162 Wis. 32 | Wis. | 1916
The contentions of defendants that the capital stock of the corporation had not been increased from $10,000 to $25,000; that if it had, then more than fifty per cent, thereof had been subscribed; and that the guilty knowledge on their part requisite to their liability is wanting, were found against them by the trial court upon sufficient evidence to sustain the findings.
Only one or two claims relative thereto need be briefly treated. On December 15, 1910, Albert S. Dahl subscribed for 75 shares, Erwin J. Spaar for 24 shares, and Fred W. Mueller for 1 share. These three men were the organizers and president, secretary, and vice-president, respectively, of the corporation. Its capital stock at that time was $10,000, divided into 100 shares of $100 each. The whole stock was
Defendants claim that their subscriptions of 75 shares, 24 shares, and 1 share, respectively, made by them on December 15, 1910, should be counted. This claim is negatived (1) by the fact that the certificates therefor are marked void and were never issued; (2) by the fact that if such original subscriptions were not canceled there was- an over-subscription of twenty-eight shares long before the capital stock was increased or before there was any idea of increasing it, so far as the record discloses; and (3) by the fact that the secretary, Mr. Bpaar, testified that only 110 shares in all were ever subscribed for in writing, including the 14 shares issued after the increase of capital stock; that a list for fur
Plaintiff’s right to recover was predicated upon the fact thát one half of the stock was not subscribed for at the time the indebtedness was incurred. ^Notwithstanding this was the issue, Spaar, the secretary, testified that only 110 shares in all were subscribed for. This would be true only in case the first subscription of 100 shares was canceled. If it were not in fact canceled it would have been easy for the three defendants to so testify. They were all witnesses upon the trial, and yet neither claims that the certificates for 100 shares, duly made out and marked void, did not correctly indicate a cancellation of the first subscription; and neither Dahl, the president, nor Mueller, the vice-president, contradicts Spaar's testimony to the .effect that only 110 shares in all were ever subscribed for. Upon the trial it was sought to show that valid oral subscriptions were made which, together with the amount of stock issued, satisfied the statutory requirement as to subscriptions. It was also sought to show that the capital stock had not been increased from $10,000 to $25,000 before the indebtedness was incurred, but proof failed as to both. The contention that the original subscription of 100 shares was not canceled is made, it is true, upon some evidence tending to sustain it; but if correct it could have rested upon actual proof of the fact by the testimony of the three defend
Some objection was made to the competency in evidence of the certificate of the register of deeds attached to the certified copy of the record of the amendment of the articles of incorporation'increasing the capital stock of the corporation, furnished by the secretary of state. Sec. 1774 requires such certificate to be filed in the office of the secretary of state before a certificate of amendment can issue. It was therefore a part of the record of the secretary of state and duly authenticated by his certificate attached to the record.
Dahl, the president of the corporation, testified that one Wilde orally promised to take ten shares of stock, and one Burwitz, by a like promise, agreed to take twenty shares. The trial court properly excluded such oral promises in determining the amount of stock subscribed. Oral promises such as were made to take stock are not subscriptions for stock within the meaning of the statute. They rested in parol, and by virtue of sec. 2308, Stats. 1913, could not be enforced.
The most important legal question raised by the assignment of errors is that plaintiff has no title to the claims assigned to him because, since the statute is a highly penal one, claims under it are not assignable. The section (sec. 1774n) reads:
“No amendment to the articles of any corporation, increasing the capital stock, shall be filed unless accompanied by the affidavit of the president and secretary that at least one half of the capital stock, including the proposed increase, has been duly subscribed and at least twenty per centum thereof actually paid in. The aforesaid officers and any other officer or stockholder consenting to the incurring of any debt or*38 liability by such corporation, while having knowledge that less than one half of the authorized capital stock has been subscribed or that less than twenty per centum thereof has been actually paid in, shall be personally liable upon the same.”
It is argued that this section is as penal in its nature as is sec. 1765, Stats., under which claims were held nonassignable in Killen v. Barnes, 106 Wis. 546, 82 N. W. 536. That section provides in substance that if directors of a corporation shall pay an unlawful dividend they shall be jointly and severally liable to the creditors of the corporation at the time of declaring such dividend to the amount of their claims. The two sections are radically different in their penalties, if sec. 1774% can be said to be penal in its nature. Sec. 1765 gives creditors of a corporation relief far in excess of that occasioned by the wrong. An unlawful dividend of but a few hundred dollars may be paid resulting in obligations that may amount to thousands of dollars. Its violation transfers indebtedness of the corporation to the offending officers. Its purpose is to punish an unlawful act. On the contrary, sec. 1774% does not give creditors of a corporation damages in excess of that occasioned by the wrong, but only equal to it. The wrong is the creating of the indebtedness for which the offenders are held liable. Hence their liability is measured by their wrongful act. It creates a primary obligation upon them at the time the debt is incurred. Its purpose is to give creditors of a corporation transacting business before it is by law authorized to do so primary recourse to those who wrongfully create the indebtedness on the part of the corporation. A violation of sec. 1773, Stats. 1913, which is quite similar in its provisions, has been construed to create a primary absolute liability on the part of the stockholders. Flour City Nat. Bank v. Wechselberg, 45 Fed. 547. The statute here imposes a contractual relation upon the officers and not a penalty in the strict sense of the term. For that reason claims arising under it are assignable, and plaintiff was properly
Among the claims assigned was a note for $152.80 given the Standard Metal Spinning Company for goods bought from it. The complaint as to this was for goods furnished the corporation. But it was admitted that a note had been given for the account and that the note was unpaid. It was not produced upon the trial and was claimed by plaintiff to have been lost. Defendants objected to the inclusion in the judgment of the amount of such note, but the trial court included it therein without requiring plaintiff to give a bond of indemnity as provided by secs. 4190, 4191, Stats. 1913. In this the court erred, and the judgment is directed to be modified by deducting this item unless the plaintiff shall within thirty days after filing the remittitur execute and file the statutory bond, in which event the judgment is affirmed. The defendants are entitled to their costs upon this appeal.
By the Court. — Ordered accordingly.