Savic v. Kramlich

• Decision Date: 31 May 1932
• Docket Number: 5810
• Court: Idaho Supreme Court
• Parties: PAUL G. SAVIC, Respondent, v. B. P. KRAMLICH, President, and CHARLES F. REDDOCH, Secretary of the CRYSTAL DOME OIL & GAS COMPANY, a Corporation, Appellants, and S. L. TIPTON, Intervenor and Respondent, and CRYSTAL DOME OIL & GAS COMPANY, Intervenor and Appellant

12 P.2d 260

52 Idaho 156

PAUL G. SAVIC, Respondent, v. B. P. KRAMLICH, President, and CHARLES F. REDDOCH, Secretary of the CRYSTAL DOME OIL & GAS COMPANY, a Corporation, Appellants, and S. L. TIPTON, Intervenor and Respondent, and CRYSTAL DOME OIL & GAS COMPANY, Intervenor and Appellant

No. 5810

Supreme Court of Idaho

May 31, 1932

CORPORATIONS-STOCK WHEN ISSUED-CONSIDERATION - MANDAMUS - STOCK CERTIFICATE ISSUANCE OF-ATTORNEY AND CLIENT-FEE-LIEN.

1. Corporate stock paid for is in fact "issued," irrespective of issuance of certificate which is evidence of stockholder's ownership.

2. Corporation's receipt of 1,992 shares of its own stock held adequate consideration for making stockholders surrendering such stock, owners with certain exceptions of all capital stock of corporation (Const., art. 11, sec. 9; Laws 1929, chap. 262, sec. 12, subds. 1, 14, 27).

3. Corporation's judgment against stockholder did not supersede attorney's right as assignee to stock assigned by stockholder to secure fee, where corporation was not stockholder's creditor at time of assignment.

4. Twenty-five thousand dollars for contingent attorney's fee for securing issuance of stock certificate for certain stock worth $50,000 at par value held not excessive.

5. Contingent attorney's fee of 50 per cent of amount recovered is not excessive.

6. Attorney taking assignment of stock to secure his fee for procuring issuance of stock certificate did not lose his statutory lien.

7. Mere taking of other security for debt secured by lien does not constitute waiver of lien.

8. Mandamus will lie to compel issuance in first instance of stock certificate to person establishing ownership to stock (C. S., sec. 7254).

9. In suit to compel issuance of stock certificate, intervenor as assignee of speculative stock to secure attorney's fee whose stockholder's vote depended on his shares did not have adequate remedy at law or equity, hence could maintain mandamus (C. S., sec. 7254).

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Charles F. Koelsch, Judge.

Petition for a writ of mandate. Judgment for plaintiff and intervenor Tipton. Affirmed.

Judgment affirmed; costs to respondent.

J. B. Eldridge, for Appellants.

Mandamus is not the proper remedy to compel the issuance of corporate stock, as the party claiming the same has a plain, speedy and adequate remedy, either at law or in equity. (38 C. J., p. 792, sec. 450; 14 C. J., p. 485, sec. 720; 7 R. C. L., sec. 187, p. 216; 18 R. C. L., sec. 107, p. 185; 7 Thompson on Corporations, 3d ed., sec. 5741, p. 787; Kimball v. Union Water Co., 44 Cal. 173, 13 Am. Rep. 157; Spangenberg v. Western Heavy Hardware & Iron Co., 166 Cal. 284, 135 P. 1127; American Asylum v. Phoenix Bank, 4 Conn. 172, 10 Am. Dec. 112; Tobey v. Hakes, 54 Conn. 274, 1 Am. St. 114, 7 A. 551.)

Intervenor Tipton waived his right to a statutory lien when he took an assignment or transfer of the stock as security for his fee. (6 C. J., sec. 382, p. 777; Fulton v. Harrington, 12 Del. (7 Houst.) 182, 30 A. 856; Stearns v. Wallenberg, 51 Ore. 88, 92 P. 1079, 14 L. R. A., N. S., 1095.)

Intervenor's fee was contingent upon success, and it conclusively appearing that the contingency upon which said fee depended has not happened, no action can be maintained. (6 C. J., sec. 319, p. 743; Pinto v. Seely, 22 Cal.App. 318, 135 P. 43; Wilson v. Horton, 140 N.Y.S. 980; Troy v. Hall & Farley, 157 Ala. 592, 47 So. 1035.)

Intervenor's contract for a $ 25,000 attorney's fee was entered into after the relationship of attorney and client obtained between himself and the plaintiff, and is presumably invalid, and no facts were pleaded or evidence given showing the same to be just, fair and reasonable. (6 C. J., sec. 310, p. 735; Manley v. Felty, 146 Ind. 194, 45 N.E. 74; McDougall v. Kasiska, 48 Idaho 424, 282 P. 934.)

S. L. Tipton, for Respondents.

Mandamus is a proper remedy to secure the issuance of a stock certificate. (Fletcher, Cyc. Corp., 1st ed., secs. 3291-3427; 2 Clark & Marshall on Corp., p. 1336; In re Ballou, 215 F. 810; Capital Petroleum Co. v. Haldeman, 66 Colo. 265, 180 P. 758; 38 C. J., pp. 562, 563; Cook v. New York Mexican Oil Co., 32 Del. 244, 122 A. 55.)

When stock is paid for purchaser is a shareholder. (5 Fletcher, Cyc. Corp., 1st ed., sec. 3427, p. 5740; Pacific Nat. Bank v. Boston, 141 U.S. 227, 11 S.Ct. 984, 35 L.Ed. 702.)

Intervenor Tipton's complaint stated a cause of action, he having a lien for his fees and an assignment of the stock, as further security, and was interested in the matter in litigation. (Pittock v. Buck, 15 Idaho 47, 96 P. 212; Horn v. Volcano Water Co., 13 Cal. 62, 73 Am. Dec. 569; Potlatch Lumber Co. v. Runkel, 16 Idaho 192, 18 Ann. Cas. 591, 101 P. 396, 23 L. R. A., N. S., 536; Pence v. Sweeney, 2 Idaho 914, 28 P. 413.)

The statutory lien intervenor was not waived by taking the assignment as additional security.

"The mere taking of other security for a debt secured by a lien does not as a rule constitute a waiver of the lien. To constitute a waiver an intention to waive the lien must appear from the circumstances of the case or from the nature of the security taken." (19 Am. & Eng. Ency. of Law, 2d ed., p. 29.)

The contract of employment of the attorney was made prior to rendering any services and for a definite sum, and the value of his services is not in question.

"In the making of a contract between an attorney and one who is not at the time his client by which the relation of client is created between them and the services to be rendered and the compensation therefor are stipulated the parties deal with each other at arms length and no presumption of undue influence arises requiring the attorney to affirmatively prove good faith and adequacy of consideration." (Dockery v. McLellan, 92 Wis. 381, 67 N.W. 733; 6 C. J., sec. 343, pp. 747, 748.)

LEE, C. J. Givens, Varian and Leeper, JJ., concur.

OPINION

LEE, C. J.

Plaintiff and respondent, Paul G. Savic, claiming to be a shareholder owning 2,004 shares of the capital stock of the Crystal Dome Oil & Gas Company, an Idaho corporation, for which stock no certificate had been issued, sued defendants and appellants, B. P. Kramlich and Charles F. Reddoch, respectively president and secretary of said company, for a writ of mandate compelling them to issue him a certificate for the stock aforesaid. He plead that on August 10, 1929, the company's board of directors, in regular meeting, all being present, adopted the following resolution:

"'Moved, seconded and carried that Paul G. Savic transfer to the company by proper conveyance, all the leases held or hereafter acquired by him as trustee, or otherwise, and leases procured after August 8th, 1929, shall be taken in the name of the company and that B. P. Kramlich pay to the treasurer of the company the sum of Twenty-five Thousand Dollars, and upon so doing all of the capital stock of the company, except that subscribed by R. F. Batten and Charles F. Reddoch, shall be owned by them ratably, said parties and all the directors assenting thereto, the motion was unanimously carried.' The minutes further show the following 'Moved and seconded and carried that Paul G. Savic and B. P. Kramlich release to the treasurer of the company 1992 shares of their stock, in equal portion to be sold if necessary, and the proceeds thereof to be paid into the treasury of the company and used for corporate purposes only, and any of said stock not so sold to be returned to the said parties ratably.'"

After setting forth this resolution, he averred that said 1,992 shares of stock were released to the company; that he transferred to the corporation by proper conveyance all the leases acquired by him as trustee or otherwise; that Kramlich paid into the company's treasury $ 25,000; that there then remained 4,004 shares of stock, of which Kramlich owned 2,000 and he 2,004; that his demand that appellants issue him a certificate therefor, as under the by-laws it was their alleged duty to do, had been refused, and that he was without speedy or adequate remedy at law, the stock being of special and peculiar value to him, in that it would, if issued, give him control of said company and enable him to exercise such control at stockholders' meetings.

It is unnecessary to go into the array of motions and demurrers interspersed throughout the transcript, since the vital contentions can be disposed of in discussing the merits of the several declaratory pleadings of the parties. Defendants and appellants answered, denying Savic's ownership of 2,004 shares of capital stock or any stock in excess of the value of $ 5,000, charging that the leases transferred were of no greater value than $ 5,000; that they were not necessary to the corporate business; that the company had tendered them back only to be met by a refusal; that the board of directors in adopting the resolution set out had acted in bad faith, in violation of the Constitution of the state of Idaho, without authority, fraudulently, knowingly and intentionally overvaluing the leases at the instigation of Savic, in order to please him and give him control of the company; that respondent had a plain, speedy and adequate remedy both at law and equity, since "there is a real, substantial and subsisting controversy between said corporation and said plaintiff as to his right to claim said stock, and that he has no clear and undisputed right thereto," and that the Crystal Dome Oil & Gas Company was a necessary and indispensable party defendant.

At this juncture, respondent, S. L. Tipton, intervened, claiming that on or about March 1, 1930, respondent Savic employed him as an attorney to sue for the stock in question and agreed to pay him $ 25,000 for...