Joy v. Godchaux
Decision Date | 07 October 1929 |
Docket Number | No. 8466.,8466. |
Citation | 35 F.2d 649 |
Parties | JOY v. GODCHAUX. |
Court | U.S. Court of Appeals — Eighth Circuit |
Charles M. Blackmar and Meservey, Michaels, Blackmar, Newkirk & Eager, all of Kansas City, Mo., for appellant.
Fred J. Wolfson, of Kansas City, Mo. (Swearingen, Wolfson & Lebrecht, of Kansas City, Mo., on the brief), for appellee.
Before KENYON and VAN VALKENBURGH, Circuit Judges, and MARTINEAU, District Judge.
Appellant is the receiver of the Tel-Tex Company, a Texas corporation. The controversy here involves two notes, one for $4,000 and one for $6,000, given by appellee to the Tel-Tex Company in payment for shares of stock in said company. The notes were made in Texas and payable there. Appellee's contention is that the notes are void under the Constitution and laws of Texas, and further that they were given without consideration. A written stipulation was entered of record in the trial court waiving a jury, and the case was tried to the court, which held that the Tel-Tex Company could not have recovered on the notes, and that the receiver had no greater claim against appellee than the company would have had. The facts are these:
Appellee was the president, director, and chief stockholder of the Tel-Tex Company. It originally had a paid-up capital of $125,000. On July 31, 1919, the stockholders, acting upon a report made to them by appellee, voted to increase the capital stock to $500,000. At this meeting there were present 787 shares of stock out of a total of 1,250, of which appellee held 537. The minutes thereof were signed by appellee as president of the company, and attested by his brother as secretary. The laws of Texas required the filing with the secretary of state of a certificate showing that the full amount of any increase of stock of a corporation had been in good faith subscribed, and that more than 50 per cent. thereof had been paid up in cash. Such certificate was signed and sworn to by members of the board of directors of the Tel-Tex Company, including appellee, and duly filed with the proper officer. The receiver also was one of the parties signing the certificate. It recited that the increase of the capital stock was $375,000, and that 50 per cent. of the sum, or $187,500 had been paid up in cash. The amount of cash paid was in fact $75,000, and a promissory note was drawn for the balance, signed by the directors of the bank. Appellee and the other directors contributed none of the $75,000 paid. The statement filed was false, and both parties to this controversy so admit. The note was reduced to $54,000 by crediting thereon at various times the proceeds of sales of capital stock. The directors prorated among themselves this balance, and gave their notes therefor, which notes include the notes in controversy here. Two directors, Raley and Morrow, were released of liability, their share being absorbed by others, of whom appellee was one. At the time the notes were signed, stock certificates were issued to the respective parties, and were deposited as collateral security therefor. The stock certificates used as security for the notes were signed by appellee as president. They were indorsed by the persons to whom the stock was issued and the notes and certificates were placed among the assets of the corporation. Whether or not these notes were entered upon the books of the company is a matter of dispute under the record. When the appellant was appointed receiver of the Tel-Tex Company by the district court of Dallas county, Tex., these notes came into his possession as assets of the company, and he brought this suit thereon. The notes signed by the other directors, as far as collectible, have been paid. While the court decided in favor of appellee, upon plaintiff's request it made the following findings of fact:
Section 6, art. 12, of the Constitution of the State of Texas, provides: "No corporation shall issue stock or bonds except for money paid, labor done or property actually received, and all fictitious increase of stock or indebtedness shall be void."
Article 1308, c. 2, tit. 32, Revised Statutes of Texas 1925, in part is as follows: "Before the charter of a private corporation created for profit can be filed by the Secretary of State, the full amount of its authorized capital stock must be in good faith subscribed by its stockholders and fifty per cent. thereof paid in cash, or its equivalent in other property or labor done, the product of which shall be worth to the company the actual value at which it was taken or at which the property was received."
Article 1330, c. 3, tit. 32, Revised Statutes of Texas 1925, is as follows:
Article 1353, c. 3, tit. 32, Revised Statutes Texas 1925, is as follows:
It is the contention of counsel for appellee that the whole transaction as to the issuance of the additional stock and the taking of the notes therefor was a subterfuge to circumvent provisions of the Constitution and laws of Texas, hereinbefore set out; that it was carried out by the directors of the company, and that none of the officers or directors ever intended to pay these notes; that they were to be credited down until completely wiped out by receipts of money from the sale of stock; that there never was any understanding that the notes should be paid except in that way; that appellee did not receive the stock certificates, but that the directors simply signed the same and placed them in a portfolio pending their sale to the public; that, even if they had received the stock certificates, the company had no right to issue the same, and no interest in the corporation passed with them; that to permit recovery would work a hardship upon one of the parties at fault in favor of the other party at fault.
Undoubtedly the transaction was contrary to the laws of Texas. If the controversy was between the corporation and appellee, it is probable a court would drop the matter, but the affairs of the corporation are in the hands of a receiver who represents, not only the stockholders, but the creditors, and the rights of creditors have now intervened and have an important bearing on the case.
The trial court found as a fact that there were insufficient assets in the hands of the receiver to pay the creditors of the company, and that, unless these notes are paid, the creditors will not receive payment of their claims in full.
Estoppel was not pleaded in reply to the answer, yet in the presentation of the case to the trial court counsel for the receiver stated, in substance, that it was the position of plaintiff in the case that a director of the company executing such notes as these was estopped to deny their validity. That question therefore arose early in the case, and was accentuated by the following request of plaintiff for a conclusion of law: "The Court declares the law to be that inasmuch as the defendant, Herbert Godchaux, who was the president, director and a principal officer of the Tel-Tex Company, participated in the stockholders' meeting at which the increase of the capital stock of the Tel-Tex Company was authorized and subsequently signed and swore to a statement filed with the State Department of the State of Texas, showing said increase of capital stock was paid up in cash, that the said defendant is estopped from asserting a plea of...
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