201 N.W. 308 | Minn. | 1924
1. It is urged that the association never became a corporation and never had any stockholders. The undisputed evidence shows that articles of incorporation were signed on March 26, 1921, by defendant and 15 other individuals; that defendant was named in the articles as a member of the first board of directors; and that the articles were duly filed and published. The corporation was formed to take over the flour mill, elevator and other property of Kensington Mills, Incorporated, a corporation in which the defendant was a stockholder, and the stockholders in the old corporation *118
were given the privilege of exchanging their stock for stock in the new, as related in Zander v. Holm,
In ordering the assessment, the court must have determined that it had before it a corporation whose stockholders were subject to assessment, and it would seem that defendant is concluded from questioning the existence of the corporation. Be this as it may, his activities were such that it ought not to lie in his mouth to say that the corporation is nonexistent.
In Zander v. Holm, supra, it was held that the failure to satisfy the statutory conditions upon which a co-operative association may commence business deprives it of the power to take or hold property. Here a different question is presented. It is this: May an individual become estopped by his conduct from denying the legality of the organization of a corporation or the validity of the stock it has issued? The question is answered in the affirmative upon the authority of Minnesota Gas-Light E. Co. v. Denslow,
Even though the corporation began to do business before it complied with the statute, defendant cannot escape liability, for, as Judge Mitchell said in Olson v. State Bank,
2. The sufficiency of the proof that defendant became a stockholder is questioned. The law requires a director of a corporation *119
to be a stockholder. Section 6171, G.S. 1913. Defendant was a director, and, in the absence of evidence to the contrary, it will be presumed that he was a stockholder. Caldwell M. E. Co. v. L.L. May Co.
It is suggested that this presumption does not arise unless the directors are elected by the stockholders. We do not stop to consider the suggestion. There was proof that stock certificates were issued to other stockholders and that on May 18, 1921, a stock certificate in the name of the defendant was filled out and signed by the proper officers. The certificate remained in the possession of Zander, the president of the corporation. The defendant's name appeared on the stub of the certificate. Anyone examining the corporate records after May 18 would have been justified in the belief that defendant was a stockholder. He cannot now be heard to deny that he was one.
3. At the opening of the defense plaintiff objected to the introduction of any evidence on the ground that the answer did not state facts constituting a defense. The objection was sustained, and this ruling brings us to a consideration of the principal question in the case. In brief, these were the facts pleaded as a defense: W.T. Coe was president, and G.A. Melges was secretary of the old corporation. On March 26, 1921, Coe, Melges and Zander represented to the defendant that the old corporation was practically free from debt; that its property was unencumbered; that it would be transferred to the new corporation free from encumbrances, and that the new corporation would begin its existence free from debt. Relying on these representations, defendant became one of the incorporators and subsequently delivered his certificates of stock in the old corporation to Zander, who had become president of the new corporation, to have them exchanged for shares of equal par value in the new corporation, on the express condition that a co-operative association would be organized according to the laws of this state and would take over the property of the old corporation free from debt. A short time thereafter defendant discovered that the representations made to him were false, and thereupon made a demand on Zander for the return of his stock certificates. The *120 demand was refused and defendant ceased to have anything to do with the affairs of the new corporation and did not know that any of its stock had been issued to him.
If a fraud was perpetrated by the individuals named in the answer, can it be laid at the door of the new corporation?
As the case stood when plaintiff objected to the introduction of defendant's evidence, it had been shown by the records of the corporation that, as a director, defendant had voted for a resolution to take over the property and assume the liabilities of the Kensington Mills; that he had moved that a Kensington Mills' note should be renewed, and for a resolution that a mortgage be placed on the mill to secure a loan to be used to pay off outstanding indebtedness of the Kensington Mills. The records were such that defendant could not deny that he knew from the first that the old corporation was in debt. With this knowledge, he continued to act as a director, taking part in the transactions which gave rise to the claims of the creditors. In short, he failed to use the high degree of care and diligence which the law requires to prevent creditors from being misled by the conduct of stockholders or officers. Dunn v. State Bank of Minneapolis,
The purpose of an objection to the introduction of any evidence is to test the sufficiency of a pleading. Here it was in the nature of a demurrer to the answer. When the objection was sustained, defendant was under no necessity of making an offer of proof to take advantage of any error there might be in the ruling. Reynolds v. McNamara,
These facts added nothing of substance to the defense pleaded. Plaintiff is not seeking to charge defendant by reason of anything he did or failed to do as a stockholder of the old corporation, and the failure to tender a stock certificate does not affect his liability to creditors. Randall Printing Co. v. Sanitas M.W. Co.
4. The allegation that a conditional delivery of the stock certificates was made to Zander does not change the situation from a legal standpoint. If it be granted that a condition attached to the delivery has not been satisfied, defendant would nevertheless be liable to creditors unaware of the existence of the condition. Minneapolis T.M. Co. v. Davis,
Order affirmed. *122
