69 Cal. 207 | Cal. | 1886
JAn opinion was filed by the court, in Department, June 23, 1885. After hearing by the court in Bank, we are satisfied of the correctness of the views expressed in that opinion. As to other points presented, but not referred to in the opinion, we will say we see no error. The court below was correct in its views that the act of March 26, 1866, authorized an assessment on full-paid stock.
The contract between Morris, the assignor of the plaintiff, and the Citizens’ Gas Light and Heat Company, did not call for unassessable stock, even if it should be conceded that under the laws of this state a corporation is authorized to issue stock upon which no assessment can be levied.
The judgment and order are affirmed.
Sharpstein, J., Morrison, C. J., Ross, J., McKinstry, J., and McKee, J., concurred.
The following is the opinion in Department One above referred to: ■—■
This is a bill in equity, filed by plaintiff, to compel the defendants, Brown, Clark, Gallatin, Watson, Cummings, Stanford, Hopkins, Crocker, Huntington, and Miller to transfer to the plaintiff, as assignee of one Henry G. Morris, three thousand five hundred shares of the capital stock of the defendant, the Capital Gas Company, and to pay to him the dividends received by them thereon; to compel the Capital Gas Company to recognize such transfer and enter the same on its books, and to obtain judgment against the defendant, the Citizens’ Gas Light and Heat Company, for eleven thousand nine hundred dollars.
From the findings of the court below, these, among other facts, appear: The Citizens’ Gas Light and Heat Company was incorporated in January, 1872, with a capital stock of one million dollars, divided into twenty thousand shares, of the par value of fifty dollars each, and on the fourth day of October, of that year, entered into a contract in writing with one Henry G. Morris, of Philadelphia, by which the latter agreed to erect gas-works for the company in the city of Sacramento, within a stated time, in accordance with certain plans and specifications, in consideration of one hundred thousand dollars in money, and six thousand five hundred shares of the stock of the company, which consideration the company agreed to pay. Morris proceeded to and did construct the gas-works, but did not complete them within the time limited in the contract,—the works not having been completed until on or about February 4, 1874, whereas the time stipulated for their completion was September 1, 1873. The company paid Morris the one hundred thousand dollars, as provided for by the contract, and issued to him four thousand five hundred shares of its capital stock, and further advanced to him, to enable him to complete the works, other sums aggregating $41,371.33, which advances have never been repaid.
The original incorporators of the Citizens’ Gas Light.
After Morris’s departure from California, the competition between the Citizens’ Gas Light and Heat Company and the Sacramento Gas Company continued, at heavy loss to both companies, until finally, in the year 1875, the two corporations agreed to consolidate their interests. To effect such consolidation it was necessary that the Citizens’ Gas Light and Heat Company should discharge all of its debts and liabilities. It was then indebted to the Savings and Loan Society, a corporation, in the sum of sixty-five thousand dollars, which sum was secured by a mortgage on the property of the Citizens’ Gas Light and Heat Company. To pay this, as well as other indebtedness of the company, the six thousand five hundred shares of the Morris stock, which was bought in by the company at the sale for the non-payment of the assessment thereon, was sold by the corporation at eleven dollars per share, as follows: To R. C. Clark, two hundred shares; to A. Gallatin, one hundred and fifty shares; to R. J. Watson, one hundred and fifty-five shares; to
The findings in some respects are earnestly challenged by appellants’ counsel as being unsupported by the evidence, but whatever might otherwise be held in respect to the findings in some particulars, there can be no doubt that the court below was justified in finding that Morris knew of the assessment of his stock and its sale for non-payment of the assessment, and of the then condition and prospects of the company and its stock. If the assessment and sale were invalid, he then had the right to commence proceedings to vacate the assessment and sale, and recover his stock. The reason he did not do so is manifest from the evidence as well as the findings. By reason of the formidable competition that existed to the business of the company, the stock had little or no value, and the prospects of the company were poor. All of this he knew. When, after the sale, the company offered to return him the stock upon his payment of the assessment and the amount of the company’s advances to him, he refused, saying the stock was not worth redeeming. If he had the right to repudiate the sale of stock upon the ground that it was not assessable, or for any other cause, was it not incumbent upon him to act with diligence? Could he acquiesce in the sale as long as the stock of the company was of but little value, but when, by the exertions of others, the consolidation of the company with a rival one imparted to the stock of the combined properties more value, come into a court of equity and claim an equivalent of the stock of the new company? We think not.
In the case of Hayward v. National Bank, 96 U. S. 611, certain mining stocks deposited by Hayward with the bank as collateral for a lo°an were sold by the bank to three of the bank directors, but at a price above the market rate and for a sum sufficient to pay the loan. Hayward was informed of the sale at the time, and did not
Judgment and order affirmed.