188 Iowa 968 | Iowa | 1920
I. The plain tifiywas the owner of a brick and tile plant, located at Audubon. For the purpose of disposing of the same, he and defendant and others organized a corporation, for the purpose of taking over said tile plant. The plaintiff had put a price thereon of $20,000. The capital stock of the corporation was fixed at $100,000, divided into 1,000 shares, of a par value of $100 each. Both plaintiff and defendant were more or less active in the promotion of the company. The contract of subscription with the defendant provided for the delivery of 30 shares to him for a subscription price of $2,000. The plaintiff became the as-signee of the subscription contract. The illegality urged by defendant as his defense is that the subscription price was fixed at less than par value, in violation of law, and that the contract was not, therefore, enforcible.
The particular sections of our statute which bear upon the.question include the following:
“Sec. 1641-d. * * * The capital stock of any corporation issued in violation of the terms and provisions hereof shall be void, and in a suit brought by the attorney-general on behalf of the state of Iowa in any court having jurisdiction, a decree of cancellation sháll be entered; and if the corporation has received any money or thing of value for the said stock, such money or thing of value shall be returned to the individual, firm, company or corporation from whom it was received, and if represented by labor or other service of intangible nature, the value thereof shall constitute a claim against the corporation issuing stock in exchange therefor.”
“Sec. 1641-f. Any officer,' agent, or representative of a corporation who violates any of the provisions hereof shall, upon conviction, he fined not less than $200 nor more than $1,000, and be imprisoned in the county jail for not less than 30 days nor more than 6 months.”
If the foregoing statutes are to be deemed applicable, they are quite controlling of the question raised. Because of these sections, no one connected with the corporation could have authority to contract for the sale of its stock at less than par value. Manifestly, therefore, the defendant, as a stock subscriber, could never have enforced specific performance of the subscription contract. It would seem to follow, of logical necessity, that, if he could not legally enforce it, he could, at least, abandon it. As a basis for his action, the plaintiff, as assignee, pleaded that he had caused tender of the stock to be made to defendant before suit and
Assuming, therefore, that the rights of the parties are governed by the sections of the statute above quoted, we are very clear that the contract sued on is not enforcible, by either party thereto.
II. The sections of the statute. which we have above quoted are, in terms, applicable to corporations organized under the laws of this state. The corporation under consideration, though organized in this state, and for the purpose of doing business at Audubon in this state, was organized, nevertheless, under the statutes of South Dakota. Neither party proved or pleaded the statutes of that state. Each claims in argument that the presumption must obtain that the statutes of the two states are alike, as regards the question at issue. We shall, therefore, so assume.. Application for permit to do business in thiis state was made to and granted by the secretary of state, under the provisions of Code Section 1637 et seq. The application for permit was in the form of a resolution, and, pursuant to Section 1637, contained the following proviso:
The permit granted contained the same proviso.
Whether we regard the legality of the contract as one to be determined under the statutes of South Dakota, or under our own like statutes, the fact remains that the subscription contract entered into was illegal and void, under the statutes of both states.
The judgment below must, accordingly, be — Reversed.
