More v. The Courier-News, a Corp.

• Decision Date: 15 January 1915
• Citation: 151 N.W. 2,29 N.D. 385
• Court: North Dakota Supreme Court

151 N.W. 2

29 N.D. 385

A. Y. MORE v. THE COURIER-NEWS, a Corporation, and E. D. Guild

Supreme Court of North Dakota

January 15, 1915

Rehearing denied February 10, 1915.

Appeal from the District Court of Cass County, Pollock, J.

Affirmed.

A. W Fowler and Pollock & Pollock, for appellant.

Fully paid stock is not assessable under the laws of this state. California Trona Co. v. Wilkinson, 20 Cal.App. 694 130 P. 190; Goodnow v. American Writing Paper Co. 72 N.J.Eq. 645, 66 A. 607; Wells v. Green Bay & M. Canal Co. 90 Wis. 442, 64 N.W. 69; Wall v. Basin Min Co. 16 Idaho 313, 22 L.R.A. (N.S.) 1013, 101 P. 733; Scovill v. Thayer, 105 U.S. 143, 26 L.Ed. 968; Dickerman v. Northern Trust Co. 176 U.S. 181, 44 L.Ed. 423, 20 S.Ct. 311; Elyton Land Co. v. Birmingham Warehouse & Elevator Co. 92 Ala. 407, 12 L.R.A. 307, 25 Am. St. Rep. 65, 9 So. 129; First Nat. Bank v. Gustin Minerva Consol. Min. Co. 42 Minn. 327, 6 L.R.A. 676, 18 Am. St. Rep. 510, 44 N.W. 198; O'Dea v. Hollywood Cemetery Asso. 154 Cal. 53, 97 P. 1; Southern Trust & D. Co. v. Yeatman, 67 C. C. A. 456, 134 F. 811; Shaw v. Straight, 107 Minn. 152, 20 L.R.A. (N.S.) 1077, 119 N.W. 951; Callanan v. Windsor, 78 Iowa 193, 42 N.W. 652; Easton Nat. Bank v. American Brick & Tile Co. 69 N.J.Eq. 326, 60 A. 54; Ersfeld v. Exner, 128 A.D. 135, 112 N.Y.S. 561; Parmelee v. Price, 208 Ill. 544, 70 N.E. 725; Randall Printing Co. v. Sanitas Mineral Water Co. 120 Minn. 268, 43 L.R.A. (N.S.) 706, 139 N.W. 606; Hoffman Motor Truck Co. v. Erickson, 124 Minn. 279, 144 N.W. 952.

The same was the rule at common law. Enterprise Ditch Co. v. Moffitt, 58 Neb. 642, 45 L.R.A. 647, 76 Am. St. Rep. 122, 79 N.W. 560; Lowry v. Inman, 46 N.Y. 119; Duluth Club v. MacDonald, 74 Minn. 254, 73 Am. St. Rep. 344, 76 N.W. 1128; Cook, Corp. 6th ed. § 241.

One of the benefits resulting from incorporation is the fact that liability is made definite and certain. Smith v. Huckabee, 53 Ala. 191; Spense v. Iowa Valley Constr. Co. 36 Iowa 407; Santa Cruz R. Co. v. Spreckles, 65 Cal. 193, 3 P. 661, 802; Rev. Codes 1913, §§ 4570-4572.

The statute authorizing an assessment on stock means that the subscribed stock, and not the authorized stock, may be assessed. Gary v. York Min. Co. 9 Utah 464, 35 P. 494.

Watson & Young and E. T. Conmy, for respondents.

Fully paid-up capital stock of a corporation is assessable under the laws of this state. Comp. Laws 1913, §§ 4570-4588; Sullivan v. Triunfo Gold & S. Min. Co. 39 Cal. 465; Santa Cruz R. Co. v. Spreckles, 65 Cal. 193, 3 P. 661, 802; Sayre v. Citizens' Gaslight & Heat Co. 69 Cal. 207, 10 P. 408; Bottle Min. & Mill. Co. v. Kern, 9 Cal.App. 527, 99 P. 994; Lum v. American Wheel & Vehicle Co. 165 Cal. 657, 133 P. 303, Ann. Cas. 1915A, 816; Browne v. San Gabriel River Rock Co. 22 Cal.App. 682, 136 P. 542; Younglove v. Steinman, 80 Cal. 375, 22 P. 189; San Bernardino Invest. Co. v. Merrill, 108 Cal. 490, 41 P. 487; Ventura & O. Valley R. Co. v. Hartman, 116 Cal. 260, 48 P. 65; Kohler v. Agassiz, 99 Cal. 9, 33 P. 741; Von Horst v. American Hop & Barley Co. 177 F. 979.

Where a state takes and adopts a statute from another state, the construction theretofore placed upon such statute by the courts of the state from which it is taken is also taken and adopted. State v. Stevens, 19 N.D. 249, 123 N.W. 888; Beddow v. Flage, 20 N.D. 66, 126 N.W. 97.

The right of a corporation to make an assignment on stock and to sell the same in case of delinquency is well settled. Bottle Min. & Mill. Co. v. Kern, 9 Cal.App. 527, 99 P. 994; People's Home Sav. Bank v. Stadtmuller, 150 Cal. 110, 88 P. 280; Lum v. American Wheel & Vehicle Co. 165 Cal. 657, 133 P. 303, Ann. Cas. 1915A, 816.

The statute becomes a part of the contract between the stockholder and the corporation just as much as though its provisions were embodied in the contract, subject only to the rule that the statutory mode must be strictly followed. Bottle Min. & Mill. Co. v. Kern, 9 Cal.App. 527, 99 P. 994; Los Angeles Athletic Club v. Spires, 166 Cal. 173, 135 P. 298; Weber v. Della Mountain Min. Co. 14 Idaho 404, 94 P. 441; Lum v. American Wheel & Vehicle Co. 165 Cal. 657, 133 P. 305, Ann. Cas. 1915A, 816; Callahan v. Chilcott Ditch Co. 37 Colo. 331, 86 P. 123; Gary v. York Min. Co. 9 Utah 464, 35 P. 494; Wall v. Basin Min. Co. 16 Idaho 313, 22 L.R.A. (N.S.) 1013, 101 P. 733; Nelson v. Keith-O'Brien Co. 32 Utah 396, 91 P. 30; 26 Am. & Eng. Enc. Law, 923.

It is conceded that, in the absence of statutory authority, or power conferred by the articles, or some other promise to pay, fully paid-up capital stock cannot be assessed. Bottle Min. & Mill. Co. v. Kern, 9 Cal.App. 527, 99 P. 994; Los Angeles Athletic Club v. Spires, 166 Cal. 173, 135 P. 298; Union Sav. Bank v. Leiter, 145 Cal. 696, 79 P. 441; Callahan v. Chilcott Ditch Co. 37 Colo. 331, 86 P. 123; Mirage Irrig. Co. v. Sturgeon, 77 Neb. 175, 108 N.W. 977; Blue Mountain Forest Asso. v. Borrowe, 71 N.H. 69, 51 A. 670; Smith v. Iron Mountain Tunnel Co. 46 Mont. 13, 125 P. 649, Ann. Cas. 1914B, 551; Price's Appeal, 106 Pa. 421; Redkey Citizens' Natural Gas Co. v. Orr, 27 Ind.App. 1, 60 N.E. 716; Gardner v. Hope Ins. Co. 9 R. I. 194, 11 Am. Rep. 238; Carter R. & Co. v. Samuel Hano Co. 73 N.H. 588, 64 A. 201; Western Improv. Co. v. Des Moines Nat. Bank, 103 Iowa 455, 72 N.W. 657; Dewey v. St. Albans Trust Co. 57 Vt. 332.

The stockholder can make his contract as he sees fit. All the courts can do is to enforce it. Santa Cruz R. Co. v. Spreckles, 65 Cal. 193, 3 P. 661; Garey v. St. Joe Min. Co. 32 Utah 497, 12 L.R.A. (N.S.) 554, 91 P. 369; Wall v. Basin Min. Co. 16 Idaho 313, 22 L.R.A. (N.S.) 1013, 101 P. 733.

Where stock is issued and has printed thereon the word "nonassessable," such word becomes a part of the contract between the stockholder and the corporation, and may be enforced by the stockholder. Lum v. American Wheel & Vehicle Co. 165 Cal. 657, 133 P. 303; Browne v. San Gabriel River Rock Co. 22 Cal.App. 682, 136 P. 542; Scovill v. Thayer, 105 U.S. 143, 26 L.Ed. 968; Handley v. Stutz, 139 U.S. 417, 35 L.Ed. 227, 11 S.Ct. 530; Dickerman v. Northern Trust Co. 176 U.S. 181, 44 L.Ed. 423, 20 S.Ct. 311; Elyton Land Co. v. Birmingham Warehouse & Elevator Co. 92 Ala. 407, 12 L.R.A. 307, 25 Am. St. Rep. 65, 9 So. 129.

The courts have nothing to do with the question of the necessity or wisdom of an assessment, nor with the motive which prompted the levy. Oglesby v. Attrill, 105 U.S. 605, 26 L.Ed. 1186; Dickerman v. Northern Trust Co. 176 U.S. 181, 44 L.Ed. 423, 20 S.Ct. 311; Nashua Sav. Bank v. Anglo-American Land, Mortg. & Agency Co. 189 U.S. 230, 47 L.Ed. 786, 23 S.Ct. 517; Weber v. Della Mountain Min. Co. 14 Idaho 404, 94 P. 441.

The majority stockholders have the right to vote as they please and elect such directors as they wish, regardless of the wishes of the minority stockholders. Weber v. Della Mountain Min. Co. 14 Idaho 404, 94 P. 441; Faulds v. Yates, 57 Ill. 416, 11 Am. Rep. 24, 3 Mor. Min. Rep. 551; Von Horst v. American Hop & Barley Co. 177 F. 979; Beitman v. Steiner Bros. 98 Ala. 241, 13 So. 87.

The appellant had and has a plain, speedy, and adequate remedy at law, and the court did not abuse its discretion in refusing to grant the temporary injunction. High, Inj. §§ 34, 35; 27 Century Dig. "Injunction," § 8, and cases cited; Burton v. Walker, 13 N.D. 149, 100 N.W. 257; Dewing v. Perdicaries, 96 U.S. 193, 24 L.Ed. 654; Herbert Kraft Co. Bank v. Bank of Orland, 133 Cal. 64, 65 P. 143; Pratt v. Taunton Copper Mfg. Co. 123 Mass. 110, 25 Am. Rep. 37, 13 Mor. Min. Rep. 590; Pollock v. National Bank, 7 N.Y. 274, 57 Am. Dec. 525; Cushman v. Thayer Mfg. Jewelry Co. 76 N.Y. 369, 32 Am. Rep. 315; Continental Hose Co. v. Mitchell, 15 N.D. 144, 105 N.W. 1108; Chicago & N.W. R. Co. v. Rolfson, 23 S.D. 405, 122 N.W. 343; Montgomery Ward & Co. v. South Dakota Retail Merchants' & Hardware Dealers' Asso. 150 F. 413; 22 Cyc. 753, Injunction; Dickson v. Dows, 11 N.D. 404, 92 N.W. 797; Donovan v. Allert, 11 N.D. 289, 58 L.R.A. 775, 95 Am. St. Rep. 720, 91 N.W. 441.

OPINION

BURKE, J.

The defendant is a domestic corporation of $ 50,000 common stock, par value $ 100 each. Of this common stock, $ 36,000 has, and $ 14,000 has not, been subscribed and issued. Plaintiff is the holder of 100, and the defendants Guild are the owners of 260, shares. Plaintiff's stock was marked "fully paid" upon its face at the time it was issued. The defendants Guild are in control of the board of directors and of the management of the corporation. In August, 1914, such board of directors attempted to levy an assessment against the issued stock for the gross sum of $ 4,996.80, or $ 13.88 upon each share actually issued. Plaintiff applied to the district court of Cass county for a permanent injunction against said assessment, claiming (a) that his stock was not subject to any assessment whatever under the laws of this state, and (b) that in case any assessments were proper, the assessment exceeded the 10 per cent limitation subscribed by § 4571, Comp. Laws 1913. The trial court denied such relief and this appeal followed. It is conceded that unless authorized by statute, no assessment can be made upon paid-up stock, and that if there is any authority for the position in question, it must be in the following sections of the Compiled Laws of 1913, of which §§ 4570-4572 read as follows:

§ 4570. When levied.--The directors of any corporation formed or existing under the laws of this state, after one fourth of its capital stock has been subscribed, may, for the purposes of paying expenses, conducting business or paying debts, levy and collect assessments upon the subscribed capital stock thereof in the manner and form and to the extent provided herein.

§ 4571. Limitation of.--No assessment must exceed 10 per...