Elhard v. Rott

• Decision Date: 17 March 1917
• Citation: 36 N.D. 221,162 N.W. 302
• Parties: ELHARD v. ROTT.
• Court: North Dakota Supreme Court

36 N.D. 221

162 N.W. 302

ELHARD

v.ROTT.

Supreme Court of North Dakota.

March 17, 1917.

Syllabus by the Court.

The “book value” of the capital stock of a banking corporation is reached by extending all the assets as they appear on the corporate books, and deducting all the liabilities and other matters required to be deducted, and taking the balance as a measure of value. The books are all of the books of the bank and are not merely the ledger, and when part of the assets are promissory notes bearing interest, the accrued interest on such notes will be computed, even though such notes are not yet due (citing Words and Phrases, Second Series, Book Value).

Appeal from District Court, Logan County; W. L. Nuessle, Judge.

Action by George Elhard against Fred Rott for the specific performance of a contract for the sale of corporate stock. Judgment for defendant, and plaintiff appeals. Affirmed.C. S. Buck, of Jamestown, for appellant. W. S. Lauder, of Wahpeton, for respondent.

BRUCE, C. J.

This is an action for the specific performance of a contract to sell bank stock. The defendant had agreed to sell the plaintiff the stock in question at its “book value” at the time of the purchase, and the only question which we need to consider is the meaning of the term “book value.” In arriving at the book value of the stock, was it necessary to compute the accrued interest on the notes which were held by the bank, even though such notes were not due? And did the books include all of the books of the bank, or merely the ledger? In other words, should a note for $500 which drew 10 per cent. interest and was due six months from date be figured merely at its face value if only three months had run since the note was executed, or, in estimating its value, should the accrued interest for the three months be taken into consideration? The learned trial court held that in view of all the circumstances, the parties intended that in arriving at the book value of the stock such interest should be taken into consideration. We are satisfied that he was justified in this conclusion. We believe, indeed, that the term “book value” has an established meaning in so far as the capital stock of a banking corporation is concerned. It means value as predicated on the face value of the assets of the corporation after deducting its liabilities. Steeg v. Leopold Bldg. & Imp. Co., 126 La. 101, 52 South. 232-235;Cabble v. Cabble, 111 App. Div. 426, 97 N. Y. Supp. 773-775; 1...