Ada Dairy Ass'n v. Mears

• Decision Date: 27 March 1900
• Citation: 82 N.W. 258,123 Mich. 470
• Parties: ADA DAIRY ASS'N v. MEARS.
• Court: Michigan Supreme Court

82 N.W. 258

123 Mich. 470

ADA DAIRY ASS'N v. MEARS.

Supreme Court of Michigan

March 27, 1900

Error to circuit court, Kent county; Frank D. M. Davis, Judge.

Action by the Ada Dairy Association against William Mears on a stock-subscription agreement. From a judgment for defendant plaintiff brings error. Reversed.

Walker & Fitzgerald, for appellant.

Judkins & Perkins, for appellee.

MONTGOMERY C.J.

This is an action of assumpsit, commenced in justice court. The action is based on a stock subscription and an agreement entered into with the True Dairy-Supply Company, which agreement has been assigned by the True Dairy-Supply Company to the plaintiff. By the terms of this agreement the True Dairy-Supply Company undertook to build a butter factory for the price of $3,000, and to supply a competent butter maker for one year, if desired. The several subscribers to the agreement, of whom defendant was one, undertook severally to pay stated subscriptions; and the subscribers, between themselves, agreed to incorporate under the laws of the state, and to fix the aggregate amount of stock at not less than the amount subscribed, and at the price of $10 per share. It was also proposed that extra stock to exceed the contract price could be subscribed, and that all money collected after paying the contract price should be used as a working capital. A corporation was organized with an authorized capital stock of $4,000.

At the close of the evidence the defendant contended that, as the stock was not all paid in, there could be no recovery, in any event; basing his contention on Association v Walker, 88 Mich. 62, 49 N.W. 1086. The circuit judge ruled against the defendant on this question, and, we think rightly. The original agreement was not only a stock subscription, but something more. It was a contract between the True Dairy-Supply Company and the various subscribers. Under the terms of this contract, a right of action accrued to the True Dairy-Supply Company, which was assigned to plaintiff. Furthermore, it is evident that the parties contemplated that the organization might take place before the stock was all subscribed, which should be fixed in the articles of incorporation.

The defense prevailed, and upon testimony offered to show that the defendant never became a party to this contract. The plea of the defendant was not accompanied by an affidavit denying the execution of the written instrument which was declared upon and filed with the justice of the peace. The notice given was that the defendant was induced to sign the agreement by false and fraudulent representations and statements, and that on the following day he withdrew his subscription, and was relieved from all obligation, and that the subscription was then and there canceled, and also that he never subscribed for any of the stock of plaintiff. The evidence in behalf of the defendant tended to show: That he was approached by a Mr. Jewett, the agent of the True Dairy-Supply Company, and asked to subscribe stock. That he stated that he knew nothing about the business, and did not care to subscribe without further information. That he was then told by Mr. Jewett that a Mr. Collar was acquainted with results attained at another factory put up by the supply company, and Jewett asked him to see Mr. Collar and learn the facts, and told him that if he would sign the contract, and...