16 F.2d 253 (9th Cir. 1926), 4933, Collins v. Morgan Grain Co.

Docket Nº:4933.
Citation:16 F.2d 253
Party Name:COLLINS v. MORGAN GRAIN CO., Inc. [1]
Case Date:November 15, 1926
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 253

16 F.2d 253 (9th Cir. 1926)

COLLINS

v.

MORGAN GRAIN CO., Inc. 1

No. 4933.

United States Court of Appeals, Ninth Circuit.

November 15, 1926

James H. Raley, of Pendleton, Or., Richard W.Montague, of Portland, Or., and William I. Brobeck, Herman Phleger, and Maurice E. Harrison, all of San Francisco, Cal., for plaintiff in error.

William S. Andrews, of San Francisco, Cal., and Harry L. Rafferty, Merwin Rankin, and David C. Pickett, all of Portland, Or., for defendant in error.

Before GILBERT and RUDKIN, Circuit Judges, and NETERER, District judges.

RUDKIN, Circuit Judge.

This was an action by a corporation to recover a balance due on a stock subscription. There is little controversy over the facts. In the latter part of 1920, one Morgan, a grain dealer of San Francisco, conceived the idea of forming a corporation to take over the grain business then conducted by certain operators on the Pacific Coast. With this object in view, he consulted Collins, a grain operator in Oregon and the Pacific Northwest, and Sibley and Anderson, American managers for Wills & Sons, Sibley, of London, and proposed that Wills & Sons, Sibley, Anderson, Collins, and himself take stock in the proposed corporation. The proposition was looked upon with favor by Wills & Sons, and they directed their American managers to proceed to New York and meet one of their directors, to discuss the matter with Morgan. A conference was held in New York, attended by Morgan, Sibley, Anderson, and a director of Wills & Sons, and as a result of this conference Morgan wired Collins concerning the matter. The telegram is not in the record, but in response thereto Collins wired Morgan, agreeing to take $25,000 in stock in the proposed corporation, payable in installments.

Upon receipt of this message, Wills & Sons agreed to subscribe for 1,260 shares, Anderson and Sibley for 10 shares each, and Morgan for 625 shares, of the par value of $100 each. Sibley and Morgan then returned to San Francisco, and while at Chicago, on their return, two additional subscriptions were taken, one for 50 shares, the other for 25 shares. After the return of the parties to San Francisco, the Morgan Grain Company was organized under the laws of the state of Delaware, and Morgan became president of the company. Morgan reported to the board of directors that he had secured subscriptions to the capital stock as above detailed. The subscriptions were accepted by the board and a call of 25 per cent. was made. The call was paid, and certificates issued to the several stockholders for the number of shares paid in full. Thereafter a certificate for the remaining shares subscribed by Collins was tendered, but he refused to accept the certificate or to pay the additional subscription. This action followed.

Upon the trial in the court below the defendant offered to prove that, before the organization of the corporation or the acceptance of his offer to subscribe, he met...

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