Hatcher-Powers Shoe Company v. Bickford

• Decision Date: 18 December 1925
• Citation: 212 Ky. 163
• Parties: Hatcher-Powers Shoe Company v. Bickford. Hatcher-Powers Shoe Company v. Call. Hatcher-Powers Shoe Company v. Charles. Hatcher-Powers Shoe Company v. G.W. Coleman. Hatcher-Powers Shoe Company v. O.L. Coleman. Hatcher-Powers Shoe Company v. F.S. Huffman. Hatcher-Powers Shoe Company v. R.T. Huffman. Hatcher-Powers Shoe Company v. McCown. Hatcher-Powers Shoe Company v. Morris. Hatcher-Powers Shoe Company v. Mullins. Hatcher-Powers Shoe Company v. Ratliff. Hatcher-Powers Shoe Company v. Reynolds. Hatcher-Powers Shoe Company v. Venters. Hatcher-Powers Shoe Company v. Wright.
• Court: United States State Supreme Court — District of Kentucky

212 Ky. 163

Hatcher-Powers Shoe Company v. Bickford.

Hatcher-Powers Shoe Company v. Call.

Hatcher-Powers Shoe Company v. Charles.

Hatcher-Powers Shoe Company v. G.W. Coleman.

Hatcher-Powers Shoe Company v. O.L. Coleman.

Hatcher-Powers Shoe Company v. F.S. Huffman.

Hatcher-Powers Shoe Company v. R.T. Huffman.

Hatcher-Powers Shoe Company v. McCown.

Hatcher-Powers Shoe Company v. Morris.

Hatcher-Powers Shoe Company v. Mullins.

Hatcher-Powers Shoe Company v. Ratliff.

Hatcher-Powers Shoe Company v. Reynolds.

Hatcher-Powers Shoe Company v. Venters.

Hatcher-Powers Shoe Company v. Wright.

Court of Appeals of Kentucky.

Decided December 18, 1925.

1. Principal and Agent — Son Held Not Liable on Stock Subscription Signed for Him by Father Without Authority. — Where father, without authority from son, signed latter's name to stock subscription,

and, on repudiation thereof by son, father withdrew subscription, and son never did anything ratifying the signature or confirming it, he was not liable thereon.

2. Corporations — Subscribers Held Without Right to Defeat Subscription for Alleged Misrepresentation of Promoters. — Where subscribers to stock in shoe corporation, who claimed that their subscriptions were procured on representation that expert in shoe business would take stock and do the buying, on learning that expert did not take stock, took no steps to have their names removed from subscription list, nor brought to corporation's notice that they proposed to cancel subscriptions, and did nothing to estop them to have stock issued to them, they cannot defeat actions on subscriptions on ground that promoters misrepresented facts.

3. Corporations — Subscribers to Stock had Right to Rely on Genuineness of Previous Signatures. — Since signature of each person on subscription paper for stock in company to be formed gave it his indorsement, every subsequent person had right to rely on fact that previous signatures were genuine, and that signers had subscribed for amount of stock indicated.

4. Contracts — Rescission is equitable Remedy, Awarded Only to the Diligent. — Rescission is purely an equitable remedy, and is never awarded to those who have not been diligent, and will thus cause a loss to others equally innocent.

5. Evidence — Absolute Contract for Stock Subscriptions Not Varied by Parol Proof of Agreement that Signers were to Pay or Not as they Saw Fit. — Absolute contract in writing whereby defendant subscribed for stock in corporation to be formed cannot be varied by parol proof that it was agreed that the signers were to pay or not as they might see fit.

6. Corporations — Stock Subscriptions Not Canceled by Act of Bookkeeper or Promoters. — Since neither promoters of corporation nor bookkeeper had power to release any of subscribers of stock from what they owed, even if they did undertake to do so, their illegal action had no effect on rights of the subscribers.

7. Corporations — Clerical Error in Minutes Held Not to Show Directors Acted Before they were Elected. — Where proof was conclusive that directors met on same day as stockholders, and just after stockholders' meeting adjourned, and that both meetings were held on April 23rd, clerical error in minutes that directors' meeting was on April 23rd, and that stockholders' meeting was on April 24th, held not to show directors acted before they were elected.

8. Corporations — One Subscriber should Not Subscribe for Stock as Trustee for Others. — Since Ky. Stats., section 539, provides that incorporators shall specify in the articles names and places of residence of each of its stockholders, and the number of shares of stock subscribed by each, one subscriber should not subscribe as trustee for others to avoid necessity of having too many persons sign and acknowledge the articles.

Appeals from Pike Circuit Court

JOHN W. WOODS, J.F. STEWART and ROSCOE VANOVER for appellant.

DAUGHERTY & BARRETT for Huffman, Charles, Call and Venters.

STRATTON & STEPHENSON for appellees Ratliff and Coleman.

ALEX L. RATLIFF for appellee Wright.

PICKLESIMER & STEELE for appellees Reynolds and Bickford.

OPINION OF THE COURT BY COMMISSIONER HOBSON.

Affirming as to F.S. Huffman and reversing as to the other thirteen appellees.

In March, 1920, several men living in Ashland, Kentucky, or near there conceived the idea of organizing a corporation to carry on a wholesale shoe business there, and with this view they had a written contract drawn, which, so far as is material, reads as follows:

"THIS AGREEMENT, made and entered into at Ashland, Boyd county, Kentucky, this the 14th day of March, 1920, witnesseth, that,

"WHEREAS it is proposed to organize, under the laws of the state of Kentucky, a corporation under the name of `Ashland Shoe Company,' or such other name as may be hereafter determined upon by the parties in interest, and

WHEREAS it is proposed that said corporation shall have an authorized capital stock of two hundred thousand ($200,000.00) dollars, divided into shares of one hundred ($100.00) dollars each; one hundred thousand dollars of said capital stock to be preferred stock, cumulative from and after January 1, 1920, and one hundred thousand dollars common stock,

"Which corporation shall be organized for the purpose of engaging in the business of wholesale jobbers of boots, shoes, rubbers and all kinds of footwear.

"Now, therefore, the undersigned, in consideration of their mutual promises and agreements, do severally agree to, and with each other, and with H.W. Hatcher, O.P. Powers and J.D. Leach, the promoters of said corporation, that they will subscribe for the number of shares of capital stock of said company, set opposite their respective names.

"It is understood that the said promoters of the said corporation, without subscribing for any preferred stock, shall have the privilege of subscribing for fifty per cent (50%) of the common stock of the said corporation sold . . .

"This agreement is conditional upon the procuring by the said Hatcher, Powers and Leach of valid agreements of subscriptions to at least one thousand (1,000) shares of one hundred ($100.00) dollars each of said capital stock, and further that no bonus, stock or compensation whatever is to be paid or given to the said promoters, or to any one for the organization or promotion of the said corporation. . . .

"Subscriptions shall be due and payable upon ten days' call by the board of directors, after said one thousand (1,000) shares shall have been subscribed, at the rate of twenty five per cent (25%) of the subscription, and the remainder from time to time, as the board of directors may determine.. . ."

The paper was signed as follows:

                                      N. of Shares  Total Amount
                "Name                Preferred Common to be Paid
                O.P. Powers ...........  25    135  $15,000.00
                H.W. Hatcher ..........  25    135   15,000.00
                James Hatcher .........  34     17    5,100.00
                . . ."
                

Thereupon O.P. Powers and H.W. Hatcher, as promoters, started out taking subscriptions. When they had obtained 102 other subscriptions, aggregating in all about $135,000.00, they organized the corporation. The articles of incorporation, so far as material, are in these words:

"We, the undersigned, in order to form a corporation for the purposes hereinafter set out, under and pursuant to the provisions of the act of the General Assembly of the Commonwealth of Kentucky, entitled, `An act providing for the creation and regulation of private corporations,' which became a law April 15, 1893, and the acts amendatory thereof, and other statutes of the Commonwealth of Kentucky, in such cases made and provided, do hereby certify as follows:

ARTICLE I.

"The name of this corporation shall be, `Hatcher-Powers Shoe Company.'

ARTICLE II.

"The principal office of this corporation shall be in the city of Ashland, Boyd county, Kentucky, but it may have offices and places of business at other places within or without the state of Kentucky.

ARTICLE III.

"The object and purposes for which this corporation is formed are:

"To conduct the business of wholesale jobbers of boots, shoes, rubbers and all kinds of footwear; to buy, sell, manufacture and deal in boots, shoes, rubbers and all kinds of footwear; to buy and own real estate, erect buildings thereon, otherwise improve said real estate. . . .

ARTICLE IV.

"The amount of the total authorized capital stock of this corporation shall be two hundred thousand ($200,000.00) dollars, which shall be divided into two thousand (2,000) shares of the par value of one hundred ($100.00) dollars each, of which authorized capital stock one thousand shares, amounting to one hundred thousand ($100,000.00) dollars, shall be preferred stock, and one thousand shares amounting to one hundred thousand ($100,000.00) dollars shall be common stock.

ARTICLE V.

"The names and post office addresses of the incorporators and the number of shares of stock subscribed by each stockholder are:

                   "Name          Address           No. of. Shares
                H.W. Hatcher, Ashland, Kentucky ...........  400
                O.P. Powers, Ashland, Kentucky ............  400
                J.B. Leach, Catlettsburg, Kentucky ........  200
                

ARTICLE VI.

"The corporation shall commence business as soon as practicable after these articles of incorporation are filed according to law in the office of the Boyd county court clerk at Catlettsburg, Kentucky, and the secretary of state at Frankfort, Kentucky, and shall continue for fifty years, unless sooner dissilved by a vote of at least two-thirds of the capital stock issued.

ARTICLE VII.

"The affairs and business of the corporation shall be conducted by five directors, one of whom shall be elected president of the board, and another vice-president. The president of the board shall be the chief executive officer of the company . . .

"The board of directors shall have power to make all such by-laws and regulations to rule the business of said company, as will not be inconsistent with these articles of...