Jackson v. Anderson

• Decision Date: 06 April 1934
• Docket Number: No. 22071.,22071.
• Parties: JACKSON et al. v. ANDERSON et al.
• Court: Illinois Supreme Court

355 Ill. 550

189 N.E. 924

JACKSON et al.

v.ANDERSON et al.

No. 22071.

Supreme Court of Illinois.

Feb. 23, 1934.

Rehearing Denied April 6, 1934.

Error to Appellate Court, Second District, on Error to Circuit Court, Kankakee County; Arthur W. DeSelm, Judge.

Bill by S. T. Jackson and others against A. E. Anderson and another. To review a judgment of the Appellate Court affirming a decree of the circuit court for complainants, defendant brings certiorari.

Reversed and remanded, with directions.Miller & Shapiro, W. H. Dyer, and John H. Beckers, all of Kankakee, for plaintiff in error.

Joseph Tolson and H. H. Whittemore, both of Kankakee, for defendants in error.

SHAW, Justice.

This is a review, upon certiorari, of a judgment of the Appellate Court for the Second District affirming a decree of the circuit court of Kankakee county wherein S. T. Jackson and others, as stockholders in the Belt Route Warehouse & Storage Company, a corporation, were complainants, and the plaintiff in error, A. E. Anderson, and the corporation were defendants.

The bill was filed on April 19, 1932, and alleges that the complainants were stockholders of the Belt Route Warehouse & Storage Company (hereinafter called the company), and that the suit was brought on behalf of the complainants and all others similarly situated. It alleges that the company was organized on November 17, 1925, under the laws of Illinois, to do a warehouse and storage business, and that the complainants had bought stock at the rate of $100 per share, without saying when or from whom they bought it. The bill further alleges that on November 27, 1925, the officers of the company, F. L. Shidler and M. J. Jackson, issued to A. E. Anderson certificate No. 7 for fifty shares of common stock and another certificate for fifty shares of preferred stock without receiving in return therefor the sum of $10,000, and that they caused the corporate records to show that said one hundred shares were fully paid but that in fact they were not; that the complainants were unaware of the facts in regard to the issuance of said stock, and did not learn of them until in August or September of 1931. The bill further alleges that several of the complainants made a personal demand on Anderson to return the stock for cancellation, and it proceeds, contrary to the prior allegations of the same bill, to allege that Anderson in March, 1931, at a stockholders' meeting, revealed the fact that he had not paid for the stock. The bill prays that Anderson be compelled to surrender the stock for cancellation, and for general relief.

The answer of Anderson admits that the complainants are stockholders, but denies that any except one of them owned any stock at the time of the transactions complained of in the bill, and therefore denies the right of any of the other complainants to any relief. The answer admits that the corporation was incorporated as set forth in the bill. It further admits that on the 27th of November, 1925, Shidler and Jackson, being president and secretary of the company, issued the certificates mentioned to Anderson, and admits that he did not pay for the stock in cash. The answer denies all of the other material allegations of the bill, and sets up limitations, laches, estoppel, and acquiescence, and prays the same advantage as if he had demurred. It also states that the complainants had an adequate remedy at law.

By an amendment to the answer, Anderson set forth in full the terms of a certain agreement between himself, Shidler, and Jackson which preceded the formation of the corporation in question, and under the terms of which, as afterwards modified, Anderson obtained the certificates in question. The substance of this agreement, which was made more than six months prior to the formation of the corporation, and the substance of the transactions preceding the formation of the corporation, are as follows:

Prior to April 18, 1925, Shidler and Jackson approached Anderson with a proposition for making a profit through the purchase and sale of certain property referred to herein as the warehouse property. In the spring of 1925, prior to the 28th of April in that year, Shidler and Jackson called on Anderson and told him that one of them had an option on the warehouse property under which it could be purchased within a limited time for the sum of $45,000, payable $15,000 in cash and the balance of $30,000 by note and first trust deed on the property. They informed Anderson that they thought it possible to make a deal with a reputable Chicago concern whereby they might sell the property for $75,000, and the proposition which they made to Anderson was that he should furnish the necessary $15,000 for buying the property; that Shidler would take title to the property and execute the $30,000 note and trust deed, at the same time placing a warranty deed from himself to Anderson in escrow for Anderson's protection in his investment of $15,000; that Shidler and Jackson should proceed to try to sell the property for $75,000, and that, if successful, Anderson's $15,000 should be returned to him together with a third of the profit on the deal, which would amount to $10,000 for his share, and that all of the necessary expenses should be divided among the three of them. The agreement further provided that, if the sale to the Chicago concern could not be made, Shidler and Jackson would organize a corporation for the purpose of conducting a public warehouse with a capital stock of $100,000, of which $50,000 should be preferred and $50,000 common.The agreement further provided, in the form of an option, that, if Shidler and Jackson should within ninety days pay to Anderson the sum of $15,000 which he had invested in the deal, and in addition thereto give him $5,000 of preferred stock and $5,000 of common stock of the corporation, he would convey the warehouse property to such person or corporation as they might designate. The deal with the Chicago parties fell through, and the matter dragged along for more than six months. It was in such condition that Anderson might, had he wished, have refused to perform the agreement because the option time had expired. However, in the fall of 1925, on November 17 of that year, Shidler and Jackson caused the company to be organized. They departed from the exact terms of the agreement and incorporated it for $150,000 instead of $100,000, of which $125,000 was common stock and $25,000 was preferred stock. They transferred the warehouse property to the corporation at a value of $115,000, less $30,000 incumbrance, taking $85,000 of common stock for themselves. They sold some of the preferred stock, paid Anderson back the $15,000 he had invested, and delivered to him the two certificates above mentioned, one for $5,000 par value of common and the...