Haskell v. Sells

• Decision Date: 12 June 1883
• Parties: CALVIN HASKELL, ASSIGNEE, Respondent, v. MILES SELLS, Appellant.
• Court: Missouri Court of Appeals

14 Mo.App. 91

CALVIN HASKELL, ASSIGNEE, Respondent,

v.MILES SELLS, Appellant.

St. Louis Court of Appeals, Missouri.

Jun. 12, 1883.

APPEAL from the St. Louis Circuit Court, ADAMS, J.

Affirmed.

THOS. C. FLETCHER, for the appellant: Article VIII., of chapter 21, of the Revised Statutes of Missouri, went into effect on August 18, 1879. The appellant never became a stockholder.-- Beach v. Smith, 30 N. Y. 116; Excelsior Co. v. Strayner, 25 Hun, 91. The signing of the memorandum sued on did not create the liability of a shareholder.--Thomp. on Liab. of Stock., sect. 105; Mudgett v. Howell, 33 Cal. 25. The alleged contract being repugnant to and contravening a statute, can not be enforced.-- Barton v. Plank R. Co., 17 Barb. 404; Seneca Bank v. Lamb, 26 Barb. 601. The company went into operation without full subscription of stock and without Sells' assent, and he is therefore not liable. 2 Redf. (5th ed.), top page, 549, sect. 242; Thomp. on Liab. of Stock., sect. 120; Gargling v. Buechtel, 41 Md. 325; Hager v. Cleveland, 36 Md. 476.

JOHNSON, LODGE & JOHNSON, for the respondent: A subscriber for stock is released from his subscription by a subsequent alteration of the organization or purposes of the company, only when such alteration is both fundamental and not provided for or contemplated by either the charter itself or the general laws of the state.-- Nugent v. The Supervisors, 19 Wall. 251, and cases cited; New Haven, etc., v. Chapman, 38 Conn. 56; Clark v. Monongahela, etc., 10 Watts, 364; Delaware, etc., v. Irick, 23 N. J. L. 321; Pacific, etc., v. Hughes, 22 Mo. 291. The subscription inured to the benefit of the corporation when formed.-- Lagrange v. Mays, 29 Mo. 65. The right of action passed by the assignment.-- Schultz v. Sutter, 3 Mo. App. 137; Lionberger v. Broadway Bank, 10 Mo. App. 499. A failure to give the notice of calls does not in any way affect a subscriber's liability upon his contract of subscription.-- Lake Ontario v. Mason, 16 N. Y. 451; Penobscot, etc., v. Dunn, 39 Me. 587. The secret agreement, as testified to by appellant, between himself and Kay and Tilden, two of the promoters of the company, relative to his taking the stock or not at his option, was in fraud of the rights of the other subscribers and void, and appellant can not claim any advantage therefrom.-- Pickering v. Templeton, 2 Mo. App. 424; Upton v. Tribelcock, 91 U. S. 45; Swartout v. The Mich., etc., 24 Mich. 389; Ridgefield, etc., v. Bush, 43 Conn. 86. It is not necessary that a certificate of stock should have been tendered to the subscriber.-- Georgia R. Co. v. Ayers, 56 Ga. 230; Fulgum v. Macon R. Co., 44 Ga. 597.

BAKEWELL, J., delivered the opinion of the court.

Under the rule of court permitting this to be done (Rule XII.), the parties have agreed to a statement of the cause of action, the defence, the evidence, the rulings of the trial court, and the exceptions saved, which, being accompanied by a certificate of the trial judge, is to be treated in this court as the record.

The statement is as follows: The plaintiff is the assignee of the Missouri Cotton Seed Oil Company. The plaintiff, as such assignee, brought his suit against the defendant, alleging, in substance, a contract on the part of defendant with his co-subscribers to take ten shares of the capital stock of said company under the name of the Missouri Cotton Seed Oil Company. The contract sued on and offered in evidence is as follows:--

“We, the undersigned, hereby severally subscribe for the number of shares set opposite our respective names to the capital stock of the Missouri Cotton Seed Oil Company--a company to be organized under the laws of the State of Missouri--and we severally agree to pay the said company the sum of one hundred dollars on each share. Twenty-five per cent to be paid on organization of the company. Twenty-five per cent to be paid on first day of September. Fifty per cent to be paid on the first day of October, or as soon thereafter as the board of directors shall call for it to be paid in.

Dated this twenty-eighth day of July, 1879.

Shares.

200

Wm. V. Kay

$20,000

50

John B. Tilden

5,000

50

H. C. McNeil, Friars P., Miss.

5,000

50

Calvin Haskell

5,000

--

Miles Sells

1,000

--

G. J. Shaw

1,000

10

Web. M. Samuel

1,000

20

W. H. Waters

2,000

10

Given Campbell

1,000

25

Chas. T. Worthington, Liota, Miss.

2,500”

And alleging that the other persons, whose names are appended to said paper, subscribed to the same in consideration of the alleged undertaking on defendant's part. That afterwards, to wit, about the twenty-third day of September, 1879, the company was duly organized under the name of the Missouri Cotton Seed Oil Company of St. Louis, and commenced business in St. Louis; that the other subscribers to the said paper, Kay, Tilden, Haskell, Shaw, Waters and Campbell, each accepted the shares subscribed for by them severally, and paid for the same; that the corporation, on the 29th of September, 1879, duly adopted a by-law, as follows:--

“The capital stock shall be paid in upon such assessments and at such place as the board of directors may order, a written or printed notice of which shall be given each stockholder by the secretary, and any subscriber who fails to pay any such assessments so ordered, after thirty days' notice, shall forfeit to the company the amount, if any, already paid on his stock, if the company so elect;” that, afterwards, on the same day, the board of directors passed a resolution ordering and directing an assessment on the capital stock, to be paid as follows: fifty per cent on the 1st of October, 1879; twenty-five per cent on the 15th of October, and twenty-five per cent on the 10th of November, 1879; that the defendant did not pay any part of his subscription at any time; that the company afterwards became insolvent, and about the 24th of February, 1881, made an assignment in due form to plaintiff, by and under the name of the Missouri Cotton Seed Oil Company, for the benefit of his creditors, and that the assets of the company are wholly inadequate to the payment of the debts, and demanded judgment for one thousand dollars and interest.

The answer of the defendant was a general denial. The cause was tried by the court without a jury. The signature of defendant to the paper sued on was admitted. It was then offered in evidence and objected to by defendant because there are no number of shares set opposite defendant's name, and because there was not shown the existence of a corporation by the name of the Missouri Cotton Seed Oil Company; but the court overruled the objection, and the same was read as hereinabove set out, to which opinion and decision of the court in admitting the same, the defendant excepted. Plaintiff then read the articles of incorporation of the Missouri Cotton Seed Oil Company of St. Louis, in the usual form, the same not being signed by the defendant or any mention of his name appearing therein for any purpose, and then read the certificate of incorporation issued by the secretary of state, in due form, to the Missouri Cotton Seed Oil Company of St. Louis, and in which there is no mention of defendant as a corporator; to all of which defendant objected, and being overruled, duly excepted.

The assignment of the company to plaintiff was admitted as alleged in the petition, and that he is the duly qualified assignee of the corporation; that whatever cause of action the corporation might have had, if any, against defendant, passed to plaintiff; that the company was insolvent.

Plaintiff Haskell testified that he subscribed and paid for fifty shares, $5,000; that he never saw or had any conversation with defendant previous to the organization of the company, nor subsequently; that he subscribed at the solicitation of Tilden and Kay; he never knew of any meeting of the subscribers for stock, for the purpose of organizing the company, or for any other purpose; that Kay called on him about the 1st of October, 1879, and he paid his subscription; he received his certificate of stock; Shaw, Campbell, Waters, himself, and Waller, paid in full, and Mr. Kay paid in part; that he was treasurer of the company the second year, and a director; that the company carried on the business of manufacturing cotton seed oil from the 1st of October, 1879, to the 17th of January, 1881. It was admitted that the stock certificates were in the name of the Missouri Cotton Seed Oil Company; that the company did business under that name, took a lease to its factory property, and made and executed the deed of assignment under that name. The minutes of the record of the proceedings of the board of directors was identified by Haskell and examined; it did not appear that defendant was ever present at a meeting of the board or of the stockholders, or was ever mentioned on the books as a stockholder. Plaintiff Haskell was a creditor of the company, and Kay's wife was also a creditor; he never demanded of defendant his subscription, nor spoke to him of it.

Given Campbell testified that he had subscribed for ten shares of the stock, and had paid for them and received his certificate of stock. He did not have any conversation with defendant on the subject at or before the time when he subscribed.

W. H. Waters testified that he had subscribed for twenty shares, $2,000, and had paid for them and received a certificate of stock. Never had any conversation with defendant in reference to the matter.

It was further admitted that Haskell, Waters, and Campbell signed the subscription after the defendant did; that they never consented to release him from the contract; that they never knew of any arrangement between the defendant and Kay to the effect that defendant was not to be held upon his own subscription, and that they testified that if they had known of such arrangement they would not have signed the contract.

The defendant, Miles Sells, testified that he signed the papers sued on after repeated solicitations of Tilden, and with the understanding between them...