Hafer v. Medford & C.L.R. Co.

• Decision Date: 03 October 1911
• Citation: 60 Or. 354,117 P. 1122
• Court: Oregon Supreme Court
• Parties: HAFER v. MEDFORD & C.L.R. CO. et al. DAVIS v. REDDY.

117 P. 1122

60 Or. 354

HAFER v. MEDFORD & C.L.R. CO. et al. DAVIS v. REDDY.

Supreme Court of Oregon

October 3, 1911

Appeal from Circuit Court, Jackson County; F.M. Calkins, Judge.

Action by Edgar Hafer against the Medford & Crater Lake Railroad Company and others. From a judgment disallowing a claim of defendant A.A. Davis against the corporation, he appeals making the receiver of the corporation respondent. Dismissed.

Defendants Davis, Adkins, Whitehead, Keene, and Vawter, as promoters and incorporators, incorporated defendant company for the purpose of constructing a railroad from Medford to Crater Lake, in Jackson county, Or., with a capital stock of 500,000 shares of the par value of $1 per share. In the complaint it is alleged that the original incorporators issued to themselves as fully paid, 60 per cent. of the stock of the corporation namely, 260,000 shares, when, in fact, nothing was paid for it, except it was shown by the minutes of the corporation that a resolution was adopted to purchase from one of their number all the rights of way, surveys, estimates, and franchises for the sum of $260,000, and made it appear on the stock books and record that the $260,000 had been paid on the stock subscribed by them, and that amount paid for the rights of way, estimates, etc., that the whole proceeding was a device on the part of the promoters to secure a majority of the stock, fully paid up, without expense to them; and that thereafter plaintiff and other citizens of Jackson county were induced by the promoters to, and they did, subscribe for stock in the corporation, and paid the face value thereof to the amount of $21,000; that, after spending in construction work the said $21,000, $35,000 borrowed by the company and secured by mortgage upon the property of the company, and certain moneys advanced by Davis, as manager of the company, the work was abandoned.

Plaintiff as a stockholder, commenced this suit on behalf of himself and such other stockholders as should ask to be joined with him as plaintiffs, to have a receiver appointed to take charge of the property of the corporation, to collect the unpaid subscription of stock, and to settle its affairs. A receiver was appointed, who sold the property of the corporation for the sum of $82,500, $46,457.52 of which amount was paid in satisfaction of the mortgage debt of the company. After the sale of the property of the company by the receiver, de...