169 Ind. 346 | Ind. | 1907
This action was brought by appellant, the receiver of the Citizens Insurance Company of Evansville, Indiana, against appellees Alexander Hutchinson, Henry S. Bennett and Isaac IT. Odell. The case is before us on exceptions to the court’s conclusions of law.
It appears from the findings that said company is an insurance corporation, organized under an act of the General Assembly approved Pebruary 3, 1832 (Acts 1832, p. 144), as amended by an act approved March 6, 1873 (Acts 1873, p. 162), and that on August 1, 1890, said company increased its capital stock from $100,000 to $200,000. The firm of Bennett & Odell, who were agents for said company, became the owner of 240 shares of its stock, of the par value of $50 each, and on Pebruary 3, 1894, they executed to said company certain notes for the balance due on said stock, payable as calls were made. About one month later Bennett bought Odell’s interest, and immediately thereafter Bennett formed a partnership with Hutchinson for the purpose of carrying on the fire insurance business, which partnership continued down to the bringing of this action. It is stated in one of the findings that Hutchinson assumed all of the liabilities
The special act under which the Citizens Insurance Company of Evansville, Indiana (originally known as the Lawrenceburgh Insurance Company), was incorporated provided that it should have a capital stock of $100,000 (Acts 1832, supra), while the act of 1873, supra, provided that said capital stock “may be increased from time to time, to such additional sum or sums as may be determined upon by a vote of the majority in value of stockholders.”
In Stace & Worth’s Case (1869), L. R. 4 Ch. *682, an attempt was made to charge certain holders of such an issue of stock, on the ground that they had accepted shares; that their names appeared on the register of shareholders, and that they had sat as directors of the corporation. Vice Chancellor James, however, declared: “This was a void agreement, with a void acting upon it, a void recognition and a void ratification by the acts which have been mentioned. It comes to an aggregate of nothings, and that aggregate of nothings is all that there is to fix those gentlemen on the list of stockholders.”
Upon the question under consideration the case of Scovill v. Thayer (1881), 105 U. S. 143, 26 L. Ed. 968, is the leading authority. In that ease the law under which the corporation was organized authorized any corporation to increase its capital stock in any amount not exceeding double its authorized capital. The corporation, after so increasing its capital, had made two further issues of stock,
In Winters v. Armstrong (1889), 37 Fed. 508, a national bank had attempted to increase its capital stock without securing the consent of the comptroller. The bank passed into the hands of a receiver, and he brought an action on certain stock notes given on account of such unauthorized issue. The defendants answered no consideration, to which the receiver replied by way of estoppel, to the effect that after the attempted increase the bank, by means of circulars and statements upon the letter-heads represented its
It was held in Clark v. Turner (1884), 73 Ga. 1, that an issue of stock which was wholly unauthorized by statute was ultra vires and void. Concerning a claim of estoppel the court said: “If this subscriber had induced insurance on the part of any person in the Grangers’ Life and Health Insurance Company by his acts as trustee or agent, or on the faith of his subscription, then an action on his individual right for the tort against Turner would lie; but this assignee stands in the shoes of the corporation and sues for the benefit of all creditors, and there is no pretense in this record that any pai’ticular creditor was induced or influenced by his action to insure in the company. Scovill v. Thayer [1881], 105 U. S. 143, 26 L. Ed. 968. So that neither the corporation nor its general assignee can recover in this suit, on the facts which the record discloses.” See, also, Ross-Meehan, etc., Foundry Co. v. Southern, etc., Iron Co. (1896), 72 Fed. 957; American Tube Works v. Boston Mach. Co. (1885), 139 Mass. 5, 29 N. E. 63; Reed v. Boston Mach. Co. (1886), 141 Mass. 454, 5 N. E. 852; Kampman v. Tarver (1895), 87 Tex. 491, 29 S. W. 768;
There being no element of estoppel in the case as between the stockholders and the corporation, the further proposition, that the receiver cannot, at least irrespective of individual right, bring forward an estoppel on behalf of the whole body of creditors, is well illustrated by the late case of Ellison v. Ganiard (1906), 167 Ind. 471, in which there was the contention, made on behalf of the plaintiff, a trustee in bankruptcy, that the defendants, who were claimants under a declaration of trust, executed by the insolvent in connection with a deed made to him by a third person, were estopped to assert such right as against the creditors, because such claimants had neglected to record such declaration, and had permitted the deed to the insolvent, which was absolute upon its face, to remain recorded and unquestioned, with a result that certain of the creditors had extended credit to him on the strength of his apparent ownership. In disposing of this contention, we said: “It is contended that appellee is invested with the power to assert this estoppel against appellants for the benefit of all the creditors of the bankrupt. But the facts as established show that out of the 800 creditors, but two, Shoup and Walters, can be said to have any basis whatever for asserting or invoking the principle of estoppel against appellants. Conceding, for the sake of argument, without deciding, that these two creditors, under the evidence, have the right successfully to assert an estoppel against appellants, certainly these facts alone would not, under the law, justify appellee, as trustee, to maintain this suit and thereby, as he has succeeded in doing under the judgment of the trial court, bring all of the property in controversy into the estate of the bankrupt to be disposed of for the benefit of all of the insolvent’s creditors. This proposition is so manifestly
Judgment affirmed."