54 Mo. App. 41 | Mo. Ct. App. | 1893
Lead Opinion
— Tbe plaintiffs recovered a judgment against tbe defendant company, on wbicb an execution was issued and returned nulla bona. They thereupon moved for an execution against tbe defendant Foley under tbe provisions of section 2517 of tbe Revised Statutes of 1889. Upon tbe trial of this motion, there was evidence tending to show that Foley held two shares of stock of tbe par value of $5.0 each in tbe insolvent corporation, on wbicb be bad paid $10 and no more, and that be bad executed bis notes to tbe corporation for tbe residue. Tbe plaintiffs produced and surrendered tbe notes upon tbe trial of tbe motion. Tbe court thereupon ordered execution to issue against Foley for $90, and be took an appeal from this order.
Tbe errors assigned are numerous, but may be summarized as follows: First. That tbe subscription for tbe stock was conditional, and that a non-compliance with tbe conditions upon wbicb it was made rendered tbe subscription nugatory. Second. That tbe court erroneously admitted tbe stock book of tbe
Upon the trial of the motion, it appeared that the corporation was formed with a capital stock of $50,000, divided into one thousand shares of $50 each; but that, although the stock was all subscribed for, yet only a very nominal amount thereof was paid for in cash or its equivalent to the corporation. The defendant Foley claims that the payment of the fifty per cent, of the subscription by the subscribers was a condition precedent to a valid organization of the company, and that, such payment not being made, the company was never organized. Revised Statutes, 1889, sec. 2768. This argument loses sight of the fact that such a defense is inadmissible even as against the corporation itself or one claiming through it (McDermitt v. Donegan, 44 Mo. 85; Joy v. Manion, 28 Mo. App. 55), much less in a proceeding by a creditor who may hold the defendant liable even in cases where the corporation could not. Schaeffer v. Home Ins. Co., 46 Mo. 248; Skrainka v. Allen, 7 Mo. App. 434; s. c., 76 Mo. 384, 392; Morawetz on Corporations, secs. 767, 818. This disposes of the first error assigned.
The stock book of the corporation was admissible in evidence, not for the purpose of showing that the defendant Eoley was a stockholder of the corporation, but for the purpose of showing that he so appeared on the books o'f the corporation and was the proper person to proceed against, if it was shown aliunde that he was a stockholder. It was shown aliunde that he was a stockholder by showing that he bought two shares of stock in the corporation, and received certificates therefor from the secretary, which he still held when the execution against the corporation was returned nulla lona. The second assignment of error, therefore, is equally untenable.
Now an arrangement by which a stockholder releases his shares to the corporation may be valid as between himself and the corporation, and yet invalid as to creditors who seek to enforce his statutory liability. Thompson’s .Liability of Stockholders, see. 205. Such surrender and reissue, therefore, create in no sense an over-issue. If the shares were surrendered to the corporation under a contract valid between it and the shareholder, and it sold them to another share-
Dissenting Opinion
(dissenting.) — I am constrained to dissent to the disposition of this case made by my associates. The result reached by the majority of the court appears to be upon their construction of the testimony of Frizzell, the secretary of the corporation. I cannot concur in that construction. My understanding of his testimony and the facts in this record will appear in the course of this opinion.
This was a motion (Revised Statutes, 1889; sec. 2517,) to chai’ge appellant as the holder of unpaid stock in the Thompson Manufacturing Company. This proceeding is in the nature of an independent and original action, bhsed upon motion and notice thereof to the stockholder. This notice has been held to be “in substance and effect a process of garnishment.” On its trial two issues are presented, to wit, “whether the person sought to be charged is indeed a stockholder, and if he is indeed indebted to the insolvent corporation Wilson v. Railroad, 108 Mo. 588, 602. The proof of both of these issues necessarily devolves upon the plaintiff in the execution sought to be enforced against a stockholder.
Under the facts in this record the right of the execution creditor to recover is dependent on his proof of the first issue. This question is raised .both in the motion for a new trial and the errors assigned on appeal. The general rule is, that ‘ ‘shares issued by a corporation
In the application of these principles of law to the facts in this proceeding on appeal, this court has the same power to make findings which it would have in a casein equity. Ollesheimer v. Mfg. Co., 44 Mo. App. 172, 176; Erskine v. Loewenstein, 82 Mo. 301, 305. From the evidence, I find the fact to be that the Thompson Manufacturing Company was incorporated on May 19, 1888, with a capital stock of $50,000, divided into one thousand shares belonging to the several persons named in its articles of association. I find further from the testimony of the secretary that certificates of stock for the full amount so subscribed by said incorporators were either delivered to them, or retained in his possession, and have never been canceled nor annulled by the •corporation. I also find that the recital in the articles of association that one half of the sum therein subscribed has been paid was substantially untrue. I ■further, find that, at the trial of this proceeding the ■stock book of said Thompson Manufacturing Company disclosed that the list of its shareholders embraced all -of its incorporators for the full amount subscribed by
In the present proceeding there is not a particle of evidence that the certificates issued to the appellant were in substitution for those of any one of the original subscribers, who had together taken all the shares (i. e., $50,000) which the corporation could lawfully issue. The stock books showed an excess of stock issue ranging between $7,000 and $8;000 of stock.' 'The testimony of the secretary, while it disclosed an intention on the part of the original incorporators to use some of their subscription to cover stock which it was expected would be subscribed in Springfield, wholly fails to show that any part ims so used, and least of all that Foley’s certificate was given in lieu of that of any other subscriber. The proper place for such facts to be noted is on the corporate records. “Persons whose names are found to bo registered thereon as holders of the stock are presumed to be the regular and lawful owners of the shares and as such liable for the company’s debts.” Beach on Private Corporations, sec. 125.
In the case at bar the stock book affirmatively showed that the original stock subscribers were still stockholders in the company of all of its authorized shares. Nor is there in this record any evidence whatever that any part of the stock or stock subscription of any one of the stockholders has been transferred to appellant; on the contrary the evidence and receipt of appellant disclosed that his dealing was directly with the corporation. The unauthorized act of the secretary in issuing stock to appellant and others beyond the limit fixed by law created no obligation against the
I, therefore, hold that the judgment holding appellant as a stockholder should be reversed.