McDonald v. Markesan Canning Co.

• Decision Date: 15 March 1910
• Citation: 142 Wis. 251,125 N.W. 444
• Parties: MCDONALD v. MARKESAN CANNING CO.
• Court: Wisconsin Supreme Court

142 Wis. 251

125 N.W. 444

MCDONALD

v.MARKESAN CANNING CO.

Supreme Court of Wisconsin.

March 15, 1910.

Appeal from Circuit Court; Green Lake County; Chester A. Fowler, Judge.

Suit by Alex McDonald against the Markesan Canning Company. Decree for complainant, and defendant appeals. Reversed and remanded, with directions to dismiss.

On or shortly prior to the 4th of March, 1902, the Fisk-Kyle Company, described as canned goods brokers, a corporation of Chicago, Ill., entered into a written agreement with the plaintiff and about 30 of his neighbors near Markesan, Wis., whereby, whenever the writing should have been signed by subscribers to the extent of $11,500, the contract should become binding, and should be to the effect that the Fisk-Kyle Company should procure a site at or near Markesan, should erect thereon and equip with machinery a canning factory. Such construction was to be according to specifications and subject to approval of a committee of the subscribers, all for $11,500 “which the said second parties hereby agree to pay.” By another provision the subscribers each agreed to pay in cash 25 per cent. of the amount when buildings were inclosed and balance when buildings were completed, the payments to be made to the Fisk-Kyle Company. It further provided that the contract should be closed by obtaining subscriptions amounting to $11,500 or more, whereupon the subscribers agreed to become incorporated under the laws of Wisconsin with $100 shares of capital stock, and that each subscriber thereto should receive a fully paid nonassessable certificate of the stock to the amount of his paid-up subscription thereon. In case the subscription exceeded $11,500, all surplus collected by the Fisk-Kyle Company were to be turned into the treasury of such corporation. The contract was subscribed to an amount slightly in excess of $11,500, to wit, $12,700. Thereupon the subscribers met, and, as a meeting of subscribers, selected a president and secretary and also a building committee, or so-called “board of directors.” Plaintiff was chosen a member of said so-called board and also secretary. The building progressed, plaintiff was dissatisfied with the work, and expressed his dissatisfaction to the directors, who apparently ignored or overruled the same, whereupon he declared in the most emphatic and unambiguous terms his determination to withdraw from the whole enterprise. A discussion continued for some time, but that determination and declaration took place at a time after the articles of association had been signed by certain of the subscribers, including the plaintiff, and before they had been filed with the Secretary of State. Thenceforward, after that declaration, plaintiff resigned as director and secretary. His resignation was not at once formally accepted on the minutes, but he, in pursuance of his declaration, withdrew entirely from all further connection. The corporation was finally organized on a stock basis of $11,500. Certain subscriptions were allowed to be withdrawn or diminished until the total of subscriptions was reduced to $11,800. All of the remaining subscribers, except one Walker, who took the same position as plaintiff did, upon completion of the building paid to the Fisk-Kyle Company their subscriptions, and received a receipt therefor which, on presentation to the corporate officers, resulted in the issue of certificates of stock. Fisk-Kyle Company, in January, 1903, sued plaintiff and one Walker for the $500 which each had subscribed. In the suit against plaintiff he interposed as defense Fisk-Kyle Company's noncompliance with section 1770b, St. 1898, and at the close of the evidence in that case, on motion, a judgment of nonsuit was entered in June, 1903, apparently but not clearly on the ground of such invalidity of the contract. Fisk-Kyle Company waited until more than two years after this judgment, and then sought permission to settle bill of exceptions, which, because the time for appeal had expired, was denied by the court. This was in 1905. They appeared thereafter to have had some correspondence with the attorney for plaintiff and said Walker in the way of an attempt to induce these subscribers to change their minds and pay their subscriptions. After all the paying subscribers had received their stock it was found to amount to $10,800 so that there remained unissued as against the two $500 subscriptions of plaintiff and Walker only 7 shares of stock. This continued to remain unissued until December 27, 1907, when the president and secretary executed two certificates of stock, one for five shares and the other for two to the defendant company itself, which, however, were never mechanically removed from the stock book where they still remain. After the building was completed the defendant engaged in the business of canning vegetables; met with misfortune, ran heavily in debt, lost money, so that its shares of stock sold as low as fifty cents on the dollar. Finally the stockholders came to its relief financially, each becoming personally liable as indorser upon its notes to the amount of 75 per cent. of his stockholding; and later considerable sums were supplied to the company by the loaning of credit by the creditors. In addition an increase of capital stock to the extent of $4,200 was made in February, 1904, which was mainly, if not entirely, subscribed by the existing stockholders and paid for at par. Following this increase of capital stock and a change in the character of the business, the concern became profitable, and in 1905 it was able to pay all its debts, including the notes which had been guaranteed by the several stockholders, and was doing a thriving business.

In 1906 plaintiff seems to have experienced a change of heart on learning that the stock had become worth a considerable premium, and an attempt was made to get the remaining 7 shares issued jointly to him and Walker, although they had not at that time either of them paid their subscriptions. But on October 1, 1907, when, as appears, the stock had attained a value more than twice its par, plaintiff went to Chicago, and gave his note to the Fisk-Kyle Company for $500, and surrendered his judgment for costs in the previous mentioned suit which he had found it impossible to collect, and obtained a certificate of such payment of $500. On October 10, 1907, he presented the evidence of such payment to the defendant Markesan Canning Company and demanded the issue of a certificate for his five shares of stock and repeated on December 23d a further and more formal notification of the payment and demand for the certificate of stock. Plaintiff freely conceded his categorical and intentional repudiation of the contract in 1902, his persistency in such election until 1906 or later, and that his change of position at that time was due to information that the stock had in the course of the four years become worth much more than par. The court held substantially that plaintiff had so completely repudiated the contract and exercised his election to that end that the other parties to the contract could have stood upon such election, but that by reason of his payment to Fisk-Kyle Company, accepted by them and consequent subrogation to their right, he might enforce delivery of the stock, and entered judgment therefor, commanding the...