Romunder v. Caskey
| Decision Date | 24 February 1919 |
| Docket Number | 124 |
| Citation | 209 S.W. 735,137 Ark. 574 |
| Parties | ROMUNDER v. CASKEY, RECEIVER |
| Court | Arkansas Supreme Court |
Appeal from Prairie Chancery Court, Northern District; John M Elliott, Chancellor; affirmed.
Decree affirmed.
W. A Leach, for appellant.
Appellant was never a stockholder in the bank. There was no consideration for the "memorandum of understanding" he signed, and his purchase of stock was brought about by false and fraudulent representations. The assets and liabilities of the bank were gross misrepresentations and fraud upon him and avoided the agreement to purchase stock. No stock was ever delivered to him. None of the conditions upon which he was to purchase stock were ever complied with. He was never an officer or a director in the bank. The findings of the court are contrary to the law and the evidence and he was clearly defrauded. Can plead this fraud against a suit by the receiver. 109 Ark. 297; 131 Id. 382; 10 Cyc. 437; 4 Thompson on Corp., § 3841; 7 R. C. L., § 211; 18 L. R. A. (N. S.) 347; 16 Ann. Cases, 179; 18 L. R. A. (N. S.) 347; High on Receivers (3 ed.), § 245; Wait on Insolvent Corp., § 235; 29 Conn. 384; 79 Ind. 293; 79 Ind. 293; 23 Barb. 636.
J. G Thweatt and Sam Frauenthal, for appellee.
1. The testimony shows that appellant purchased the stock from the bank and became the owner thereof and was held out to the world as president of the bank and knew that he was so held out to the world. Deposits were continually being made and in April, 1913, the deposits exceeded $ 25,000. The receiver is the representative of the depositors and creditors of the bank, and is entitled to recover on appellant's unpaid stock to pay these depositors and creditors. It is conceded that the liabilities of the corporation exceeded the entire amount of unpaid stock and the chancellor properly entered a decree directing the receiver to demand payment of the amounts due on unpaid stock and sue for same. No call was necessary as the order of court was equivalent to a call where the liabilities exceeded the amount due on unpaid stock. 7 R. C. L. 387, § 371. The principle of this case is sustained in 146 U.S. 689 (36 Law. ed., 1139); 72 F. 960; 31 L. R. A. (N. S.) 365; 33 Id. 895; 101 U.S. 205 (Law. ed., 885).
2. If appellant purchased the stock from Vaughan and purchased other unsubscribed stock, he is liable for the amount of the unpaid stock and it is conceded that 80 per cent. of the stock is unpaid. The transferee is liable to the same extent as the transferer. 91 U.S. 65 (23 L. ed., 384); 7 R. C. L 256, § 234; Ib., p. 276, § 254; 10 Cyc. 701; 91 U.S. 45 (L. ed., 203); 96 U.S. 328 (24 L. ed., 818).
3. It is conceded that appellant did act as president of the bank and had examined the books prior to the written contract and he is liable and the decree below is right and should be affirmed. He was not induced to purchase by false representations, but if so it was Mr. Vaughan who made these misrepresentations, and he alone would be liable and not the bank nor the receiver. 7 R. C. L. 241, § 214; 181 U.S. 202 (45 L. ed., 822); 31 L. R. A. (N. S.) 900. The statement of resources and liabilities furnished by Mr. Vaughan was correct and appellant was fully advised of the condition of the bank. The statement of the items as to "real estate, banking house, furniture and fixtures," etc., was not fraudulent nor misleading. There was nothing wrong in it and there is no error in the decree. See cases supra.
OPINION
This suit was instituted in the Prairie Chancery Court, Northern District, by appellee, W. J. Caskey, receiver of an insolvent banking corporation styled "Des Arc Bank & Trust Company," under an order of court, against appellant and other stockholders of said bank and trust company, to recover unpaid balances due on stock alleged to have been purchased by each. The complaint contained, among other allegations the following: That appellant purchased 734 shares of stock of the par value of $ 25 per share, on which there had been paid $ 5 per share, leaving a balance of $ 20 per share due and unpaid; that the amount due to the depositors was greater than the total amount of the unpaid stock which had been subscribed and held and owned by all of said stockholders; that appellant had made a transfer of certain real estate in Prairie County, without consideration, to Henrietta L. Greening who thereafter conveyed it to his wife for the purpose of defrauding his creditors; that appellant was a nonresident of the State of Arkansas. Based upon said allegations appellee prayed judgment for the balance due on the stock; for an attachment and for an order setting aside the conveyances and subjecting the land to the payment of the sum claimed.
Appellant denied that he was the owner of any stock in said bank and trust company or that he was obligated to the bank in any sum on stock subscriptions or purchases of stock; but stated that if the facts reveal that, he purchased 734 shares of stock in said company, as alleged, the purchase was induced by a false and fraudulent statement of the resources and liabilities of said bank and trust company made by Emmett Vaughan who was the president of the bank, and that the purchase of said stock was vitiated on account of the fraud practiced upon him.
By agreement, the cause was continued as to all the defendants except Herman and Emily Romunder, and, as to them, was submitted on the pleadings, depositions of witnesses and exhibits thereto, from which the court found that appellant purchased 734 shares of stock in the Des Arc Bank & Trust Company, and owed thereon eighty per cent. of the purchase price, or a total of $ 15,600; that the conveyances of certain real estate in Prairie County by appellant to Henrietta L. Greening, and by Henrietta L. Greening to his wife, Emily Romunder, who was also made a party to this suit, was without consideration and made in fraud of his creditors; and that the grounds for attachment were established by the proof. Thereupon the court rendered judgment in favor of appellee against appellant for the sum of $ 15,600 with interest, canceled the deeds to said real estate, sustained the ground of attachment and subjected the lands to the payment of the judgment, from which judgment an appeal has been prosecuted to this court.
The Des Arc Bank & Trust Company was organized with an authorized capital stock of $ 50,000 on the 1st day of August, 1907. The capital stock was divided into two thousand shares of $ 25 each, and sold by subscription for par value, twenty per cent. of the purchase price being paid in cash. Emmett Vaughan became the owner of 1,100 shares of stock by subscription and purchase, and, on the 5th day of June, 1912, entered into a written agreement with appellant, Herman Romunder, for the sale of 550 shares of the stock owned by him, and 184 shares of treasury stock owned by said bank and trust company. The agreement, in so far as concerns the questions involved on appeal, is as follows:
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Citizens Investment & Security Company v. Daniel
...a dividend or a renewal of a note. The offer to rescind comes too late. 35 Ark. 483; 38 Ark. 334. For other authorities on rescission, see 137 Ark. 574 and 7 R. C. § 211. Defendants cannot vary the written subscription agreement by parol. 126 Ark. 400; 92 Ark. 504; 125 Ark. 502; 111 Ark. 23......
- Romunder v. Caskey