Calumet Paper Co. v. Stotts Inv. Co.

• Decision Date: 22 October 1895
• Citation: 64 N.W. 782,96 Iowa 147
• Parties: CALUMET PAPER CO. v. STOTTS INV. CO.
• Court: Iowa Supreme Court

96 Iowa 147

64 N.W. 782

CALUMET PAPER CO.

v.STOTTS INV. CO.

Supreme Court of Iowa.

Oct. 22, 1895.

Appeal from district court, Polk county; C. R. Holmes, Judge.

Action at law by plaintiff, a judgment creditor of the Olsen-Welch Printing Company, a corporation organized under the laws of this state, to recover the amount of its judgment from the defendant, a stockholder in said corporation, under the provisions of sections 1082-1084 of the Code of Iowa. The case was tried to the court without the intervention of a jury, and judgment was rendered for plaintiff. Defendant appeals. Affirmed.Chas. MacKenzie and F. B. Huckstep, for appellant.

S. G. Van Auken and Crom Bowen, for appellee.

DEEMER, J.

In the month of May, 1892, J. F. Olsen, J. H. Welch, and Louis Stutz attempted the organization of a corporation to be known as the “Olsen-Welch Printing Company.” Articles of incorporation were executed and filed, but no notice was given, as required by law. Olsen and Welch furnished all the capital, $1,500, which they borrowed from a bank and invested in machinery. This defectively organized corporation purchased from plaintiff some paper, some time prior to November, 1892, and failing to pay therefor, judgment was obtained against the Olsen-Welch Printing Company, which judgment is the foundation of this suit. In November, 1892, the Olsen-Welch corporation was reorganized, or new articles of incorporation were adopted and filed, and due notice given, as required by law, to cure the defects in the former organization. This new corporation issued stock to the amount of $7,500 to Olsen and $7,500 to Welch, and thereafter, and within a few days, Olsen and Welch each assigned $2,500 of the stock so issued to them to the defendant, Stotts Investment Company, and to one Schuyler, a member of the Stotts Investment Company,--$4,500 to the defendant, and $500 to Schuyler; and thereafter the business was carried on in the name of the Olsen-Welch Printing Company. There was no formal transfer of property or change in the character of the business from the time of the first attempt to organize the company in May, 1892. The reincorporation was either to cover defects in the original, or for the purpose of forming a perfect corporation, so as to issue stock to the defendant. On the 18th day of January, 1893, the plaintiff recovered its judgment against the Olsen-Welch Printing Company, a corporation, and execution having been issued thereon, and returned unsatisfied, it thereupon commenced this action to recover the amount of its judgment from defendant as a stockholder holding unpaid stock to an amount more than the amount of plaintiff's claim. Olsen and Welch paid nothing for the stock issued to them, except as they transferred to the corporation property which, as we have seen, was not worth to exceed $1,500. The defendant paid nothing for the stock issued to it. It holds this stock either as collateral security, or as bonus or gift from the corporation, for having procured a loan to it after its reorganization. The defendant, in answer, after some specific denials, avers that it never subscribed for any stock in the Olsen-Welch Printing Company, that it never in fact purchased any stock in said corporation, and that no certificates of stock were issued to it with the knowledge or consent of any of its authorized agents. It further avers that it is a corporation, and that under its articles it had no authority to purchase stock in the printing company. It also avers that, before the commencement of this suit, it transferred its stock to one F. S. Treat, and is no longer the holder thereof. It further avers that, on the 6th day of December, 1892, the printing company being indebted to it in the sum of $1,500, stock of Olsen and Welch in the printing company, to the amount of $4,500, was reissued to it for the purpose of giving defendant security for the amount due it. Defendant also avers that plaintiff's judgment is against the corporation organized in May, 1892, and that it holds no stock in this company, its stock being in the corporation organized in November.

1. Upon the filing of this answer the defendant moved to transfer the action to the equity side of the calendar. This motion was overruled, and exception taken, and this presents the first question for determination. Plaintiff's action was properly commenced at law. Bayliss v. Swift, 40 Iowa, 648;Water-Power Co. v. Hopkins, 79 Iowa, 653, 44 N. W. 797. We see nothing in the answer or amendments thereto which presents an equitable defense. Every matter pleaded in answer can be tried and determined in a law action. Indeed, we see nothing in any of the averments of the answer of an equitable character. No mistake was alleged, and no reformation asked. The motion to transfer was properly overruled.

2. It is next insisted that the judgment is against the defective corporation, organized in May, and that defendant was not a...