"After
the payment of the said notes Prouty was to receive, from the
stock, cash, or assets of the business, the sum of $14,000
and upon receipt of that sum the business and whatever might
remain of the assets was to vest in and become the property
of Fields, who should become the sole and individual owner
thereof.
"In
pursuance of this agreement Charles N. Prouty (whose firm was
a creditor of Austin Fields & Co.) indorsed the composition
notes, received James A. Fields's note for $14,000 in
payment of the bonus agreed upon, and the title to the assets
of the late firm of Austin Fields & Co. was assigned and
transferred to Charles N. Prouty, but the assets themselves
remained in the hands of James A. Fields, who acted as agent
for Charles N. Prouty in pursuance of their agreement.
"On
Dec. 1, 1888, James A. Fields, Everett V. Prouty, and Edward
L. Barr agreed to form a corporation under the name of James
A. Fields Shoe Co. for the purpose of 'manufacturing and
selling boots and shoes and foot-wear.' [It was agreed
that James A. Fields should furnish the stock of boots and
shoes which he then had on hand, being part of the assets of
Austin Fields & Co., at a valuation of $40,000,] for which he
should receive stock of the corporation, and that he should
also contribute the good will of his business at a valuation
of $10,000, for which amount he was also to receive stock of
the corporation. Edward L. Barr and Everett V. Prouty each
agreed to furnish $10,000 in cash. The title to the boots and
shoes then in possession of James A. Fields being in Charles
N. Prouty it was agreed that Prouty should release his claim
upon the same and accept as collateral security for the debt
thereby secured $40,000 worth of the stock of the corporation
then about to be formed, and for the purpose of carrying out
this arrangement Charles N. Prouty executed a power of
attorney dated Nov. 22, 1888, by which James A. Fields was
authorized to sell, transfer, and assign to the said James A.
Fields Shoe Co., the corporation then about to be formed, all
the boots, shoes, stock and fixtures then upon the premises
837 Market street, being the same which had formerly
constituted part of the assets of Austin Fields & Co.
"On
Jan. 1, 1889, a charter was issued by the state of
Pennsylvania incorporating the James A. Fields Shoe Co., and
James A. Fields transferred to the corporation the stock of
boots and shoes and the good will above mentioned, and
received therefor five hundred shares of the stock of the new
corporation of the par value of $50,000.
"Edward
L. Barr and Everett V. Prouty each paid in $10,000 in cash
and received one hundred shares of the stock, the other
corporators being all nominal and having no pecuniary
interest in the stock of the corporation.
"Of
the five hundred shares of stock which James A. Fields
received he indorsed four hundred shares in blank to Charles
N. Prouty, who held the same as collateral security for the
payment of the debt of James A. Fields to him and against
liability as indorser of the latter's notes.
"The
stock was not transferred to Charles N. Prouty on the books
of the company but remained in the name of James A. Fields,
who was the owner thereof, subject to the transfer as
collateral. Three agreements dated Feb. 9, May 3, and Sept.
3, 1889, were afterward made between Charles N. Prouty and
James A. Fields, defining the conditions upon which the stock
of the James A. Fields Shoe Co. was held by Charles N.
Prouty, and clearly showing that [as between the parties
themselves there was no question but that Charles N. Prouty
held it (the stock of the company) as collateral security for
the payment of James A. Fields's $14,000 note, and for
the payment of the notes of composition with the creditors of
Austin Fields & Co. which had been indorsed by Charles N.
Prouty.]
"The
James A. Fields Shoe Co. conducted a general jobbing business
in boots and shoes under the management of James A. Fields,
Everett V. Prouty and Edward L. Barr, as officers and
principal stockholders, until October, 1889, at which time
Everett V. Prouty and Edward L. Barr purchased the five
hundred shares of stock of James A. Fields in the
corporation, and in consideration therefor paid him $10,000
in cash, and assumed all of his liability to Charles N.
Prouty on the $14,000 note, four composition notes of $7,000
each, and one note for $2,201.38 given in settlement of the
indebtedness of Austin Fields & Co. to Isaac Prouty & Co.,
making in the aggregate $30,201.38, and Charles N. Prouty
gave his consent to the transaction, accepted Everett V.
Prouty and Edward L. Barr as his debtors, and released James
A. Fields from all liability on the said notes, and accepted
from Everett V. Prouty and Edward L. Barr as collateral
security for the indebtedness assumed by them four hundred
shares of the stock of the corporation. At the time of this
transaction two agreements were made, one signed by Charles
N. Prouty, dated Oct. 9, 1889, and the other signed by
Everett V. Prouty and Edward L. Barr, to which James A.
Fields was a party but did not sign, which was dated October,
1889, and it is evident that the two agreements were executed
or intended to be executed on the same day, as they both
relate to and fully explain the transaction.
"For
the purpose of carrying out these agreements, the
certificates for four hundred shares of James A. Fields stock
which were held by Charles N. Prouty as collateral were
transferred to Charles N. Prouty by filling in the blank
transfer on the back of the certificate, and, on Oct. 15,
1889, the certificate was surrendered by Charles N. Prouty,
who on that day assigned the shares to Everett V. Prouty and
Edward L. Barr, whereupon new certificates were issued to
Everett V. Prouty and Edward L. Barr for four hundred shares
of the stock, and they in turn indorsed them in blank to
Charles N. Prouty, as collateral security for the debt which
they had assumed. These certificates, indorsed in blank, were
in the possession of Charles N. Prouty at the time of the
hearing.
"It
does not appear that any certificates of stock in the
corporation were ever issued to him. The only time his name
appears upon the transfer book of the company is in the
transfer of the Fields stock to him and from him to Everett
V. Prouty and Edward L. Barr on Oct. 15, 1889, as above
mentioned.
"After
the retirement of James A. Fields from the company the
remaining stockholders desired to change the name of the
corporation, and, on Nov. 15, 1889, the name was duly changed
to the Prouty & Barr Boot & Shoe Co. After this change of
name new certificates were issued to Everett V. Prouty and
Edward L. Barr for the amount of their holdings in the James
A. Fields Co., and they indorsed in blank to Charles N.
Prouty four hundred shares of the stock under the new name,
which he held as collateral in pursuance of the former
agreement. The stock, however, was never transferred to him
on the books of the company.
"There
still remains due Charles N. Prouty of the old debt of James
A. Fields, assumed by Everett V. Prouty and Edward L. Barr,
the $14,000 note, which was given in consideration of his
indorsement of the composition notes and about $14,300 of the
notes given by James A. Fields in settlement with the
creditors of Austin Fields & Co., which had been indorsed by
Charles N. Prouty & Co.
"[It
does not appear that either Charles N. Prouty, or the firm of
Isaac Prouty & Co. of which he was a member, had any part in
the formation of the corporation of James A. Fields Shoe
Co.,] nor that any member of the firm of Isaac Prouty & Co.
ever held stock of either the James A. Fields Shoe Co. or the
Prouty & Barr Boot & Shoe Co. in their own right or in any
way except as collateral security for the debt of James A
Fields to Charles N. Prouty, which was afterwards assumed by
Everett V. Prouty and...
