Snodgrass v. E. A. Zander & Co.

• Decision Date: 03 February 1913
• Citation: 154 S.W. 212
• Parties: SNODGRASS et al. v. E. A. ZANDER & CO.
• Court: Arkansas Supreme Court

Page 212

154 S.W. 212

SNODGRASS et al. v. E. A. ZANDER & CO.

Supreme Court of Arkansas.

February 3, 1913.

Appeal from Circuit Court, Benton County; J. S. Maples, Judge.

Action by E. A. Zander & Co. against G. M. Snodgrass and others. Judgment for plaintiff, and defendants appeal. Affirmed.

Appellee brought suit against appellants and five others, who did not appeal here, in justice court, alleging that each of the said appellants were indebted to it in the sum of $100 for subscriptions to the capital stock of the corporation. It alleged in the complaint against G. M. Snodgrass that he was likewise indebted to it in the sum of $100 on subscription to the capital stock, which stock he had accepted and given his check in payment for, but had thereafter stopped payment of the check. Appellants filed an answer, five of them denying that they had subscribed for stock in the corporation, and four of the others admitting that they did; all, however, denied that they were indebted, because their subscriptions, if any were made, were on condition that appellee company would bring to Rogers and equip a glove factory, the assets of which should invoice not less than $6,000, at a reasonable valuation, and that its pay roll should approximate $2,000 per month from the beginning of operations, and that the amount disbursed for wages would largely increase if additional capital were secured for the purchase of additional material. They alleged it was agreed that the preferred stock should remain in the hands of the original subscribers and have representation on the board of directors; that the capital stock was to be $6,000 common and $4,000 preferred, no more and no less, and the name of the corporation to be E. A. Zander & Sons. They denied that the conditions had been complied with, alleging that the factory as equipped was not worth more than $2,500, and the pay roll had not amounted to more than $300 per month; that the preferred stock had never been represented on the board of directors; that the company was incorporated for $25,000, instead of $10,000, and in the name of E. A. Zander & Co. instead of E. A. Zander & Sons; denied that the $4,000 preferred stock was ever subscribed, and alleged that none of the subscriptions were to become due until the conditions were performed. Appellant Snodgrass admitted that he gave his check in payment for his subscription, but alleged that it was obtained upon misrepresentation, and that the conditions of the contract had not been complied with. The case was appealed to the circuit court, where judgment was rendered in favor of appellee, and from the judgment there this appeal comes.

The testimony shows that the Commercial Club of Rogers desired the location of a glove factory at that place, and began negotiations with E. A. Zander & Sons, owners of a glove factory at Buchanan, Mich., with a view to having one constructed and operated at Rogers. It solicited subscriptions to the capital stock of such corporation, the subscribers signing the following instrument:

"Whereas, the Rogers Commercial Club, of Rogers, propose to locate here a leather glove factory, to be operated by E. A. Zander & Sons of Buchanan, Michigan, at present, said E. A. Zander & Sons to bring to Rogers a completely equipped factory, the machinery and other property, assets of which shall invoice not less than $6,000 at a reasonable cash value; and whereas, the pay roll of said factory will be approximately $2,000.00 per month to begin with and which pay roll can be largely increased if additional capital is secured for the purchase of raw material and the expansion of the business in other legitimate ways; and whereas, the board of directors have investigated the proposition and believe that a factory of this kind employing girl and woman labor and using motor power can reasonably expect to be a financial success and will be of great benefit to our people: Therefore, we, the undersigned, hereby agree to subscribe for the number of $100.00 shares (or equivalent in smaller shares) of the preferred stock of said Zander & Sons Company, to be organized on arrival here, it being understood that the amount subscribed shall amount to $4,000.00 neither more nor less, and that the preferred stock issued to cover shall be a lien on all the assets of the company and bear 8% interest, not otherwise participating in the earnings of the company; also, each of the undersigned agree to pay to the secretary of the Commercial Club on demand the sum of $10.00 to be used by the club in defraying the expenses of said Zander & Sons, their skilled workmen and machinery from Buchanan, Mich., to Rogers, Ark., to wit:

                ------------------------------------------------------------------------
                Signed         Shares      Exp.      Signed          Shares        Exp
                ------------------------------------------------------------------------
                Jas. J. Keiser   1        $10.00   Cowan & Freeman      1         $10.00"
                

— and others, showing 40 shares subscribed exclusive of two names for one share, each marked off ____.

Some of the appellants denied that they ever signed the agreement at all, others stated that they signed or authorized their signatures for $10 expense money for the removal of the factory to Rogers, while others testified that their subscriptions were procured through fraudulent representations, claiming the solicitors stated to them that the preferred stock had all been taken by the banks, and that they were only signing for expense money.

E. A. Zander & Sons organized the appellee corporation under the name of E. A. Zander & Co., moved their factory to Rogers, setting it up fully equipped, and putting it in operation, its president stating that he was formerly located in the glove manufacturing business in Michigan; that he wanted to change to the South, came to Rogers, after having learned that they desired a factory, and talked it over with the Commercial Club; told...