in the corporation of which the defendants were officers; that he purchased this stock from the defendants ; that the defendants were president and secretary of the company. It appears without dispute that, prior to the organization of the corporation, a partnership existed between one Cline and these defendants; that, subsequently, the corporation was organized, and the property of the partnership turned in to the corporation, and stock issued to the original partners on the strength of the property so turned in to the corporation. This property was never ap
That the officers of a corporation are personally liable for a fraudulent issue of stock, or stock issued in violation of law, has been settled by this court. Sykes v. Pure Food Cider Co., 157 Iowa 601" court="Iowa" date_filed="1912-11-16" href="https://app.midpage.ai/document/sykes-v-pure-food-cider-co-7115197?utm_source=webapp" opinion_id="7115197">157 Iowa 601. When the defendants incorporated and took over the personal property belonging to the partnership, and issued stock, without having the property appraised by the executive council, the stock issued was issued in violation of the statute hereinbefore set out. In issuing the stock, there was an implied representation that the statute had been complied with. The implied representation was that the stock had been fully paid for in cash. In the Sykes case, supra, it was held that the issuance of certificates of stock was a representation that the corporation had received par value therefor, as exacted by the statute, and the officers issuing the stock are responsible to the persons dealing directly with it, and to all who deal with the stock in reliance upon the representations so made. And it was further held in that case that it is immaterial whether the officers issuing the stock profit by the issuance personally or not; that a showing that they received personal benefit from the issuance of the stock is not necessary to lender them liable.
The right of (he plaintiff to recover damages for the fraud so practiced upon him in issuing the stock to him is settled by what is said in Fish v. White, supra; and certainly the fair measure of his damages is the amount he actually paid for the stock, with 6 per cent interest from the date of payment. Assuming that these officers were simply the agents of the corporation in doing what they did in inducing plaintiff to do this, assuming that, after they received the money, they paid it to the corporation, they still remained liable to the party from whom the mon
So far as it involves the $1,200 and interest, it will be allowed to stand; but, as to the wage question, the judgment entered is reduced by that amount. — Modified and affirmed.