Perkins v. Merchants & Farmers Bank

• Citation: 103 Miss. 179,60 So. 131
• Decision Date: 16 December 1912
• Docket Number: 15,586
• Parties: W. R. PERKINS v. MERCHANTS & FARMERS BANK
• Court: United States State Supreme Court of Mississippi

60 So. 131

103 Miss. 179

W. R. PERKINS v. MERCHANTS & FARMERS BANK

No. 15,586

Supreme Court of Mississippi

December 16, 1912

October, 1912

APPEAL from the circuit court of Pontotoc county, HON. GEO. J LEFTWICH, Special Judge.

Suit by Merchants & Farmers Bank of Pontotoc for use of J. A. Powell against W. R. Perkins. From a judgment for plaintiff defendant appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

Alexander & Alexander, for appellant.

It was a glaring mistake to instruct the jury in the fifth instruction that Perkins was estopped if he acted as a stockholder of said company "just as if the stock had been issued and delivered to him." There is not one particle of proof that he acted as a stockholder. When asked by the company for a power of attorney to represent him at a meeting, and when about the same time he learned that the company was about to go into the hands of a receiver, surely he had the right to appoint someone, whether it is called by proxy or power of attorney, to represent him in looking after his rights. There is not a particle of proof that Salmon, who got this proxy, ever voted it. He could not have voted the stock for the corporation was not chartered. In other words, the court, in the face of the admitted facts that this gang of adventurers never had been incorporated, allowed the jury to find against Perkins on the theory that he had acted as a stockholder. The rascals were caught up with and a receiver appointed before they could ever organize, or get a charter, and yet the holder of a note must be held to stand in exactly the shoes of an unincorporated concern and is to recover on the theory that Perkins had so acted as to make himself a stockholder in a corporation never organized. This is not a case for straining at technical rules of law. It is a case where the court, sitting as a court of equity and conscience, should set the emphatic seal of its condemnation on the whole scheme of fraud, and announce that no one connected with it, and no one who holds under it, can be allowed to profit by its fraud. and cunning.

Fountaine & Fountaine, for appellee.

There was no error in the court instructing the jury as it did. Appellant could not have successfully defended the suit upon the note by the Great Southern Agency Company on the ground of fraud until he had rescinded, disaffirmed or repudiated the contract; nor can he defend the suit of Powell against him until he had done this if indeed he had any defense at all. Powell is protected by his bona fides.

"For where the subscriber has been guilty of negligence in informing himself of the actual facts, (2) where, in consequence of his delay in repudiating the contract, innocent third parties, shareholders, or creditors have acquired rights which would be prejudiced by its rescission." 10 Cyc. 423, and authorities cited in note 86.

Again appellant appointed J. H. Salmon, his agent, or attorney in fact, to represent him at a meeting of the Great Southern Agency Company, which could have only been a meeting of the stockholders. The appointment of Salmon was made upon one of the company's blanks, and it makes no difference whether appellant was called upon to do this or not. It is contended that this amounted to nothing; that appellant had the right to appoint some one to look after his rights. He could certainly have no rights in the concern, except those springing from and growing out of this contract. The certificate of stock issued by the company and received by appellant, and still held by him, does not constitute the title to stock, which is created only by the registry of the holder's name in the corporate books with statement of the number of shares of which he is the owner, certificate being simply an evidence of that ownership, and constitutes him a stockholder. 2 Beach on Corporations, p. 972; Field on Corporations, p. 144, sec. 130; 7 Words & Phrases, p. 6662.

And the subscriber is chargeable with knowledge of the fact of the organization of the corporation, of the powers which it possesses with respect of the creating of a share capital, and the issuing of shares, and the control which it may have over its shares. 10 Cyc. 380 (2). And by doing this he has waived all right to and is estopped from setting up any defense to this suit. He cannot claim any rights, or benefits, under the contract and at the same time repudiate the contract.

OPINION

REED, J.

On August 26, 1909, appellant made and delivered his promissory note for six hundred dollars. The note was payable on or before December 1, 1911, to Merchants' & Farmers' Bank of Pontotoc, with six per cent per annum interest from December 1, 1909, and with a reasonable attorney's fee expended in the collection thereof. Suit was filed by the Merchants' & Farmers' Bank of Pontotoc, for the use of J. A. Powell, against W. R. Perkins, for the recovery of the amount of the note, with interest and attorney's fees. Appellant contended that he should not be required to pay this note, because it was given in payment for his subscription to twenty shares of the capital stock of the Great Southern Agency Company, and that the subscription was procured by the fraudulent misrepresentation of A. D. Johnson, the stock salesman of the company. He also contended that the Merchants' & Farmers' Bank of Pontotoc was not in operation at the time.

It appears from the record that W. R. Perkins, the appellant made application for the twenty shares of stock he purchased in the Great Southern Agency Company, whereby he agreed to pay the sum of thirty dollars per share. The application provides that the Agency Company should furnish a gold bond, a copy of which had been exhibited to the applicant, Perkins, providing that he should be repaid the amount of his stock, not later than twenty-five years after the date of the bond, and that upon such...