132 Iowa 272 | Iowa | 1906
The Midland Investment Company was organized in Des Moines on August 6, 1902. The declared purpose of the corporation was to buy and sell personal and- real property, and the capital stock was fixed at $10,000, to be issued in shares of $100 each. J. M. Brenton was named as president, L. A. Brenton, vice president, J. A. Dyer, secretary, and J. B. Lucas, treasurer; and these, with L. II. Campbell, were named as the board of directors. The articles were signed by each of such persons. It is admitted • that publication of the notice of the formation of the corporation was never made. On the .date of organization, fifteen shares of stock were issued. Eive of these were issued to J. M. Brenton, five to L. A. Brenton, and five to I. A. Dyer. The certificates of shares issued to the Brentons bore upon their face the legend that they had been fully paid up in cash. J. M. Brenton in fact paid in no cash, and it does not appear what, if any, consideration for the stock moved from him. L. A. Brenton paid in $500 in cash. Dyer paid in no cash; it appears, however, that the stock issued to him was in consideration of services rendered — presumably as a lawyer in perfecting the organization of the company — and this fact was indorsed on the face of the certificate of shares. It seems that the plan of business adopted was to reach people of moderate means and to enter into contracts with them by the terms of which each of such contract holders should pay into the company treasury the sum of $1.50 per month, of which $1 would go into a home or trust fund, and fifty cents into an expense fund. The home fund was to be used in buying properties for the contract holders as fast as a sufficient amount was accumulated. The expense fund was to be used by the company in extending its business
The foregoing statement, somewhat lengthy in its details, has seemed necessary to an understanding of the situation at the beginning of this action. In his petition plaintiff claims to be the sole owner of the interest represented by the fifteen shares of stock issued to him and his son, and this the son by answer admits. He alleges that he purchased said shares of stock on the solicitation of the defendants Dyer, Campbell, and Lucas; that said defendants falsely represented to him that the company was regularly and duly incorporated as a de jure corporation; whereas it had not been legally incorporated in that no notice by publication of the incorporation thereof was ever given as required by law. And from this it is said that the sale of stock to plaintiff was ultra vires, illegal, and void. It is further alleged that the condition of the company and its affairs —»
The defendant Maine admitted by answer all the allegations of the petition. As to the defect in the organization of the corporation, the other defendants who appeared made admission thereof but pleaded matter in estoppel, and they denied all fraud and misrepresentation, and denied the tender pleaded. The affirmative relief asked by them is that the affairs of the company be wound up, and that the receiver be ordered to pay out the funds in his hands to the stockholders pro rata in proportion to their holdings. On application of plaintiff a receiver was appointed, and he possessed himself of the moneys in the bank. It seems to be conceded that the company had no interest in any other property. Under the direction of the court the receiver gave notice 'to all persons having claims to present the same, and down to the time of the trial which was long after the expiration of the time fixed by the court in its order none were filed, except the claim of the People’s Reserve — a judgment based on a claim for rent. The decree found for the defendants on tbe estoppel and fraud issues. It was adjudged, however, that the corporation should he dissolved, and the receiver was ordered that, after paying the expense of his receivership, he pay first the claim of the People’s Reserve; that he then pay the balance remaining to the shareholders proportionately to their holdings. With the situation now fully before us, we may proceed to inquire what ought to be said and done in view thereof.
I. First we may dispose of the intervention feature, and this may be done by saying that the claim was a proper one to be allowed and it was sufficiently proven. Indeed, in respect of this counsel for appellant makes no serious question.
The matter' of estoppel pleaded was that, after the discovery of the fact of corporate defect, plaintiff and his son continued to act as officers of the corporation and in the transaction of its business. The trouble with this matter of contention lies in the proof. The facts as disclosed by the record are that no corporation business was done after the discovery. It is true that there was a meeting of the stockholders held upon call of E. K. Maine, but nothing was done except to talk over the situation of the company’s affairs.
From the foregoing consideration it follows that a decree should have been entered directing payment of in- • tervener’s claim, and, as there were ho other creditors to be considered, directing that the balance in the treasury after paying the receivership expenses be paid over to plaintiff upon the return by him of the fifteen shares of stock; also a deficiency judgment against the company. To the extent thus indicated, the decree appealed from is modified; otherwise it is affirmed. A decree in harmony with our conclusion is ordered.— Modified and affirmed.