Hayden v. The Atlanta Cotton Factory

• Decision Date: 31 August 1878
• Citation: 61 Ga. 234
• Parties: Hayden. v. The Atlanta Cotton Factory.
• Court: Georgia Supreme Court

61 Ga. 234

Hayden. v. The Atlanta Cotton Factory.

Supreme Court of the State of Georgia

(August Term, 1878.)

Corporations. Stock. Contracts. Evidence. Pleading. Practice in the Superior Court. Onus probandi. Before Judge Clark. City Court of Atlanta. December Term, 1877.

Reported in the decision.

Collier & Collier, for plaintiff in error, cited as follows: Non est factum, error to strike, Code, § 3479; 19 Ga, 505; 54 Ib., 59; 59 Ib, 157; 60 Ib., 50. Directors agents of plaintiff, 18 Ga., 434; 57 Ib, 240; Abbott on Corp, 8. Payment in specifics, 8 Gray, 596. Charge not founded on evidence, 51 Ga, 289; 52 Ib, 632.

Hopkins & Glenn, for defendant, cited as follows: Declaration good, 22 Ga., 586. Special plea bad, Code, § 2757; 13 Ga, 208-210; 39 N. H, 491; 5 Snead (Tenn.), 567; 1 Red. on R'lw's, 159-160; 24 Vt, 465. Non est factum properly stricken, Code, § 2851. Subscription book admissible, *41 Me, 517, 518; 40 Ib, 175. Admissions not evidence, 41 Me, 512. Directors determine amount of stock taken, 41 Me., 521. Payment in specifics, 2 Met. (Ky.), 219. Bona fides at time of subscribing, 40 Me, 172-175.

Warner, Chief Justice.

At the December term, 1876, of the city court of Atlanta, the Atlanta Cotton Factory Company brought complaint (in short form) against Julius A. Hayden, on a contract of subscription alleged to have been made by said Hayden to the capital stock of said company. Attached to said complaint was a contract of subscription, of which the following is a copy: "Subscription to the capital stock of the Atlanta Cotton Factory-Company.

"We, the undersigned, hereby agree to take the number of shares of capital stock of the Atlanta Cotton Factory Company set opposite our respective names, and to pay for the same, at the rate of one hundred dollars per share, upon the following terms and conditions, to-wit:

"1. It is agreed that the assessments shall be at the rate of one dollar per week per share for fifty weeks, and then at the rate of two dollars per share per week for twenty-live weeks, payable weekly or once in four weeks, as the subscribers may elect and stipulate at the time of subscribing.

"2. It is agreed that no subscription shall become binding or of force until 2, 500 shares ($250,000) shall have been subscribed.

"3. It is agreed that at any time within thirty days after one thousand shares shall have been subscribed, the present executive committee shall call a meeting of the subscribers to the said one thousand shares or more, at such time and place as they may designate-in their call, for the election of directors, in which election each share shall be entitled to one vote.

"4. It is agreed that assessments as aforesaid shall become due and payable at the end of the first week of the month next after said election, and the full amount of 2, 500 shares have been subscribed.

"5. It is agreed that any subscriber who may choose to pay up his subscription in full at any time shall be entitled to a discount at the rate of ten per cent, per annum for the average of such advance payment.

"6. It is agreed that unless the entire amount of 8, 500 shares shall *be subscribed on or before July 1, 1875, that the legal obligation to pay their subscription ceases to be binding upon subscribers.

"7. It is agreed that the company shall have the right to make all roles and regulations and by-laws which they may deem expedient for the protection of their interests not inconsistent with this agreement.

"Atlanta, January 4, 1875.

"J. A. HAYDEN, (10 Shares) $1000.00."

At the said December term, ' 1876, the defendant filed sworn pleas as follows:

1. The general issue.

2. "And for further plea in his behalf, this defendant says that said plaintiff ought not further to have or maintain its aforesaid action against him, because he says that at the time he authorized his name to be put down as a stockholder in said corporation, it was expressly agreed by and between this defendant and J. C. Kimball, who was then the agent of said corporation, soliciting and taking subscriptions for stock in said corporation, that the subscription for stock in said concern should not be binding on this defendant until the sum of two hundred and fifty thousand dollars of bona fide subscriptions should be made to said corporation, by solvent subscribers, from whom such stock, so subscribed, could be collected by legal process.

"This defendant avers that no such sum has been bona fide subscribed by solvent subscribers to such stock, and from whom such stock so subscribed could be collected by legal process, all of which this defendant is ready to verify, " etc.

At the June term, 1877, of said court, this case came on for a hearing on the pleadings as above set forth, when defendant demurred to plaintiff's declaration, on the ground that there was no allegation in the said declaration that the conditions precedent set out in said contract of subscription had been complied with before suit was brought, which demurrer was overruled. Plaintiff then moved to strike defendant's special plea as above set forth, which motion was granted, and the plea stricken by order of the court. The defendant then amended his plea ofthe general issue by filing, as an amendment thereto, a formal plea of non est * factum, whereupon plaintiff claimed a surprise, and the case was, on plaintiff\'s motion, continued for the term. To the action of the court in overruling defendant\'s demurrer to plaintiff\'s declaration, and in sustaining plaintiff\'s motion to strike defendant\'s special plea, the defendant then and there tendered exceptions pendente lite, and had the same allowed and signed by the presiding judge, and filed in the clerk\'s office of said court.

At the December term, 1877, of said court, the case came on again for a hearing, and the court, on motion of plaintiff's counsel, ordered defendant's plea of non est factum stricken on the ground that it had not been filed at the first term, and thecase then proceeded with defendant\'s sworn plea of the general issue in.

Plaintiff introduced Hannibal I. Kimball, who testified as follows:

The book presented to witness is the original subscription book of the Atlanta Cotton Factory Company. The question was then asked witness: "Has 2, 500 shares of stock been subscribed for in said company?" Defendant's counsel objected to said question, and the objection was overruled, when witness answered that something more than 2, 500 shares had been subscribed for. The original subscriptions were taken by a committee upon subscription lists. Those lists were handed into the office, and copied into the subscription book above testified about. The lists handed witness are all the original lists, except the one canvassed for by Mr. English, and the list shown witness was handed in by English as a copy of his list. The subscriptions embraced in the lists and on the book were all obtained on or before July 1st, 1875, and the subscription book was accepted and used by the stockholders when they met. The book now presented is the original minute book of the company. The subscription book was before the board at their meeting on the 25th day of May, 1875. Judge Hayden's name on the subscription book is the original subscription as to him. The subscription in other things than money *were for articles that were necessary for the building, improvement and use of the company, and for freight that would be due on articles so necessary, and were to be charged at the reasonable market price.

Cross-Examined—Question by defendant's counsel: "Is this (referring to name of J. A. Hayden on subscription book) Judge Hayden's handwriting?" Ans. "It is not; but Judge Hayden authorized it to be put there." Plaintiff's counsel then moved to rule out the question and answer, which motion the court sustained, and withdrew the question and answer from the jury Witness continuing: I am a subscriber to 650 shares of the capital stock of the company, amounting to $65,000.00. My original subscription was for only 50 shares, but when the board of directors met on the 25th May, 1875, for the purpose of making some arrangements about the closing of the subscription book, it was ascertained that only about $190,000.00 of the capital stock had been taken, and as the time allowed by the charter for procuring subscribers was almost out, I announced that I would take the 600 remaining shares amounting to $60,000.00. I made this last subscription for the purpose of completing the 2, 500 shares required, in order to make the other subscriptions valid and binding. I did intend to pay for said stock, or place it with my friends, and did pl-ice some $25,000.00, 1 or $30,000.00 of said subscription. The subscription was made by me in good faith, and after talking with me about any intentions, the board of directors accepted my subscription, and de-dared that 2, 500 shares had been subscribed for. Of my original subscription of $5,000.00, I have paid in cash about $1,900.00, and of the $60,000 subscription over $20,000 has been paid by my friends. At the time I made this last subscription I was worth $25,000 more or less. It was about two years after I had been discharged in bankruptcy. I had some capital employed in a Needle Factory, received as compensation for getting up theenterprise, which amounted to about $12,000 in the stock of said company in Massachusetts. *This was the first year after my discharge in bankruptcy. The second year I lost about as much as I made, and since that time have about made a living. There was no objection made by the board to my taking the $60,000 of stock.

Between $100,000 and $120,000 have been collected on all the subscriptions.

Geo. W. Adair for plaintiff: "I was a director of plaintiff's company, and was present at the meeting of May 20th, 1875, when the resolution declaring the 2, 500 shares had been subscribed for was adopted, and in voting for the resolution I acted in good faith. I knew nothing of Kimball's condition...