Goodyear v. Meux
| Decision Date | 19 January 1921 |
| Citation | 228 S.W. 57 |
| Parties | GOODYEAR v. MEUX. |
| Court | Tennessee Supreme Court |
Certiorari to Court of Civil Appeals.
Suit by A. G. Goodyear, as trustee in bankruptcy of the Southern Pharmaceutical Company, against Dr. G. W. Meux. From a decree of the Court of Civil Appeals reversing a decree of the chancellor dismissing the bill, defendant brings certiorari. Decree of Court of Civil Appeals reversed, and decree of chancellor affirmed.
J. W. E. Moore & Son, of Brownsville, and Lusk & Thompson, of Chattanooga, for plaintiff.
Kinney & Wills, of Brownsville, for defendant.
This suit was brought by the complainant as trustee in bankruptcy of the Southern Pharmaceutical Company to recover a balance alleged to be due from the defendant on his subscription to the stock of said corporation. This corporation was organized under the laws of Delaware, and undertook to establish a wholesale drug business in this state. Agents were employed to sell its stock, and under the plans followed preferred stock was sold to subscribers and common stock in an amount equal to their subscriptions was given to each subscriber as a bonus. The concern is now being wound up in the bankruptcy court. It is averred that this donation of common stock as a bonus was illegal under the laws of Delaware, and this suit is brought, as stated, to recover on account of the bonus stock as for an unpaid subscription.
Various questions are raised in the case. The bill was dismissed by the chancellor, but the Court of Civil Appeals reversed the chancellor and rendered a decree for the complainant, and the case has been brought before us on certiorari.
One of the defenses interposed is that the defunct corporation and its agents had failed to comply with chapter 31 of the Acts of the First Extra Session of 1913, known as the Blue Sky Law. It is therefore insisted that the contract for the sale of the stock was illegal, and there can be no recovery herein. We think this defense is good.
The statute referred to, which is carried into Thompson's Shannon's Code, at section 3608a139 et seq., provides that all local and foreign corporations, with certain designated exceptions, shall be known as investment companies. It provides that before offering to sell any stock, bonds, or other securities of any kind or character, except government, state, or municipal bonds, or any lands or town lots, such corporation shall file statements containing information particularized in the act and shall pay a fee of $25. The act further provides such companies shall file additional statements at the close of business on December 31 and June 30 of each year, and it provides that no agent of such companies shall do any business for them until such agents register their names with the Secretary of State and pay certain fees. It is further enacted that any person or agent who undertakes to sell the securities of companies which have not complied with the statute, and that any such companies which undertake to do business in the state without compliance therewith, shall be guilty of a misdemeanor punishable by penalties set out. It is provided that the statute shall be complied with before any attempt to sell stock or do...
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