Brahm v. M. C. Gehl Co.

• Decision Date: 24 September 1907
• Citation: 112 N.W. 1097,132 Wis. 674
• Parties: BRAHM v. M. C. GEHL CO. ET AL.
• Court: Wisconsin Supreme Court

132 Wis. 674

112 N.W. 1097

BRAHM

v.M. C. GEHL CO. ET AL.

Supreme Court of Wisconsin.

Sept. 24, 1907.

Appeal from Circuit Court, Milwaukee County; Lawrence W. Halsey, Judge.

Action by Peter Brahm against the M. C. Gehl Company and others. From an order overruling his demurrer to the counterclaim of defendant M. C. Gehl Company, plaintiff appeals. Reversed and remanded, with directions to sustain the demurrer to the counterclaim.

Appeal by plaintiff from an order overruling a demurrer to counterclaim of the corporate defendant, M. C. Gehl Company, which asserted, as one ground of demurrer, the nonpleadability as a counterclaim of the cause of action attempted to be set forth. The complaint alleged the formation of the defendant company to continue a business theretofore conducted by defendant M. C. Gehl; that plaintiff contributed $4,000 of money capital, and received 40 shares of the capital stock; that the defendant M. C. Gehl contributed $3,000, consisting of the assets of his former business, and received therefor 30 shares of the capital stock, which was issued, at his request, to his wife, Mary E. Gehl, and his brother-in-law, Salick, and is now held by them in trust for him; that the defendant M. C. Gehl falsely and fraudulently represented that the good will of his former business was valuable and worth at least $1,000, and thereby induced the plaintiff and the corporation to issue therefor 10 shares of capital stock, which were issued to said defendants Mary E. Gehl and Otto T. Salick and are now held by them on like trust; that said M. C. Gehl also procured to be issued, for no consideration whatever, 1 additional share of stock to himself, which he now holds; that, in fact, the good will was valueless and said 11 shares of stock issued without value and illegally; that it was agreed at the time of the organization of the corporation, and as part consideration for his contribution of capital, that the plaintiff should be president of the corporation and be employed thereby at a salary of not less than $60 per month; that he was so elected president, and M. C. Gehl was chosen secretary and treasurer, and the defendant Mary E. Gehl vice president, and the three were chosen directors; that plaintiff faithfully performed his duties as president and employé, but the defendant M. C. Gehl is attempting to drive him out of connection with said business and force him to resign his position as president, in various ways, and is threatening to injure and wreck the business of the corporation so as to render plaintiff's stock valueless, and is proceeding to hold a meeting of directors, where, by virtue of the majority of himself and wife on the board, he proposes and threatens to call a meeting of stockholders, and thereat to so vote the 11 shares of stock unlawfully issued to him as to change the date of the annual meeting so as to enable immediate exclusion of the plaintiff from his office of president and his participation in the business of the corporation and deprive him of his salary therefor. The prayer is that these 11 alleged fraudulent shares of stock be adjudged to be void and ordered canceled upon the books of the corporation; that the defendants be enjoined from changing the by-laws and from holding the proposed meeting of stockholders in December, 1906, and from voting at any meeting of stockholders such illegal stock; also, that “a receiver may be appointed of the property of the corporation with the usual powers of receivers in such cases made and provided for the purpose of winding up the affairs and business of such corporation;” and for general relief. The counterclaim, contained in separate answer of the M. C. Gehl Company, asserts that the corporation secured an option upon a certain tract of land at a price of $4,000 and paid thereon $200; that later, it being unable to pay the balance, the plaintiff paid it and took title to the land, upon an agreement variously stated, either to hold the property in trust for the corporation upon reimbursement of the cost, interest, and expenses, or as a loan, to secure which the title was taken in the plaintiff, as a mortgage; that the plaintiff has repudiated all rights of the defendant corporation in said property and claims and insists that he owns the same absolutely; that the property has increased largely in value, and by plaintiff's claim the corporation will be deprived of several thousand dollars value of its equity of redemption; that at one time it offered to repay to plaintiff the $3,800 paid by him, together with compound interest at the rate of 5 per cent., and all sums which the plaintiff had paid for taxes or otherwise in connection with said real estate, which offer the plaintiff refused, and that he still refuses to give the corporation a deed. The prayer of the counterclaim is for judgment adjudging the equity of redemption in the defendant corporation, that plaintiff be adjudged to have no right or interest therein, but that the title be adjudged in the defendant, and that the plaintiff by reason of said conduct be ousted from the presidency and directorship of the corporation, and for general relief.A. J. Eimermann, for appellant.

John H. Paul, for respondents.

DODGE, J. (after stating the facts as above).

Before considering whether the counterclaim is pleadable as such, it is necessary to ascertain what is the plaintiff's cause of action. The obvious primary complaint is that the defendants have obtained from the corporation and hold stock to which they have no right, and which therefore ought to be canceled. This is clearly a right of action belonging to the corporation. It is the...