Sexton v. C. L. Percival Co., 33324.
| Decision Date | 13 April 1920 |
| Docket Number | No. 33324.,33324. |
| Citation | 189 Iowa 586,177 N.W. 83 |
| Parties | SEXTON v. C. L. PERCIVAL CO. ET AL. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Polk County; Hubert Utterback, Judge.
In this suit, begun February 21, 1918, the plaintiff, as executor of C. M. Sexton, deceased, prays that the defendants, C. L. Percival Company and its officers, be required to issue a certificate for 15 shares of stock to him as such executor. Prior to 1901 a corporation known as the D. H. McDoneld Company was organized. On June 23d of that year C. L. Percival sold to Sexton a certificate of 10 shares of stock of the par value of $100 each, known as certificate No. 15, in that company on terms substantially as hereinafter recited. This stock was left with the Des Moines Savings Bank as trustee. In February, 1904, the name of the company was changed to C. L. Percival Company, and certificate No. 15 was surrendered, and certificate for 10 shares known as No. 7 in the latter company was issued in its stead, and left with the bank. At a directors' meeting, immediately following a stockholders' meeting, on January 13, 1908, a motion was adopted:
“That the 20 shares of stock now held by the Des Moines Savings Bank as trustee for C. F. Percival be turned back to the company, and 20 shares in lieu of the same be issued direct to C. F. Percival. Motion carried.
It was further moved and seconded that the 10 shares of stock now held by the Des Moines Savings Bank as trustee for C. M. Sexton be put in such shape that said C. M. Sexton can draw the dividends on same as long as he lives. At his death stock shall be sold back to C. L. Percival or his assignees at par value.”
On June 23d, following the death of the decedent, C. L. Percival Company and the Des Moines Savings Bank entered into an agreement with reference to the 10 shares of stock evidenced by certificate No. 15:
“First. That in consideration of the sum of $1,000, the receipt whereof is hereby acknowledged,the said Percival has hereby sold, subject to the terms of this agreement, to the said C. M. Sexton, 10 shares of the capital stock of the said C. L. Percival Company.
Second. In the event of the death of the said C. M. Sexton, the said C. L. Percival, his heirs or assigns, shall for 90 days thereafter have the right to repurchase the said stock at his election, and in the event that he elects to so repurchase the same the said C. L. Percival, his heirs or assigns, shall pay therefor the sum of $100 per share, plus interest upon the said amount from the date of the last dividend paid upon the said stock to the date of such purchase at the rate of 8 per cent. per annum.
Third. In order to effectuate the purposes of this agreement the stock so purchased by the said C. M. Sexton has been issued to the Des Moines Savings Bank, trustee, and shall be held by it in trust for the parties hereto pursuant to the terms of this agreement until such time, if any, as said Percival, his heirs or assigns, shall elect to repurchase the said stock subject to the terms of this agreement. All dividends upon the said stock during said period shall be paid to the said C. M. Sexton as they become due, and the said C. M. Sexton shall have the right during the said period to vote the said stock at all meetings of the said corporation, but he shall not pledge or transfer said stock, or otherwise prevent the carrying out of this agreement.
Fourth. In the event the said C. L. Percival, his heirs or assigns, shall under this contract elect to repurchase the said stock, he shall pay the purchase price therefor to the said bank, as trustee, and the said bank shall thereupon transfer the said stock to the said C. L. Percival, his heirs or assigns, and pay over the said purchase price to the executors or administrators of said C. M. Sexton. If, having the right to repurchase said stock, said C. L. Percival, his heirs or assigns, shall elect not to do so, said bank shall thereupon, and after 90 days after the death of said C. M. Sexton, transfer the same to his said executors or administrators, whose title thereto shall thereupon become absolute.”
At a stockholders' meeting in January, 1913, a resolution was adopted amending its articles so as to increase the amount of capital stock from not in excess of $50,000 in the aggregate to “not in excess of $100,000,” and striking the limitation of the preferred stock to the amount of common stock from the articles. The officers were directed to effect these changes and they so did. Following adjournment of the stockholders' meeting, the directors convened, and after the election of officers resolved:
“That a dividend of 25 per cent. of the par value of the capital stock of this company that has been issued be, and is hereby, declared; said dividend to be paid in cash at once to the stockholders of this company as they appear of record on the 1st day of January, 1913.”
Thereupon a resolution declaring a stock dividend of 150 per cent. with preamble as follows was adopted:
“Whereas, the authorized capital stock of the C. L. Percival Company was, at the annual meeting of the stockholders on January 13, 1913, increased by amendment to its articles of incorporation from $50,000 to $100,000, in order to take care of the growing needs of the company; and whereas, the surplus or undivided earnings of the C. L. Percival Company, as of the 1st day of January, 1913, amounted in the aggregate to $47,345.28; and whereas, it is deemed advisable to set aside of the surplus or undivided earnings of the company the sum of $30,000 as a stock dividend to the common stock now outstanding, amounting to $20,000; and whereas, it is desired to sell for cash at not less than $150 per share the remaining portion of the increased issue of common stock, i. e., $25,000.”
On March 25, 1913, C. L. Percival, as president, and Carl F. Percival, as secretary and treasurer, executed under the seal of the C. L. Percival Company a certain stock certificate No. 58 for 25 shares of the capital stock of the C. L. Percival Company of the par value of $100 each, said certificate being issued in the name of the Central Trust Company, trustee, and having written on the top thereof the name “C. M. Sexton,” and the stub from which said certificate was originally detached bears the following indorsement:
The blank form of receipt on the stub was not signed, and certificate No. 58 never delivered nor any in its stead. Within 90 days from Sexton's death Percival paid par value with interest as stipulated to the Des Moines Savings Bank, and thereupon the original certificate No. 7 for 10 shares of stock was surrendered to him, and on June 20, 1917, in lieu thereof, and of certificate No. 58, the company issued a certificate No. 77 for 10 shares and a certificate for 15 shares, known as No. 78, to Percival. No dividend has been paid to decedent or the executor of his estate since January, 1917. During the last four years or after the stock dividend, decedent was paid dividends on 25 shares of stock, and prior thereto on 10 shares. During all this time he was one of the four directors of the company, actively participated in its management, served as bookkeeper, and later as cashier at a salary. The court, on final hearing, entered its decree:
“That upon the payment within 90 days from the entry of final decree in this cause to the plaintiff by the defendant C. L. Percival of the sum of $1,500, together with 8 per cent. interest thereon from January 15, 1917, said defendant shall be and become the absolute owner of said 15 shares of dividend stock in said C. L. Percival Company, together with all rights which have accrued thereunder since said last-named date and all rights which may hereafter accrue thereunder; that in default of such payment to the plaintiff by the defendant C. L. Percival the defendant Percival Company, through its proper officers, shall issue and deliver to the plaintiff said 15 shares of stock as and pursuant to the said stock dividend of February 22, 1913.”
One-half of the costs was taxed to each party, and each appealed on the same day. Reversed.
Brookhart Bros., of Washington, Iowa, and Charles W. Lyons, of Des Moines, for appellant.
Miller, Parker, Riley & Stewart, of Des Moines, for appellees.
The plaintiff is the executor of the estate of C. M. Sexton, deceased, and as such prays for an order directing the C. L. Percival Company and its officers to issue to him, as such executor, a certificate of 15 shares of the capital stock of that company. It appears from the record that on December 10, 1901, the decedent, being in the employment of the D. H. McDoneld Company, arranged to purchase 10 shares of the capital stock of said company from C. L. Percival. This was done, but on terms substantially like those entered into after the name of the company had been changed to C. L. Percival Company. Such change occurred in 1904, and on June 23, 1908, a new contract was entered into under which the certificate for 10 shares of stock was deposited with the Des Moines Savings Bank as trustee, on condition that--
“In the event of the death of the said C. M. Sexton the said C. L. Percival, his heirs or assigns, shall for 90 days thereafter have the right to repurchase the said stock at his election, and in the event that he elects to so repurchase the same the said C. L. Percival his heirs or assigns shall pay therefor the sum of $100 per share, plus interest upon the said amount from the date of the last dividend paid upon the said stock to the date of such purchase at the rate of 8 per cent. per annum.
Third. In order to effectuate the purposes of this agreement the stock so purchased by the...
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Sexton v. C. L. Percival Co.
...177 N.W. 83 189 Iowa 586 J. O. SEXTON, Administrator, Appellant, v. C. L. PERCIVAL COMPANY et al., Appellees No. 33324Supreme Court of Iowa, Des MoinesApril 13, REHEARING DENIED SEPTEMBER 25, 1920. [177 N.W. 84] Appeal from Polk District Court.--HUBERT UTTERBACK, Judge. IN this suit, begun ......