Seyberth v. American Commander Mining & Milling Co.

• Decision Date: 02 March 1926
• Citation: 245 P. 392,42 Idaho 254
• Court: Idaho Supreme Court
• Parties: HENRY SEYBERTH, Appellant, v. AMERICAN COMMANDER MINING & MILLING COMPANY, LTD., a Corporation, Respondent

245 P. 392

42 Idaho 254

HENRY SEYBERTH, Appellant, v. AMERICAN COMMANDER MINING & MILLING COMPANY, LTD., a Corporation, Respondent

Supreme Court of Idaho

March 2, 1926

CORPORATIONS-UNIFORMITY OF ASSESSMENTS ON CAPITAL STOCK-SALE OF STOCK FOR NONPAYMENT - VOID ASSESSMENT - REMEDY OF STOCKHOLDER-PLEADING-PARTIES DEFENDANT.

1. Assessment levied on capital stock of corporation must be equal and uniform; otherwise assessment is void.

2. "Assessment" means a demand on stockholders for payments above par value of their stock to meet money demands of creditors of corporation, while "call" or "instalments" means action of the board of directors demanding payment of all or portion of unpaid subscription.

3. Where portion of corporate stock had been deposited in treasury in pursuance of resolution inviting stockholders to deposit stock for certain length of time, exempt from assessments, assessment levied on balance of stock outstanding was properly an assessment, as distinguished from call or instalment, levy and collection of which is provided for by C. S., sec. 4733.

4. Levy and collection of assessment on corporate stock is statutory.

5. Where, in pursuance of resolution inviting stockholders to return stock to treasury for definite period, when stock would be reissued to owners, a portion of outstanding stock was returned, such stock did not become treasury stock so as to be exempt from assessment.

6. Where portion of corporate stock was deposited in treasury in pursuance of resolution inviting stockholders to deposit stock in treasury for definite period exempt from assessment assessment on portion outstanding was void as being unequal and not uniform, and sale for nonpayment of such assessment was void.

7. Under C. S., sec. 4749, stockholders can maintain action to recover stock sold for nonpayment of void assessment without having made tender of payment.

8. Forfeiture of stock sold for delinquency of payment of void assessment is invalid.

9. Generally, an invalid forfeiture will be annulled at the suit of the stockholder.

10. Assessment and sale of stock for delinquent assessment is a proceeding to enforce a forfeiture.

11. In action to quiet title to shares of stock sold for nonpayment of assessment, on ground that assessment was void as being made only against outstanding stock and not against stock deposited in treasury in pursuance of resolution inviting stockholders to deposit stock for definite period exempt from assessment, it was unnecessary that owners of stock deposited in treasury in pursuance of such agreement be made parties defendant, under C. S., secs. 6646, 6657, there being no privity or connection whatever, and particularly since defendant corporation had made only defense possible as fully as could be made.

12. Prayer is no part of the statement of the case, as alleged in charging part of the complaint.

APPEAL from the District Court of the First Judicial District, for Shoshone County. Hon. A. H. Featherstone, Judge.

Action to quiet title to shares of stock which had been sold for nonpayment of assessment. Demurrer to complaint sustained and action dismissed. Reversed and remanded.

Reversed and remanded, with instructions. Costs awarded to appellant.

H. J Hull, for Appellant.

The remedy adopted by plaintiff to secure the cancelation of the assessment sale of plaintiff's stock, and the reinstatement of the stock in plaintiff's name, is the proper remedy in such an action. (Mantle v. Jack Waite Mining Co., 24 Idaho 613, 135 P. 854, 136 P. 1130; Herbert Kraft Co. v. Bank of Orland, 133 Cal. 64, 65 P. 143; Cheney v. Canfield, 158 Cal. 342, 111 P. 92.)

Assessments must be levied uniformly and equally. Assessments or calls which are not levied uniformly or equally are void. ( Kohler v. Agassiz, 99 Cal. 9, 33 P. 741; O'Dea v. Hollywood Cemetery Assn., 154 Cal. 53 97 P. 1; Geary Street Ry. Co. v. Rolph, 189 Cal. 59, 207 P. 539; Bank of China, Japan and the Straits v. Morse, 168 N.Y. 458, 85 Am. St. 676, 61 N.E. 774, 56 L. R. A. 139; North Milwaukee Townsite Co. v. Bishop, 103 Wis. 492, 79 N.W. 785, 45 L. R. A. 174; Great Western Tel. Co. v. Burnham, 79 Wis. 47, 24 Am. St. 698, 47 N.W. 373; Brockway v. Gadsden Mineral Land Co., 102 Ala. 620, 15 So. 431; Pike v. Bangor & C. S. L. R. Co., 68 Me. 445; Dotson v. Hoggan, 44 Utah 295, 140 P. 128; Sullivan Co. Club v. Butler, 26 Misc. 306, 56 N.Y.S. 1; Liggett v. Glenn, 51 F. 381, 2 C. C. A. 286; 2 Fletcher, Cyc. Corp., sec. 677, p. 1530; 1 Cook on Corp., sec. 114; 4 Thompson, Corp., sec. 3713; 1 Clark & Marshall, sec. 499F; 1 Morawetz, Private Corp., 2d ed., sec. 154.)

The contract between the corporation and certain of its shareholders, the purpose and effect of which was to grant to those entering into same the privilege, exemption and immunity from the payment of assessments, was void as against public policy. (3 Fletcher, Cyc. Corp., sec. 1714, p. 2895; sec. 1753, p. 2957; sec. 1754, p. 2968, and cases cited; 7 Fletcher, Cyc. Corp., sec. 4275, p. 7536; Manson v. Curtis, 223 N.Y. 313, 119 N.E. 559; Dieckman v. Robyn, 162 Mo.App. 67, 141 S.W. 717; Funkhouser v. Capps (Tex. Civ. App.), 174 S.W. 897; Thomas v. Matthews, 94 Ohio 32, 113 N.E. 669, L. R. A. 1917A, 1068; Carlisle v. Smith, 234 F. 759; Gilchrist v. Hatch (Ind. App.), 100 N.E. 473.)

"It is not all persons who have an interest in the subject matter of the suit, but in general those only who have an interest in the object of the suit who are ordinarily required to be made parties." (Story, Equity Pleading, sec. 72; Idaho Irr. Co., Ltd., v. Dill, 25 Idaho 711, 139 P. 714; Taylor v. Lytle, 26 Idaho 97, 141 P. 92.)

Walter H. Hanson and Charles E. Horning, for Respondent.

Defendant corporation had the right to agree with its stockholders that for a fixed period, of time the stock held by them should be nonassessable, and this is particularly true where the corporation received a valuable consideration for such an agreement and extended to every stockholder an opportunity to join in such agreement. (Wall v. Basin Mining Co., Ltd., 16 Idaho 313, 101 P. 733, 22 L. R. A., N. S., 1013; Jonas v. Frost, 32 Idaho 214, 179 P. 949; O'Dea v. Hollywood Cemetery Assn., 154 Cal. 53, 97 P. 1.)

The assessment levied by defendant corporation was levied in accordance with the statute and was not unfair, unequal or void. (C. S., secs. 4733-4748; par. 4, Plaintiff's Amended Complaint.)

Failure or omission to collect a regularly levied assessment from one or more stockholders does not relieve other stock-holders of the obligation to pay their assessments, nor does it render the assessment itself void. (C. S., sec. 4748; San Bernardino Inv. Co. v. Merrill, 108 Cal. 490, 41 P. 487, 489; Burnham v. San Francisco Fuse Mfg. Co., 76 Cal. 26, 17 P. 939; Mantle v. Jack Waite Min. Co., Ltd., 24 Idaho 613, 135 P. 854, 136 P. 1130.)

All of the stockholders who are alleged to have entered into the agreement in question with the defendant corporation are proper and indispensable parties to this suit, one of the objects of which is to have said agreement adjudged null and void. (C. S., secs. 6646, 6657; Chadbourne v. Coe, 51 F. 479, 2 C. C. A. 327; Donovan v. Campion, 85 F. 71, 29 C. C. A. 30; Ribon v. Chicago, R. I. & P. R. R. Co., 83 U.S. 446, 21 L.Ed. 367; Bond v. Hunt, 135 Ga. 733, 70 S.E. 572; Rogers v. Penobscot Mining Co., 154 F. 606, 83 C. C. A. 380; Ducas v. Ducas, 150 A.D. 397, 135 N.Y.S. 35; Idaho Irr. Co., Ltd., v. Dill, 25 Idaho 711, 139 P. 714; 3 Elliott on Contracts, sec. 2442; Lawrence v. Times Printing Co., 90 F. 24; Kendig v. Dean, 97 U.S. 423, 24 L.Ed. 1061; Taylor v. Lytle, 26 Idaho 97, 141 P. 92; 4 Thompson on Corporations, sec. 4643; Patterson v. Yuba County, 12 Cal. 105.)

HEITMAN, District Judge. William A. Lee, C. J., and Budge and Givens, JJ., concur. Taylor, J., took no part.

OPINION

HEITMAN, District Judge.

This is an appeal from a judgment dismissing plaintiff's action. The trial court having sustained a demurrer to plaintiff's amended complaint, plaintiff thereafter elected to stand upon his amended complaint, and the judgment of dismissal was thereupon rendered.

The amended complaint alleges in substance as follows: Defendant was incorporated under the laws of Idaho for 2,000,000 shares of the par value of one dollar each. Prior to June 12, 1923, about 1,300,000 shares of the capital stock were issued and outstanding, which was all common stock. Plaintiff, at the times mentioned was, and now is, the owner of 37,000 shares of said capital stock.

On June 12, 1923, the board of directors, at a special meeting, called and held for that purpose, passed and adopted a resolution called in the briefs an agreement, the vital part of which is as follows:

"Now, therefore, be it resolved, that the stockholders of this company be invited to return their stock to the treasury of the corporation so as to again cause it to become treasury stock, and there to remain for a period of one and one-half years, or until such time as the directors of the company shall consider that its financial program has been sufficiently well carried out so that its future work will not be endangered by sale of private stock, when the said directors may break said agreement and cause said stock to be reissued;

"Be it further resolved, that if, after the deposit of any such certificate or certificates of stock, and the cancelation thereof on the books of the company, any assessment shall be levied, they shall not apply to or be collectible from such stock as may have been in such manner returned to the treasury."

On June 30, 1923, the defendant caused to be mailed to every stockholder of record a letter, the material part of which is as follows:

"Of course assessments levied after the stock is deposited...