Porter v. Bagby

• Decision Date: 07 January 1893
• Citation: 50 Kan. 412,31 P. 1058
• Parties: R. E. PORTER v. W. D. BAGBY et al
• Court: Kansas Supreme Court

31 P. 1058

50 Kan. 412

R. E. PORTER v. W. D. BAGBY et al

Supreme Court of Kansas

January 7, 1893

Error from Franklin District Court.

ALL the material facts are stated in the opinion, filed January 7 1893.

Judgment affirmed.

F. A Waddle, for plaintiff in error:

Whetstone is unquestionably liable as a stockholder of the Pomona Creamery Company. It is well settled that one who assists in organizing a corporation, and signs such an agreement, is held to all the liabilities and has all the privileges of a stockholder. Thomp. Liab. St., § 105; Winston v. Brooks 129 Ill. 64; Sawyer v. Hoag, 17 Wall. 610; Nulton v. Clayton, 54 Iowa 425 (37 Am. Rep. 213); Hawley v. Upton, 102 U.S. 314; Ross v. Gold Hill Bank, 19 P. 243; Jackson v. Traer, 64 Iowa 469; Foundry Co. v. Killian, 99 N.C. 501 (6 Am. Rep. 539); Thompson v. Savings Bank, 19 Nev. 103 (3 Am. Rep. 797, and note on p. 829); 1 Mor. Corp., § 56; Boone, Corp., §§ 108, 110; Henry v. Railroad Co., 17 Ohio 187; Noble v. Callender, 20 Ohio St. 199; Anderson v. Railroad Co., 12 Ind. 376; Whittesey v. Frantz, 74 N.Y. 456; Insurance Co. v. Floyd, 74 Mo. 286; Mining Co. v. Adams, 35 Kan. 193; Topeka Mfg. Co. v. Hale, 39 id. 23; Milling Co. v. Ropes, 9 Pick. 187; The State v. Smith, 48 Vt. 266.

As to the estoppel of the judgment in the case of Waddle v. Altman et al., we claim that that judgment is in no sense an estoppel, because the plaintiff in that case was the mere agent or trustee of the creditors for whom the suit was brought, and they had nothing to do with the creditors in this suit. Authorities are abundant to show that a judgment only estops a party in the capacity in which he sues, i. e., there must be "identity of quality" in the persons. A. T. & S. F. Rld. Co. v. Comm'rs of Jefferson Co., 12 Kan. 135. See, also, Bates, Pleading, p. 6, and cases cited; Wells, Res. Adj., §§ 21, 22; Freem. Judg., § 156 (3d ed.); Eshelman v. Shuman, 13 Pa. 561; Building Association v. Chalmers, 75 Cal. 332; Wright v. DeGroff, 14 Mich. 164; Rathbone v. Hooney, 58 N.Y. 463, and cases cited.

C. A. Smart, for defendant in error Whetstone:

Whetstone is not liable as a stockholder. He never was a stockholder. True, he signed the contract with Hall & Co. for other parties, and all persons connected with the organization of the corporation understood that he was not signing said contract for himself. It is the intention of the party that the court will endeavor to find. Nutton v. Clayton, 54 La. 125. As to what is necessary to create a liability, see 60 Am. Dec. 49; 28 Mut. 152; 63 Pa. 279; 90 id. 271; Beach, Corp., § 63; Mor. Corp. (2d ed.), § 49; 80 N.Y. 219; 105 Ill. 578, 585.

SIMPSON, C. All the Justices concurring.

OPINION

SIMPSON, C.:

On the 15th day of August, 1888, F. A. Waddle recovered a judgment before W. W. Warren, a justice of the peace of Franklin county, against the Pomona Creamery Company, for the sum of $ 260.17, and $ 6.25 costs. On the 3d day of November following, said judgment was duly assigned to the plaintiff in error, R. E. Porter, who commenced this action to enforce payment of said judgment against certain stockholders of the creamery company, that being a corporation organized under the laws of this state. John H. Whetstone, one of the corporators and one of the defendants, filed an answer in which it was alleged --

"That in a certain action pending in this court, wherein the said F. A. Waddle was plaintiff and [he] Whetstone was a defendant, it was, by the judgment of this court, on April 22, 1887, duly and solemnly adjudged and determined that this defendant was not a stockholder in the said corporation known as the Pomona Creamery Company; all of which at full length appears by reference to said judgment in said cause, found on page 444, journal 'G' of the records of this court, hereby made a part of this pleading. The defendant Whetstone avers that said judgment is a full, complete and final adjudication of all and singular the issues in this cause between himself and the plaintiff."

The reply was a general denial. At the trial the court made special findings of fact, and stated certain conclusions of law, as follows:

"FINDINGS OF FACT.

"1. On October 24, 1883, the several defendants in this action, together with several other citizens of this county, signed a written contract or proposition with John W. Hall & Co., of Iowa, whereby said Hall & Co. proposed to erect and put in operation a creamery at Pomona, of a certain capacity, and said subscribers agreed to pay therefor the sums set opposite their names; and when $ 5,800 should be subscribed the creamery to be erected in 120 days thereafter, and the subscribers then to incorporate under the laws of Kansas, fixing the capital stock at $ 6,800, to be divided into 136 shares of $ 50 each, Hall & Co. to have $ 5,800 in money for the creamery, and 20 shares of stock therein, to be issued to them for superintending the work. Said writing further provided, that 'in the articles of incorporation and in the by-laws thereof no assessment shall be made upon the stockholders for the indebtedness of the same, except to pay Hall & Co., as above specified. Neither shall the private property of said stockholders be liable for such subsequent indebtedness.' It was further provided in said writing, 'that after said organization is completed, and said amount paid to Hall & Co., said corporation shall issue stock to each of the above-mentioned subscribers to the amount of his subcription hereto annexed; also issue 20 shares of stock to said Hall & Co., as full payment for superintending the manufacturing and marketing of the butter above mentioned.' The defendants subscribed said paper as follows:

Names.

P. O. address.

Amount subscribed.

L. Altman

Ottawa

$ 100

J. Patton

Pomona

100

E. A. Rice

Ransomville

300

J. H. Scoville

Pomona

100

A. H. Sellers

"

100

Philip Bledsoe

"

100

Morg. Wickham

"

200

J. J. Whetstone

"

200

J. H. Whetstone, per orders

"

750

"The paper was similarly subscribed by several others who are not made parties.

"2. In pursuance of said contract and proposition, John W. Hall & Co. erected and put in operation said creamery about March 1, 1884, and about the same time said subscriptions were collected, to the amount of $ 5,800, and paid over to Hall & Co., except $ 250, which was never collected, being part of the $ 750 so subscribed by J. H. Whetstone, 'per orders,' which is hereafter again referred to.

"3. On January 1, 1884, 10 of said subscribers executed and acknowledged a charter for said 'Pomona Creamery Company,' and caused the same to be filed in the office of the secretary of state, as provided by law, whereby they undertook to, and did, become incorporated by said name under the laws of Kansas, as contemplated in said contract or proposition referred to in the first finding; a copy of said charter, marked 'A,' is attached to the answer herein.

"4. After the filing of said charter certificates of stock were duly issued to said defendants and other subscribers thereto, as provided in said original contract, for the amounts so subscribed, except said J. H. Whetstone, which were duly paid in full by said defendants, and, thereupon, they became and were stockholders therein, holding paid-up stock for the amounts specified in their subscriptions, as stated in the first finding, and have ever since continued to and still do hold said stock.

"5. The subscription of J. H. Whetstone for $ 750 was made by him and understood by the other subscribers to be for other parties, and afterward $ 500 of said amount was taken and stock therefor issued to C. W. and O. L. Parkinson; but the balance thereof, to wit, $ 250, was never taken by anyone, and never issued.

"6. Regular books were kept, showing the transactions of said corporation, and its board of directors, and the names of its stockholders and amounts of stock held. The corporation engaged in the business named in its charter and proposed in said original agreement, and continued therein from the spring of 1884 down to October 1, 1885, when it suspended business, and since that time has failed to resume its usual and ordinary business, and had wholly suspended business for more than one year prior to the commencement of this action.

"7. One week prior to June 1, 1885, the secretary of said corporation, by order of its president, and as provided by the by-laws, gave to each stockholder therein, including the defendants, a notice of a special meeting to be held at the creamery office, in Pomona, on June 1, 1885, for the purpose of changing the articles of incorporation. This notice was given by mail to each stockholder, by posting in three public places in Franklin county, and by advertisement in the Pomona Enterprise, a newspaper published at Pomona, and was in conformity to a by-law of the corporation providing for special meetings and the notice therefor. Stockholders were present and acting at such meeting representing 79 shares of the capital stock. None of these defendants were present at such meeting. Prior to the call for the meeting, the 20 shares issued to Hall & Co. had been surrendered to the corporation and canceled, and the certificates burned. This was done in pursuance to a resolution of the stockholders at a stockholders' meeting, authorizing any holders of stock to so surrender the same and have it canceled. The stock outstanding, excluding said Hall stock, on June 1, 1885, was $ 5,350.

"8. At such special meeting of June 1, 1885 it was voted to adopt the second or amended charter, which had been executed May 18, 1885, by six of the original corporators, and thereupon it was duly filed with the secretary of state. A copy of this amended charter is attached to the answer herein, marked 'B.' This...