Converse v. Emerson

Decision Date22 December 1909
Citation90 N.E. 269,242 Ill. 619
CourtIllinois Supreme Court
PartiesCONVERSE v. EMERSON, TALCOTT & CO.

OPINION TEXT STARTS HERE

Appeal from Appellate Court, Second District, on Appeal from Circuit Court. Winnebago County; Arthur H. Frost, Judge.

Action by Theodore R. Converse, receiver of the Minnesota Thresher Machine Company, against Emerson, Talcott & Co. A judgment for defendant was affirmed by the Appellate Court, and plaintiff appeals. Affirmed.F. E. Carpenter and E. M. St. John (J. H. Chandler and Davis, Kellogg & Severance, of counsel), for appellant.

E. P. Lathrop and Robert Lathrop, for appellee.

COOKE, J.

This was an action of assumpsit brought in the circuit court of Winnebago county by Theodore R. Converse, as receiver of the Minnesota Thresher Manufacturing Company, appellant, against Emerson, Talcott & Co., appellee, to recover the amount of two assessments, aggregating $1,900, levied by the district court of Washington county, in the state of Minnesota, against appellee, as the owner and holder of 38 shares of the capital stock of the said Minnesota Thresher Manufacturing Company. By agreement a trial was had before the circuit court without a jury upon a stipulation of facts, and resulted in a finding in favor of appellee and a judgment against appellant for costs of suit. Appellant prosecuted an appeal to the Appellate Court for the Second District, where the judgment of the circuit court was affirmed. He has prosecuted a further appeal to this court, and here seeks a reversal of the judgments of the circuit court and of the Appellate Court.

Appellee was in January, 1883, and has ever since been, a corporation, created and existing under the general incorporation laws of the state of Illinois. Its object, as set forth in its charter, is ‘the prosecution and carrying on the business of the manufacture and sale of agricultural machinery, tools and other articles.’ In January, 1883, appellee sold and delivered to the Northwestern Manufacturing & Car Company (hereinafter referred to as the car company), a corporation organized under the laws of the state of Minnesota and engaged in that state in manufacturing cars and threshing machinery, certain agricultural implements, in part payment for which the car company gave appellee its promissory note for $1,904.14, dated January 26, 1883, and due November 1, 1884. During the year 1884 the car company became insolvent, and was placed in the hands of a receiver. In November, 1884, the Minnesota Thresher Manufacturing Company, a corporation (hereinafter referred to as the thresher company), was organized under the laws of the state of Minnesota by certain creditors and stockholders of the car company. The objects for which the thresher company was formed, as set forth in its charter, were ‘the purchase of the capital stock, evidences of indebtedness issued by and the assets of the Northwestern Manufacturing & Car Company, a corporation existing under the laws of the state of Minnesota, or any portion of said capital stock, evidences of indebtedness or assets, and the manufacture and sale of steam engines, and all kinds of farm implements, machinery of all kinds, and the manufacture and sale of all articles, implements, and machinery of which wood and iron, or either of them, form the principal component parts, and the manufacture of materials therein used.’ The capital stock of the thresher company was $7,000,000 divided into 140,000 shares of the par value of $50 each, of which 80,000 shares were classed as preferred stock and the remaining 60,000 shares as common stock. At the time this suit was brought 27,967 shares of the preferred stock and 42,594 shares of the common stock had been issued and were outstanding. Under the plan of organization of the thresher company, the creditors of the car company had the right to subscribe for and accept preferred stock of the thresher company and to pay for the same by the assignment of their respective claims against the car company. Appellee, as a creditor of the car company, participated in the organization of the thresher company, subscribed for 38 shares of the preferred stock on or about April 29, 1885, assigned and turned over to the thresher company its claim for $1,904.14 against the car company, and received, in addition to the 38 shares of stock, scrip of the theresher company in the sum of $26.73, the scrip representing the amount of appellee's claim, with accrued interest, over and above the par value of the 38 shares of stock. Appellee has never received any dividends or profits upon this stock. At the time of the organization of the thresher company the Constitution of the state of Minnesota provided that ‘each stockholder in any corporation (excepting those organized for the purpose of carrying on any kind of manufacturing business) shall be liable to the amount of stock held or owned by him,’ which provision is still in force, and has been held by the Supreme Court of Minnesota to render the stockholders of the thresher company liable to the amount of stock held or owned by them, respectively. On August 16, 1901, a judgment having been rendered against the thresher company for $2,936.07 by the district court of Ramsey county, Minn., and execution having been issued thereon and returned ‘No property found,’ and, the company then being insolvent and without any assets other than the constitutional liability of its stockholders above set forth, the district court of Washington county, Minn., upon the application of the judgment creditor, appointed Theodore R. Converse receiver of all the property, assets, rights, and interests of the thresher company, with authority, among other things, to sue for, collect, and compromise any stockholder's liability that might exist under the Constitution and laws of the state of Minnesota. Claims against the thresher company aggregating $443,752.17 were allowed in that proceeding. Thereafter, in pursuance of the laws of the state of Minnesota and upon petition filed by the receiver, the district court of Washington county, Minn., entered an order levying an assessment of $18 upon each share of the capital stock of the thresher company, and directing the receiver to collect such assessments and to bring suit therefor, if necessary, against any stockholder neglecting or refusing to pay the same. Afterwards another assessment of $32 upon each share of the capital stock was made by said district court and similar directions were given to the receiver. Appellee refused to pay either of these assessments upon the 38 shares of stock subscribed and held by it, and the receiver brought this suit in the circuit court of Winnebago county to recover the same. Appellee resisted this action on the ground that its act in acquiring the stock of the thresher company under the conditions above set forth was not within its charter powers, and was therefore ultra vires. Upon the trial appellant submitted to the court written propositions to be held as law in the decision of the case, announcing that under the facts stipulated in the case the action of the appellee in acquiring the stock was not ultra vires, and, further, that appellee, having received and held this stock for more than twenty years, is estopped from interposing the defense of ultra vires. The action of the circuit court in refusing to hold these propositions as law in the decision of the case is the only ground urged for reversal.

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