Smith v. Dickinson

• Decision Date: 11 October 1898
• Citation: 76 N.W. 766,100 Wis. 574
• Parties: SMITH v. DICKINSON.
• Court: Wisconsin Supreme Court

100 Wis. 574

76 N.W. 766

SMITH

v.DICKINSON.

Supreme Court of Wisconsin.

Oct. 11, 1898.

Appeal from superior court, Milwaukee county; George E. Sutherland, Judge.

Action by Albert E. Smith against Harry E. Dickinson, impleaded with others, for contribution. Judgment for plaintiff, and defendant appeals. Affirmed.

Plaintiff and defendant jointly guarantied the payment of a promissory note, which, in process of time, plaintiff was compelled to pay in full, whereupon he brought this action against his co-guarantor to recover one-half of the amount so paid. The defendant answered, denying that plaintiff paid the note as claimed by him, and alleging that he paid it by discharging his own indebtedness to the corporation. The facts claimed in that regard were also set up as an equitable defense, and after the trial and before judgment, the court allowed an amendment, putting the equitable defense into the form of an equitable counterclaim. The cause was tried by the court and resulted in findings of fact covering the issues raised by the pleadings, in substance as follows:

(1) June 7, 1893, the Milwaukee & Eastern Transit Company by its promissory note dated on that day, promised to pay to the Wisconsin Marine & Fire Insurance Company Bank, one day after date, $53,000, with interest at the rate of 7 per cent. per annum.

(2) Before the note was delivered, plaintiff and defendant Dickinson duly guarantied the payment thereof.

(3) After the maturity of the note, plaintiff was obliged to, and did, pay the note, the amount required being $60,018.39.

(4) By reason of such payment defendant Dickinson is now indebted to the plaintiff in the sum of $32,978.41.

(5) When plaintiff paid the note he was the holder of certificates for 92 shares of the capital stock of the debtor company, of the par value of $92,000, 30 shares having been subscribed for by him in May, 1891, 29 shares October 19, 1891, and 33 shares, acquired by purchase, on all of which 20 per cent. has been paid. Defendant Dickinson, in May, 1891, subscribed for 10 shares and received certificates therefor upon the payment of 20 per cent. of their face. He thereafter paid a call or assessment on such stock of 10 per cent. From the organization of the company until after the payment of the note by plaintiff, he was the president, treasurer, and one of the directors of the corporation, and the defendant was its secretary, general manager and one of its directors.

(6) Before plaintiff paid the note, various assessments or calls upon the capital stock of the corporation were attempted to be made, amounting in the aggregate to 64 per cent., but they were invalid, no by-law or regulation of the corporation, providing for calling in subscriptions to stock, having been made.

(7) Plaintiff did not, by reason of the assessments mentioned, become liable to the corporation in any sum whatever.

(8) Defendant's equitable defense is not sustained, and he is therefore liable to the plaintiff in this action in the sum of $32,978.41 and costs.

Exceptions were filed on the part of defendant Dickinson to raise the question as to whether the finding that plaintiff did not become liable to the corporation on account of the assessments attempted to be made upon the corporation stock, and the question of whether, if he did become so indebted, the indebtedness should be applied to extinguish his claim for contribution. Judgment was rendered in favor of the plaintiff and defendant appealed.

N. B. Neelan and Austin & Fehr, for appellant.

Miller, Noyes, Miller & Wahl, for respondent.

MARSHALL, J. (after stating the facts).

The principal contentions of appellant on this appeal are that the court should have found that assessments on stock subscriptions were due and payable to the maker of the note from plaintiff; that such maker was insolvent so that any sum paid by defendant as contributor could not subsequently be recovered of such maker by him; and that by reason of the facts defendant was entitled in equity to the use, as an equitable counterclaim to plaintiff's cause of action, of the latter's indebtedness to the corporation. The equitable doctrine invoked is well established. It permits claims, whether such as are the subjects of set-off or counterclaim under the statute or not, to be applied upon the principal claim in suit on equitable principles, where circumstances exist such as to render that course necessary in order to prevent injustice. The subject received a...