198 P. 1047 | Cal. | 1921
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *44 This is an action by W.W. Kaye, as trustee in bankruptcy of the J. M. S. Oil Company, a bankrupt corporation, against alleged stockholders of said corporation to recover of each the balance alleged to be unpaid to the corporation for the stock thereof belonging to him. The court found in favor of the plaintiff and gave judgment accordingly. The appeal is from the judgment. We take up the points presented in the order in which they appear in the appellants' brief.
[1] 1. The appellants contend that the action is barred by section
This proposition is settled against the appellants by the decision in Union Sav. Bank v. Leiter,
[2] 2. The next objection is that the call was invalid because the trustee did not make the assessment in the manner provided by sections 331 to 349 of the Civil Code, providing for assessments upon corporate stock and for the collection thereof by sale of the stock, or, at the option of the directors, by an ordinary action at law. It has been held that these provisions of the code are so far a part of the contract of subscription that the corporate directors in *46
the ordinary course of its business cannot enforce the payment of the price, except by proceedings in the mode prescribed by those sections, unless the subscription contract itself dispenses therewith. (Los Angeles Athletic Club v. Spires,
[3] 3. Appellants also claim that judgment should have been rendered against each stockholder for no more than his ratable proportion of the total indebtedness instead of the whole amount unpaid upon his stock. Hunt v. Sharkey,
4. The objection of appellants that the court erred in allowing interest on the amount adjudged against J.W. Jameson and I.M. Jameson is based on a misunderstanding of the terms of the judgment. The court found that the corporate debts amounted to $31,307.82 on January 28, 1913, the date of the adjudication in bankruptcy. The judgment was rendered on July 9, 1918. It declares that interest amounting to $14,129.38 had accrued on said debts, making a total of $45,437.20. J.W. Jameson owned ninety-six thousand eight hundred shares of the stock, on which three-fourths of the par value was unpaid, amounting to seventy-two thousand six hundred dollars. I.M. Jameson owned 52,150 shares, on which $39,112.50 was unpaid. The judgment did not charge any interest on either of these amounts. J.W. Jameson, it will be noted, owed more on his stock than the total amount of the debts and interest. The judgment against him was only for that amount, to wit: $45,437.20. A similar judgment was given against Smith, another stockholder, who owed more than the total debts and interest. I.M. Jameson owed only $39,112.50 on her stock, which was less than the debts and interest. The judgment against her was for $31,307.82 (being the amount of the debts without interest), together with interest thereon from January 28, 1913, but in no event to exceed $39,112.50, the amount unpaid on her stock. The other defendants owed less than the principal of the debts, and the judgment against them was for the unpaid amount without mention of interest on the debts. The appellants are in no way *49 injured by this method of stating the amounts adjudged against them, and it is not true that they were charged interest on the amount of their unpaid subscriptions.
[4] 5. The court did not err in refusing to offset the claims of the respective stockholders as creditors of the corporation against the amounts unpaid on their respective holdings. The unpaid amounts were assets of the corporation and as such they constituted a trust fund to be applied to the payment of its debts in general. (Sawyer v. Hoag,
[6] 6. The J. M. S. Oil Company was organized on April 30, 1910, with a capital stock of five hundred thousand dollars, divided into five hundred thousand shares of the par value of one dollar each. Five shares were subscribed for by each of the incorporators, namely, J.W. Jameson, J.M. Smith, William Jenkins, F.E. Borton, and T. Metz, all of whom were made directors. Thereafter, in July, 1910, the company purchased of the two directors, Smith and Metz, a forty-year lease held by them on forty acres of land in the oil region, in consideration of the issuance to Smith and Metz of four hundred thousand shares of stock of the *50 company to be issued as fully paid-up stock. The lease was transferred and the stock issued in accordance with this agreement. The appellants claim that this constituted full payment for the said shares and that nothing is unpaid upon the stock so issued.
The rule applicable to such transactions is thus stated inHarrison v. Armour,
[7] On this point the court found the making of the exchange as above stated and that "at all of said times the said corporation and the officers and directors thereof knew and believed that said leasehold interest and said appurtenances above described . . . was actually worth no more than the sum of one hundred thousand dollars; . . . that *51 at none of said times did said corporation, its officers or directors, have any reasonable ground for believing that said leasehold interest above referred to and appurtenances were worth or had a value, actual or otherwise, of four hundred thousand dollars, or any sum in excess of one hundred thousand dollars." The appellants claim that these findings are without support in the evidence. It must be conceded that the evidence on the subject is not as full and complete as might have been desired; but, on the other hand, it is to be said that full and complete evidence on a subject of this character can seldom be obtained. The only one of the directors who was examined as a witness was J.W. Jameson. He testified that at the time of the transaction he believed the leasehold property was worth the sum of four hundred thousand dollars and even more, but he based this belief on his opinion that by development it would produce a profit from the pumping of oil therefrom in excess of four hundred thousand dollars. Testimony of other witnesses familiar with the locality and with the business of oil production was given to the effect that the property was worth no more than one hundred thousand dollars and probably less than that amount under the circumstances then existing in that vicinity and in the oil business. It was also shown that all of the directors, including Smith and Metz, the holders of said lease, were present at the meeting of the directors at which the transaction was closed, and that immediately after the passage of the resolution authorizing the purchase of said lease by the corporation for said amount; of stock the same directors passed another resolution that the remaining one hundred thousand shares of stock of the company should be placed on the market at twenty-five cents a share. This was done accordingly and a large part of the one hundred thousand shares was sold at that price. The greater part of the stock in question here was the stock originally transferred to Smith and Metz in exchange for said lease. It had been acquired afterward by the appellants with knowledge of all the circumstances. The conduct of these parties in immediately putting the remaining stock on the market at twenty-five cents a share was a clear indication that they then believed that the stock already disposed of to Smith and Metz had no real value above that amount. It is true that Jameson testified that it was necessary to sell at that price in order to raise the *52 money with which to develop the property and that this proceeding was not an unusual one in the oil business. It still remains true, however, that the court may well have inferred from this circumstance that the directors, all of whom consented to this sale at the reduced price, did not believe that the stock had a greater value. We are, therefore, of the opinion that the finding is sustained by the evidence and that under the doctrine above stated it must be deemed paid up only to the extent of one hundred thousand dollars, or one-fourth of the par value.
[8] 7. It is contended that the findings that I.M. Jameson held 52,150 shares of the stock of the corporation is not sustained by the evidence. The books kept by the company were introduced in evidence. It appears that she had an office in which she carried on business, that this office was also used as the office of the corporation in which its books were kept, and that she was somewhat familiar with its affairs. These books show the issuance to her of more than that number of shares of the so-called "Treasury stock" at the price of twenty-five cents a share, and a payment by her of a part of the price. The principal objection as to the effect of this evidence seems to be that the books were kept by one Rose, who was not the secretary of the corporation, and that, therefore, the entries in the books were not competent evidence. The evidence shows, however, that he was the assistant secretary and acted in that capacity in keeping the books and making the entries therein. It is obvious that they have the same sanction as if the secretary had personally made the entries. They were competent evidence and sufficient prima facie evidence of the facts shown by the entries therein. (1 Cook on Corporations, sec. 55.)
No other points are presented. No brief has been filed on behalf of the appellant Hubbard. We find no sufficient ground for a reversal.
The judgment is affirmed.
Olney, J., and Lawlor, J., concurred.
Hearing in Bank denied.
All the Justices concurred, except Shurtleff, J., who did not vote. *53