Corcoran v. Sonora Min. & Mill. Co.

• Court: United States State Supreme Court of Idaho
• Writing for the Court: STOCKSLAGER, J. Per Curiam.
• Citation: 71 P. 127,8 Idaho 651
• Decision Date: 06 December 1902
• Parties: CORCORAN v. SONORA MINING AND MILLING COMPANY

71 P. 127

8 Idaho 651

CORCORAN
v.
SONORA MINING AND MILLING COMPANY

Supreme Court of Idaho

December 6, 1902

WHEN AN ORDER SUSTAINING A DEMURRER MAY BE REVIEWED.-The right to have an order sustaining a demurrer reviewed in this court is not waived by filing an amended complaint.

WHEN ORDER ON MOTION TO STRIKE OUT PORTIONS OF AMENDED COMPLAINT MAY BE REVIEWED.-An order of the trial court sustaining a motion to strike out certain portions of an amended complaint may be reviewed in this court on final appeal, and is not waived by filing a subsequent amendment.

WHEN ORAL EVIDENCE IS NOT ADMISSIBLE TO PROVE RECORD OF CORPORATION.-Oral evidence is not admissible to prove the records of a corporation in a suit brought to set aside a sale of stock of a stockholder for nonpayment of assessments.

WHEN STATUTE STRICTLY CONSTRUED.-Every requirement of the statute relating to the proceedings must be strictly followed.

(Syllabus by the court.) [8 Idaho 652]

APPEAL from District Court, Shoshone County.

Reversed and remanded. Costs awarded to appellant.

W. W. Woods and A. G. Kerns, for Appellant.

The court erred in sustaining the demurrer to the original complaint. The complaint alleged the corporate existence of the defendant. The court sustained a general demurrer to the complaint on the ground that it did not continue and allege that one-fourth of the capital stock of defendant had been subscribed, as provided in section 2614 of the Revised Statutes. The appellant maintains that this allegation was not legally required of him; that it was a matter of defense. To reach the insufficient part the demurrer should go to the complaint on the ground of ambiguity or uncertainty in respect to insufficient part. (Dangel v. Levy, 1 Idaho 722; Fairchilds v. Ada County, 6 Idaho 340, 55 P. 654.) The court erred in striking out portions of the amended and supplemental complaint. It is a well-settled principle of law that a corporation will not be permitted to plead ultra vires where it has received a benefit under a contract. (5 Thompson on Corporations, secs. 5833, 6007, 6016; 7 Thompson on Corporations, sec. 8321; 2 Thompson on Corporations, sec. 1770.) "Whenever a corporation is acting within the scope of the legitimate purposes of its institution, all parol contracts, made by its authorized agents, are express promises of the corporation; and all duties imposed upon them by law, and all benefits conferred at their request, raise implied promises, for the enforcement of which an action will lie." (Bank of Columbia v. Patterson, 7 Cranch (U. S.), 299, 306.) Section 2614 provides when an assessment can be levied; section 2617, what the order levying an assessment must contain; and section 2639, that the order levying the assessment must be recorded in the minute-book or journal. When a statute requires a particular transaction to be entered in a minute-book or journal by a corporation, parol testimony is not admissible to prove the transaction. (4 Thompson on Corporations, sec. 5175; Hill v. City of Cleveland, 4 Ohio Dec. 562; 6 Thompson on Corporations, sec. 7735.) An assessment is an obligation created by statute. Observation of the mode of making an assessment upon and sale of stock must comply strictly with the statute. A sale made without strictly following the statute is just as invalid as if made without any power at all. (Clark on Corporations, p. 320; San Bernardino Inv. Co. v. Merrill, 108 Cal. 490, 41 P. 487; Clise Inv. Co. v. Washington Sav. Bank, 18 Wash. 8, 50 P. 575; 1 Morawetz on Private Corporations, 122 et seq., 201; Boone on Corporations, 119; Cook on Corporations, 129, 130.)

C. W. Beale, for Respondents.

Error, if any, in sustaining a demurrer to a complaint is waived by the filing of an amended complaint. (Brittan v. Oakland Bank of Savings, 112 Cal. 1, 44 P. 339; Bank of Santa Fe v. Haskell County Bank, 54 Kan. 375, 38 P. 485; Anthony v. Slayden, 27 Colo. 144, 60 P. 826.) There can be no nonassessable stock under the laws of this state. When one-fourth of the capital stock has been subscribed, assessment may be levied and collected for the purpose of paying expenses, conducting business, or paying debts of the corporation. (Thompson on Corporations, sec. 8661; Santa Cruz R. Co. v. Spreckels, 65 Cal. 193, 3 P. 661, 802; Sparks v. Lower Payette Ditch Co., 3 Idaho 306, 29 P. 134; Hall v. Eagle Rock etc. Water Co., 5 Idaho 551, 51 P. 110.) That parol evidence is admissible to prove facts omitted from the record is not only the rule laid down by the supreme court of California, which has the same statute upon this subject that we have, but is also supported by the supreme court of the United States, and the practice of admitting and receiving such testimony is universally indorsed by the highest courts in this country. (Gordon v. City of San Diego, 108 Cal. 264, 41 P. 301; Bay View Assn. v. Williams, 50 Cal. 353; Gilson Quartz M. Co. v. Gilson, 51 Cal. 341; Bank of United States v. Danbridge, 12 Wheat. 64; Allis v. Jones, 45 F. 148; United States v. Danbridge, 12 Wheat. 74.)

STOCKSLAGER, J. Quarles, C. J., and Sullivan, J., concur.

OPINION [71 P. 128]

The facts are fully stated in the opinion.

STOCKSLAGER, J.

The plaintiff commenced his action in the district court of Shoshone county to set aside the sale of eight thousand shares of the stock of the Sonora Mining and Milling Company, alleged to have been sold to appellant by the officers of said corporation, and thereafter sold to respondent Gibbs for certain alleged assessments due. A demurrer was interposed and sustained to the complaint. An amended complaint was filed, and a motion sustained to strike out certain portions thereof. A second amended complaint was filed, which alleged the corporate existence of the respondent the Sonora Mining and Milling Company under and by virtue of the laws of the state of Idaho and that it has, or claims to have, a capital stock of $ 1,000,000 divided into one million shares, of one dollar each, and that at the time of its incorporation the incorporators thereof set forth and declared that all of said stock was fully subscribed; that on or about the thirteenth day of June, 1899, George Steward, A. F. Gill, W. G. Chapman, D. Cardoner, H. J. Rossi, and W. C. Clark, members of the board of directors of defendant corporation, pretended to hold a meeting of the board of directors of said corporation, at which pretended meeting plaintiff is informed and believes the following proceedings were had and recorded, to wit: "After discussing the financial condition of the company, a resolution was offered that an assessment of one mill per share on the outstanding stock of the company was levied, the same to become delinquent on July 15, 1899, and the delinquent stock to be sold on August 15, 1899. The vote upon the proposed assessment was as follows: Ayes, Steward, Gill, Chapman, Cardoner, Rossi, Clark--6. Absent, Moffatt--1." Plaintiff alleges, on information and belief, that the pretended meeting of the board of directors was not duly assembled on said day, in that all the members of said board were not present, and no notice of such meeting had been given, and no provision had been made by said company for calling such or any meeting. On information and belief, plaintiff alleges that the pretended levy of an assessment at said pretended meeting was not a uniform and equal assessment on all of the capital stock of defendant; [8 Idaho 655] that an attempt was made at said pretended meeting to delegate the power and authority to levy and collect such pretended assessment to officers of said defendant corporation, and no provision was made specifying when, to whom, and where such assessment was payable, nor the paper in which notice of any assessment should be published, nor fix the amount thereof, and that no notice of such pretended levy of an assessment was given; that thereafter, and on or about the fifteenth day of August, 1899, defendant corporation wrongfully and without right, or the plaintiff's consent or knowledge, unlawfully pretended to sell eight thousand of the twelve thousand shares of the capital stock of said defendant corporation belonging to plaintiff to one C. W. Gibbs, for the alleged sum of fourteen dollars and sixty cents; that he had no notice of the pretended acts and doings of the defendant corporation in pretending to levy an assessment against his said stock, and that he had no knowledge or notice that his said stock was being sold as aforesaid, or otherwise; that prior to the commencement of this action the plaintiff tendered to the defendant corporation and to said C. W. Gibbs the sum of twenty-five dollars, being more than the amount of the pretended price of said stock, together with all subsequent assessments which had or have been levied or paid or due thereon, together with interest thereon, and all costs and other moneys due and payable, and that said tender has been and was refused by each of said defendants; that at the time of said tender said C. W. Gibbs denied that...