Mathis v. Pridham

• Decision Date: 27 October 1892
• Citation: 20 S.W. 1015
• Court: Texas Court of Appeals
• Parties: MATHIS <I>et al.</I> v. PRIDHAM.

20 S.W. 1015

MATHIS et al. v. PRIDHAM.

Court of Civil Appeals of Texas.

October 27, 1892.

Appeal from district court, Victoria county; H. CLAY PLEASANTS, Judge.

Action by F. R. Pridham, receiver of the Texas Continental Meat Company against J. M. Mathis and others, stockholders, for an accounting and contribution of unpaid subscriptions for stock to satisfy the debts of the corporation. From a judgment in favor of plaintiff, defendants appeal. Reversed.

Glass, Callender & Carsner, Hunter, Stewart & Dunklin, Hogsett & Greene, Scott & Levi, and Henry J. Labatt, for appellants. Proctor & Proctor and D. C. Labatt, for appellee.

WILLIAMS, J.

This suit was commenced October 16, 1882, by appellee, as receiver of the Texas Continental Meat Company, a Texas corporation, in the district court of Victoria county, against certain stockholders of said company, some of whom were alleged in said petition to have been original subscribers to the capital stock of said company before its organization, or before its charter was filed, as shown by the following agreement, to wit: "Victoria, Texas, Oct. 17th, 1882. We, the undersigned, agree with Capt. A. F. Higgs, and with each other, to subscribe for, and hereby subscribe, the amounts set opposite our respective names to the capital stock of the Texas Continental Meat Company, a corporation to be chartered under the laws of Texas, with headquarters at Victoria. The said company to be stocked at $500,000.00, and we are to receive two dollars of said stock for every dollar of cash subscribed. The amounts of the capital stock not subscribed for or otherwise disposed of to remain in the company as reserve. It is further agreed that, should our whole subscription not be required, we will take stock in proportion to our subscriptions. [Signed] * * *" The charter, it is alleged, was filed on the 20th day of October, 1882. That at a meeting of the stockholders, held soon after the filing of said charter, the board of directors of said company was authorized to issue for cash subscriptions shares of full-paid stock of the company, at the rate of $2 in stock for $1 in cash, such issue not to exceed $120; and said directors were to contract with Capt. A. F. Higgs for the issuance to him of one fourth of the capital stock as disposed of in the way of bonus, and for certain rights, and to retain in the treasury of the company as a reserve the balance, to be disposed of as the growth and necessities of the company require. That by reason of the issuance of said stock two for one to each of said subscribers, each of them became liable to pay to said corporation the par value of said stock so agreed to be issued by said company to them and each of them, with interest. The petition then shows that after the organization of said Texas Continental Meat Company, and its actual commencement and transaction of business at Victoria, the said company made and entered into the following contract for the extension of its business at the city of Ft. Worth, in Tarrant county, Tex., and for other and further subscriptions to its capital stock, which contract is in writing, executed and delivered for the consideration therein stated by the persons whose names are signed thereto, to wit: "Ft. Worth, Texas, Aug. 4th, 1883. We, the undersigned, agree to subscribe, and hereby do subscribe, the sums of money set opposite our respective signatures, to the capital stock of the Texas Continental Meat Company, a corporation created by and existing under the laws of Texas, and having its domicile in Victoria, Texas; and we offer said subscriptions to said company under the following stipulations and conditions, to wit: (1) That said company shall erect and operate, as soon as possible, in or in the immediate vicinity of Ft. Worth, a slaughterhouse, capable of killing, storing, and shipping not less than 250 grown cattle per diem. (2) Should one half the sum necessary to erect, equip, and operate said house be less than the amount of our subscriptions, only such a portion of our subscriptions shall be called for as will be equal to said half: provided, further, that our subscriptions, or any portion thereof, shall be subject to call at any time until April 1st, 1884, and that any portion thereof not then called in by said company shall, by said company and by us, be considered null and void. (3) That for our said subscriptions we shall receive certificates of stock in said company in the following proportion, to wit, for $60 cash we shall receive $85 in stock: provided, that we shall not be entitled to any issue of stock until we have responded to each call to the amount of our respective subscriptions, and that, if we shall fall to pay any installments, all previous payments shall be forfeited: provided, however, that when our certificates of stock are issued, our rights, duties, obligations, and privileges shall relate back to the time of the acceptance of this offer. (4) That immediately after the acceptance hereof by the company the charter shall be so amended as to provide for thirteen directors, of whom six shall be immediately elected from the undersigned; but this agreement shall not operate so as to guaranty the election of parties who shall cease to own any stock, or dispose of so much as to be only nominally stockholders; that this shall have the full force and effect of a contract whenever accepted by said company, and the collections of said subscriptions may be enforced as any other debt or obligation." And the persons who subscribed said instrument — some 40 in number — were also made parties defendant, and with reference to the liability of whom the following allegations were made. "That the instrument aforesaid was delivered by said subscribers to said company at Victoria on the 25th day of August, 1883, and was then and there submitted to a meeting of the stockholders of said company, then and there assembled, for action thereupon. That said stockholders meeting, then and there acting in behalf of said company, did adopt the following resolution of acceptance of said proposition, to wit: `Resolved, that the proposition made to this company by J. P. Smith, H. C. Edrington, and others, of Ft. Worth, Tex., under date of August 14, 1883, be, and is hereby, accepted, reference being had to the communication of August 25th, 1883, from A. F. Higgs, Esq., and that the directors of this company be, and are hereby, empowered to do all things necessary to comply with the undertaking required of this company by said proposition. That the secretary of the company be directed to spread a copy of said proposition on the books of this company, and to officially transmit, as the acceptance of said proposition, a copy thereof, a copy of this resolution, and of said communication from A. F. Higgs, together with copies of any other proceedings of this body and of the directory as may be pertinent to the contract consummated by the acceptance of this proposition, to Fort Worth for the examination and information of the signers of said proposition, notifying each subscriber of the acceptance of the proposition, and where such copies can be seen and examined.'"

Plaintiff's petition alleges that in pursuance of said contract the said Ft. Worth subscribers elected their six directors, who, with an assistant secretary and treasurer, took immediate charge and management of the business of said corporation at Ft. Worth, under the general direction of the whole board of directors, and that said corporation erected the slaughterhouse named in the contract, and proceeded to operate the same, and continued to transact business at Ft. Worth for some time; and that by reason thereof, and by the execution and delivery of said contract and its acceptance, as aforesaid, they, and each of the subscribers to said contract, became bound to pay to said company the full amount of the stock they contracted to be issued to them, to wit, for each $60 of cash subscribed, $85, the amount of stock they were, by the contract, to receive. That, so far as said subscription in cash was paid by said subscribers, the stock for $85 for every $60 paid was issued to them, and each of them, in proportion to his payment. That they had, each and all of them, contracted for $85 of stock for each $60 paid by them, and each of them; and that, by reason of said contract, they were bound to pay, if necessary, to secure the solvency of said company, the whole par value of the stock contracted to be issued to them, and each of them. Plaintiff further alleges that none of the subscribers have paid any more than the proportion of $60 for each $85 issued or to be issued to them. It was alleged that some of them had not paid the full amounts they agreed to pay. The petition then proceeds to set out the amount for which each of said Ft. Worth defendants are liable. The petition further alleges that other defendants sued therein did not sign either of the contracts of subscription to the stock of said company, but bought stock at a discount, and became liable and bound themselves to pay the par value of the stock issued or to be issued to each of them; the balance due thereon against each of said subscribers being stated as above. The plaintiff then proceeds to show that he was appointed receiver of all the property of said corporation by the district court of Victoria county on the 16th day of April, 1884, at the suit of Ayers & Cannon et al., creditors of that company. That he had duly qualified, and that he brings this suit by virtue of an order of said district court, as follows: "In this cause, the motions of Fagan & Osgood, the Sterne Fertilizer & Chemical Manufacturing Company, the New Orleans National Bank, creditors of the Continental Meat Company, defendant in this cause, coming on to be heard by the court, and it appearing to the court from the report of the receiver and from the record in this cause that all the property of said the Texas...