Great W. Tel. Co. v. Purdy

• Decision Date: 15 October 1891
• Citation: 50 N.W. 45,83 Iowa 430
• Parties: GREAT WESTERN TEL. CO. v. PURDY.
• Court: Iowa Supreme Court

83 Iowa 430

50 N.W. 45

GREAT WESTERN TEL. CO.

v.PURDY.

Supreme Court of Iowa.

Oct. 15, 1891.

Appeal from district court, Des Moines county; CHARLES H. PHELPS, Judge.

Action by the receiver of a corporation to recover against a stockholder an unpaid balance due upon his subscription for stock. The case was tried without a jury, and judgment rendered for defendant. Plaintiff appeals.Newman & Blake and Thomas J. Sutherland, for appellant.

S. L. Glasgow, for appellee.

BECK, C. J.

1. On the 16th day of February, 1869, defendant subscribed for 50 shares of the capital stock of the Great Western Telegraph Company, organized under the laws of the state of Illinois, in May, 1868. The par value of each share of stock was $25. Payments of installments were made upon the stock. In 1874 a receiver of the telegraph company was appointed. In 1886 a decree was entered in an action in the circuit court of Cook county, Ill., ordering an assessment upon the stockholders for the unpaid stock subscriptions. The corporation was a defendant, and certain persons, who need not be named, were plaintiffs. It does not appear that defendant was a party to the proceedings. This action was commenced in 1889. The contract of subscription is in the following language:

“We, the subscribers hereunto, for value received, severally, but not jointly, agree to take the number of shares in the capital stock of the Great Western Telegraph Company placed opposite our respective names, and pay for the same in installments, to-wit, five per cent. on amount paid in, and the balance as the directors from time to time may order. In consideration thereof the Great Western Telegraph Company agree that, when forty per cent. of the par value of the shares shall have been paid under such orders, and the installment receipts therefor surrendered to the company, the number of shares severally subscribed by the undersigned shall be issued to them as full paid stock by the said company. T. C. Snow is appointed agent to solicit stock, and receive only the first installment of five per cent. (fifty cents on a share) at the time of subscription.

J. SNOW, Secretary.

+-----------------------------------------------------------------+
                ¦Names.      ¦Residence.     ¦Date of Subscription.¦No. of Shares.¦
                +------------+---------------+---------------------+--------------¦
                ¦Hiram Purdy.¦Burlington, Io.¦Feb. 16, 1869.       ¦Fifty, (50.)” ¦
                +-----------------------------------------------------------------+
                

In 1872 the executive committee of the board of directors of the telegraph company, by resolution, required the payment of all arrearages upon subscription to the capital stock of the company, and directed the secretary to notify the stockholders of this action, and to demand payment of all arrearages. It is not made to appear that the notices required were given to the stockholders.

2. The defendant pleads as a defense that the action is barred by the statute of limitations. In our opinion, this defense is sustained, and the action must fall. It will be observed that 5 per centum of the amount of the stock was payable when the subscription was made, and the balance was to be paid as the directors of the corporation should order. It may be assumed that this balance did not become due, and no action to recover therefor could be maintained until such an order had been made. It rested with the corporation, by proper orders and notices, or other acts, to acquire the right to maintain an action. It is the case of a creditor or obligee holding, by the...