Tama Water-Power Co. v. Hopkins
| Decision Date | 13 February 1890 |
| Parties | TAMA WATER-POWER CO. v. HOPKINS. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from district court, Tama county; S. M. WEAVER, Judge.
Plaintiff is a judgment creditor of the Tama Paper Company, of which defendant is a stockholder. This is an action to recover of defendant the sum of $2,500, alleged to be due from him to the said company on account of stock by him taken. After the evidence was submitted, the court directed the jury to return a verdict in favor of plaintiff for the sum of $2,500. From the judgment rendered on the verdict, defendant appeals.Struble & Stiger, for appellant.
W. H. Stivers and J. W. Willett, for appellee.
On or about the 20th day of June, 1877, the Tama Paper Company was organized as a corporation for pecuniary profit. Its articles of incorporation provided for a capital stock of $20,000, divided into shares of $100 each, to be paid at the call of the board of directors. The company was permitted to commence business when subscriptions for the $20,000 of stock had been taken. The private property of the stockholders was to be exempt from the payment of the corporate debts, excepting for amounts due on stock. Defendant was one of the incorporators and original stockholders of the company, and signed the stock subscription paper twice. Opposite his first signature was written, “Twenty-five shares.” Opposite his second signature, and following it, was written, “Twenty-five shares of preferred stock, on which the company guaranties ten per cent. interest, payable annually.” Another stockholder made similar subscriptions, and all were required to make the total of $20,000. Defendant was elected a director of the company, and was re-elected from time to time, and continued to act as director from the time the company was organized until it went out of business, after the debts in controversy were contracted. During at least a part of that time he also held the position of traveling agent of the company. He paid, on account of his stock subscription, the sum of $2,500. Defendant admits the recovery of two judgments by plaintiff against the paper company, which amounted to more than $2,500, when the case was tried in the court below, and that they are unpaid; but relies upon various defenses to this action, which we will proceed to consider.
1. It appears that the second subscription of defendant was altered, after it was made, by striking out the words “preferred,” and “on which the company guaranties ten per cent. interest, payable annually.” The evidence shows that the alteration was made within five or six months of the date of the subscription, if not at the time; but defendant states that it was made without authority from him, and that he had no knowledge of it until about the time this action was commenced. The books of the company fail to show any authority by the board of directors of the company, or by any one else, for making the erasure. So far as the evidence shows, the change in the subscription was made without authority, and without the knowledge of defendant, and the officers of the company empowered to act for it. Therefore, during the time in question, defendant must have believed himself to be the owner of 50 shares of stock. Appellant claims that he is released from liability in this action by reason of the alteration in the terms of his subscription. In reply to that, plaintiff pleads that defendant is estopped from denying liability, by reason of the acts of the company and his connection with it, and we think the record shows that to be the case. The articles of incorporation which were signed by defendant do not provide for the issuing of preferred stock. The company had no power, under the articles adopted, to commence the business for which it was organized, until the full amount of its capital stock was subscribed. 1 Mor. Priv. Corp. §§ 57, 137, 141, 408. Notwithstanding that fact, on the day the company was...
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