Chisholm Bros. v. Forny

• Decision Date: 09 December 1884
• Citation: 21 N.W. 664,65 Iowa 333
• Parties: CHISHOLM BROS. v. FORNY ET AL.; CANTERBURY & CO. v. SAME. MORSE & CO. v. SAME
• Court: Iowa Supreme Court

21 N.W. 664

65 Iowa 333

CHISHOLM BROS. v. FORNY ET AL.;

CANTERBURY & CO. v. SAME.

MORSE & CO. v. SAME

Supreme Court of Iowa, Des Moines

December 9, 1884

Appeal from Des Moines Circuit Court.

THESE causes were submitted on a single abstract. The petitions stated that the several plaintiffs recovered judgment against the Burlington Manufacturing Company, and that executions were issued, and a demand made on the last acting president of the corporation to point out corporation property upon which the same could be levied, and that he failed to do so that the defendants are owners of certain shares of the capital stock of the corporation, for which they had paid nothing, and a judgment was asked against the defendants for the amount of the capital stock owned by each of them. The defendants answered the petition, and, in substance, pleaded that they and others were the owners of a valuable patent for certain specified territory, for a new and improved churn, and were about to manufacture and vend said machine jointly, in a manner to be agreed upon; that afterwards a joint-stock corporation was organized, known as the Burlington Manufacturing Company, for the purpose of selling territory and manufacturing churns; that it was agreed by and between said corporation, the defendants, and other owners of the patent, that they would sell it to the corporation for the sum of $ 10,000, payable in stock of the corporation. In accordance with this agreement the corporation was formed the patent transferred to it for the price named, and stock issued to the defendants therefor; that said transaction was entered into in good faith, and that the patent was reasonably worth the sum above stated; that said corporation has disposed of the patent, and said contract cannot be rescinded and the parties placed in the same position they were in before it was entered into. The defendants also pleaded the statute of limitations. The plaintiff, in reply stated that the patent was worthless, and its purchase, and the attempted release of defendants from their obligations to pay for the stock, was a device to defeat the rights of plaintiff, and a fraud upon it and other creditors of the corporation. Trial to the court, and judgment was rendered against the defendants, Forny and McIntire, and they appeal.

AFFIRMED.

Hall & Huston, for appellants.

P. Henry Smythe & Son, for appellee.

OPINION

SEEVERS, J.

No finding of facts was made by the court, and there is but little conflict in the evidence. Sprague was the owner of a patent, and he sold an interest therein to the defendants and others. Such interest was transferred to said parties. Appellants paid no "money or property" for the interest assigned to them, the consideration being their knowledge, experience, and supposed influence. At least, the court was warranted in so finding. It will be assumed that the appellants, at the time the patent was assigned to them believed it was valuable. But the court, under the evidence, was warranted in finding that it was worthless. Afterwards the patent was transferred to the corporation, in consideration of $ 10,000 of its capital stock, which was issued to the appellants and others for the interest therein, which had been previously transferred to each of them by Sprague. The capital stock of the corporation was fixed at $ 10,000; the only property owned by it was the patent. ...