Lea v. Iron Belt Mercantile Co.

• Decision Date: 15 August 1898
• Citation: 24 So. 28,119 Ala. 271
• Parties: LEA ET AL. v. IRON BELT MERCANTILE CO.
• Court: Alabama Supreme Court

24 So. 28

119 Ala. 271

LEA ET AL. v. IRON BELT MERCANTILE CO.

Supreme Court of Alabama

August 15, 1898

Appeal from chancery court, Calhoun county; J. R. Dowdell Chancellor.

Suit by the Iron Belt Mercantile Company against Preston Lea and the Piedmont Land & Improvement Company. From a decree for plaintiff, defendants appeal. Affirmed.

J. J Willett, for appellants.

Blackwell & Keith, for appellee.

BRICKELL C.J.

The bill in this cause was filed by the Iron Belt Mercantile Company against Preston Lea and the Piedmont Land &amp Improvement Company, alleging, in substance, that complainant is a judgment creditor of said corporation, and that execution had been issued on its judgment, and returned "No property found," and that the said Lea was a nonresident of Alabama; that the Piedmont Land & Improvement Company was a corporation organized in the year 1890, with a capital stock of $1,250,000, all of which was subscribed and paid for by the conveyance to the corporation of a large body of land which the subscribers had just purchased for $90,000 and the value of which did not exceed $100,000. A copy of the subscription contract, containing the names of the subscribers, and the amount subscribed by each, and showing that each subscription was to be discharged by the conveyance of said land to the corporation, is attached as an exhibit to the bill. Of the capital stock appellant subscribed for 1,187 1/2 shares, of the par value of $118,750, and his subscription was discharged by the conveyance of his undivided interest in said land, the value of which interest did not exceed $20,000, and that pretended payment of his subscription was merely colorable, and void as to the creditors of the corporation. The bill further avers that the said Lea is the assignee and owner of a decree against said Piedmont Land & Improvement Company in favor of one J. C. Clarke for $1,003.14, rendered in October, 1895, in a suit by said Clarke to have a vendor's lien declared and enforced against 80 acres of land known as the "Piedmont Springs Property," which Clarke had sold to the corporation in 1890; that in November, 1892, said corporation executed a mortgage on substantially all its real estate, to secure an issue of $50,000 of bonds, and that said Lea is the owner of $1,000, or other amount, of said bonds; that a suit is now pending to foreclose said mortgage, in which suit a receiver was appointed, who now has the custody and management of the property covered by the said mortgage, and is managing the same under the direction of the court. The bill prays for an extension of the receivership in this cause; that an attachment issue to be levied on said Piedmont Springs property, on which the decree of the appellant is claimed to be a lien, and a garnishment issue to said Piedmont Land & Improvement Company, requiring it to answer what it is indebted to said Lea, etc.; that a reference be ordered to ascertain the amount due by Lea on the stock subscribed for by him, and also the amount of said mortgage bonds owned by him, and that his interest in said Piedmont Springs property be subjected to the payment of complainant's judgment. The bill does not expressly pray that Lea's unpaid subscription be subjected to the payment of said judgment, but contains a prayer for general relief. The appeal is prosecuted from a decree overruling a demurrer to the bill.

The objections to the bill specified in the demurrer are: First because it appears from the bill that the record of the incorporation proceedings in the probate office show that the subscriptions to the capital stock were discharged by a conveyance of lands to the corporation, and therefore complainant was chargeable with notice of the overvaluation of the property; second, because no fraud is charged against defendant; third, because it appears that the Piedmont Land & Improvement Company is insolvent, and in the hands of a receiver, who alone is the proper party to enforce the payment of unpaid subscriptions to stock; and, fourth, because the other stockholders of the corporation are not made parties defendant. The record in the probate office of the incorporation proceedings, if the corporation was organized under the general laws of the state,-which is not shown by the bill,-is undoubtedly notice to those dealing with the corporation of the existence of the corporation, its corporate powers and capacity, the amount of its capital stock, and the par value of its shares, and also, perhaps, of the fact that certain subscribers reserved and exercised the privilege of discharging their subscription by the conveyance of property, when these facts appear in the subscription contract, and in the affidavit of the person authorized to receive from the commissioners the subscriptions to stock. But we are of the opinion that the record of these facts does not operate as constructive notice to...