Conrad v. La Rue

• Decision Date: 20 December 1883
• Citation: 17 N.W. 706,52 Mich. 83
• Court: Michigan Supreme Court
• Parties: CONRAD v. LA RUE.

17 N.W. 706

52 Mich. 83

CONRAD v. LA RUE.

Supreme Court of Michigan

December 20, 1883

One of several stockholders cannot back out of an agreement, which all have entered into, to contribute a number of shares each to be sold for the benefit of the corporation, after the rest, in reliance upon the agreement, have contributed their proportion. And if his shares have been taken and used accordingly, he cannot bring trover for them.

Error to Marquette.

F.O. Clark, for plaintiff and appellant.

E.J Mapes, for defendant.

COOLEY J.

Trover for the conversion by defendant of 200 shares in the Conrad Iron Mining Company. Defendant was secretary and treasurer of the company, and it is not disputed that he had the shares and disposed of them. The question is whether he was warranted in what he did. The evidence for the defense tended to show the following state of facts: The Conrad Iron Mining Company is a corporation, and in October, 1880, it had 10 stockholders, each of whom owned 2,000 shares. The company was in need of money, and an informal meeting of the stockholders was held, at which it was agreed that each of them should put 200 shares of his stock in the hands of defendant, to be disposed of by him for the company at two dollars a share. This agreement was carried out so far as the other shareholders were concerned, but not by the plaintiff. Defendant, however, had possession of the certificates for all the plaintiff's shares, and in December, 1880, when plaintiff called upon the defendant for his certificates those representing 1,800 shares were delivered over to him and the rest retained and canceled. For those canceled, new certificates were subsequently issued and disposed of by defendant, who relied in disposing of them upon the October agreement. Plaintiff denied that he agreed to put the 200 shares into defendant's hands as was claimed by defendant, and he gave evidence which he contended showed that he paid to or for the company in money, all that could be justly claimed from him. He also produced evidence to show that the proceeds of the shares put into defendant's hands and sold had been misappropriated.

In submitting the case to the jury the circuit judge instructed them as follows:

"It appears, gentlemen, from the evidence in the case that a corporation known as the Conrad Iron Mining Company was organized and incorporated with ten stockholders of which the plaintiff was one and the defendant La Rue was another. The amount of stock was 20,000 shares. Each was entitled to 2,000 shares of stock. It seems the certificates of stock were duly filled out and signed by the president and the secretary, and that a certificate of 200 shares belonging to the plaintiff in this case was left with the secretary or, in other words, it was never delivered by the secretary of the company to the plaintiff in this case. The plaintiff claims that he was entitled absolutely to that stock, and that the defendant having taken and used it, or disposed of it without his authority, converted it. It will depend, gentlemen, upon the arrangement made between these parties. The defendant claims that sometime in October, 1880, the stockholders of the company got together for the purpose of ascertaining what should be done. It is claimed that the stockholders then and there agreed that each should...