Vaughan-robertson Drug Co v. Grimes-mills Drug Co

• Decision Date: 16 May 1917
• Docket Number: (No. 357.)
• Citation: 92 S.E. 376
• Court: North Carolina Supreme Court
• Parties: VAUGHAN-ROBERTSON DRUG CO. et al. v. GRIMES-MILLS DRUG CO. et al.

(173 N.C. 502)

92 S.E. 376

VAUGHAN-ROBERTSON DRUG CO. et al.

v.GRIMES-MILLS DRUG CO. et al.

(No. 357.)

Supreme Court of North Carolina.

May 16, 1917.

Appeal from Superior Court, Forsyth County; Long, Judge.

Action by the Vaughan-Robertson Drug Company and others against the Grimes-Mills Drug Company and others. Judgment for plaintiffs, and certain individual defendants appeal. Error.

Civil action heard at November term, 1916, of Forsyth superior court, upon exceptions to the report of a referee. The drug company failed in business after a very brief career, and its affairs and assets were placed in the hands of a receiver by proper proceedings under the statute, and he has brought this suit to recover certain sums of money, which he alleges are due to the company by the defendants upon their several subscriptions to its capital stock. The case was duly referred to Mr. Philip Williams, who submitted to the court an unusually clear and concise report. The drug company was incorporated under the general law.

The referee finds the following facts:

(1) A subscription agreement for stock in a corporation to be formed for the purpose of conducting a drug store in the city of Winston-Salem was entered into by a number of persons, whose names appear in said agreement and who agreed to subscribe for the number of shares of stock set opposite their names, and to pay therefor at the rate of $25 a share. That the said subscription agreement was accepted by and became the property of the Grimes-Mills Drug Company, which was incorporated, by certain of the subscribers whose names appear in said agreement. A copy of the subscription agreement is annexed.

(2) In order to prevent the delay and inconvenience which would result from having all the subscribers in the subscription agreement sign the certificate of incorporation of the Grimes-Mills Drug Company, it was agreed orally between the incorporators that they would each sign the certificate of incorporation as a subscriber for 36 shares of stock, but that they were only to be liable for the payment of the number of shares they had subscribed for inthe subscription agreement, and the excess over and above that number, necessary to make up the total subscribed capital stock of 1144 shares, was to be paid for by the other subscribers to the subscription agreement and by additional subscribers to he obtained.

(3) The Grimes-Mills Drug Company accepted the parties whose names appeared in the subscription agreement, as subscribers to its capital stock of 144 shares, and received the money paid by them as payments on this capital stock and issued certificates of stock, as hereinbefore set out, in evidence thereof. That the subscription agreement was kept in the safe in the office of the Grimes-Mills Drug Company, and the company attempted to collect from the subscribers who failed to pay their subscriptions.

(4) The parties who were the incorporators, and who subscribed to the stock under the foregoing agreement were as follows: It. A. Mills, 36 shares, aggregate value $900; T. W. Grimes, 36 shares, aggregate value $900; T. A. Butner, 36 shares, aggregate value $900; and S. F. Vance, 36 shares, aggregate value $900.

(5) It will appear from the subscription agreement herein that the number of.shares of stock subscribed for therein amount to the total sum of $3,025, and of that sum $2,525 has been paid to the Grimes-Mills Drug Company, and the balance of $500 has not been paid. This result as to the amount paid in on the original subscription list, as we will call it, for the purpose of clear designation, was obtained after purging it of some plain errors, and of wrong entries.

(6) The subscription agreement, set out in finding 1 hereof, was entered into by the parties herein found to be subscribers thereto, prior to the incorporation of the Grimes-Mills Drug Company, with the exception of the subscribers whose names appear in the said agreement after the name of Geo. C. Tudor; the latter parties entered the agreement after the corporation had been organized.

(7) That T. A. Butner, in his answer filed in this cause sets up a counterclaim, in which he alleges that the Grimes-Miles Drug Company is indebted to him for money paid to said company and for services rendered it. That evidence was introduced at the hearing to prove that the said Butner had loaned the said company the sum of $400. To this counterclaim the receiver in apt time filed a demurrer.

(8) That T. W. Grimes, in his answer filed in this cause, sets up a counterclaim in which he alleges that Grimes-Mills Drug Company is indebted to him for merchandise and for services rendered. To this counterclaim the receiver in apt time filed a demurrer. That evidence was offered at the hearing to prove said counterclaim.

(9) That R. A. Mills, in his answer filed in this cause, sets up a counterclaim, in which he alleges that the Grimes-Mills Drug Company is indebted to him for services rendered. To this counterclaim the receiver in apt time filed a demurrer. No evidence was offered at the hearing in proof of this counterclaim.

The following are the referee's conclusions of law:

(1) That the Grimes-Mills Drug Company was incorporated according to the laws of this state, with a capital stock of 144 shares of the value of $25 per share, the aggregate value of which was $3,600.

(2) That the subscribers of this stock who are liable for its payment are:

                -------------------------------------------------
                |R. A. Mills |36 shares.|aggregate value $900.00|
                |------------|----------|-----------------------|
                |T. W. Grimes|36 shares,|aggregate value $900.00|
                |------------|----------|-----------------------|
                |T. A. Butner|36 shares,|aggregate value $900.00|
                |------------|----------|-----------------------|
                |            |36 shares,|aggregate value $900.00|
                -------------------------------------------------
                

(3) That the indebtedness of the Grimes-Mills Drug Company exceeds the proceeds derived from the sale of its assets, and the receiver is entitled to recover judgment against the subscribers of its stock for the amount of their subscriptions which remain unpaid.

(4) That the amount paid to the Grimes-Mills Drug Company by the subscribers to the subscription agreement constitutes a payment pro tanto of its capital stock, and should be credited as such. It follows, therefore, that upon the amount of the stock subscribed for by Mills, Grimes, Butner, and Vance in the certificate of incorporation must be credited the payments made by each one of these parties, and in addition thereto each one of these parties is entitled to a credit on the amount subscribed for by him of an amount equal to one-fourth of the total of the payments made by the other parties to this subscription agreement.

(5) That the receiver is entitled to recover judgment for the balance of the stock subscriptions remaining unpaid after making the foregoing credits, as follows:

                ------------------------
                |R. A. Mills   |$106 25|
                |--------------|-------|
                |T. W. Grimes  |306 25 |
                |--------------|-------|
                |T. A. Butner  |106 25 |
                |--------------|-------|
                |S. F. Vance.. |556 25 |
                ------------------------
                

—and interest from April 2, 1914. The referee states that those amounts were arrived at by charging each of the incorporators with the amount of his subscription, or $900, and deducting therefrom the amount paid by him, and also his share or one-fourth of the payments made by the subscribers on the list, other than the four above mentioned. He then proceeds to state the amount due by the other subscribers on the list, after correcting certain errors, and recommends that judgment be entered against each of the parties for the amount thus found to be due by him and the costs.

The court sustained the finding of facts, as being supported by the evidence, there being no exceptions thereto, but overruled the decision of the referee as to the competency of the evidence relating to the twenty-fourth finding of fact, exception having been taken thereto, which evidence had been admitted by the referee, and from which he made his twenty-fourth finding of fact (No. 2 in this statement) in regard to the agreement as to payment of subscription by R. A. Mills, and his three associates, to the stock of the drug company, and approved the other findings, overruling all other exceptions. Finding No. 24 was disapproved. Judgment was rendered against the several parties accordingly, and for costs, that against T. A. Butner for $400, and interest, and the one against S. F. Vance for $850, and these two defendants excepted and appealed.

Fred M. Parrish, of Winston-Salem, for appellant T. A. Butner.

Holton & Holton, of Winston-Salem, for appellant S. F. Vance. Louis M. Swink and Gilmer Korner, Jr., both of Winston-Salem, for appellees.

WALKER, J. (after stating the facts as above). [1] It will not be necessary to state the testimony introduced to support the second of the findings of fact, as it appears above, or the twenty-fourth, as it appears in the referee's report, the judge having heldthat there was evidence sufficient to warrant the finding, in which ruling we concur, and disapproved the finding upon the ground only that the testimony in support of it is incompetent. The evidence is substantially like the facts found by the referee, and the question is whether it was competent to hear the evidence and consider those facts in coming to a decision of the case. We think it was, as the evidence had no tendency to contradict, vary, or alter any writing nor to show that one contract of subscription was being substituted for another, but simply proved that the parties had adopted a convenient way of paying for the stock which was subscribed by R. A. Mills, T. W. Grimes, T. A. Butner, and S. F. Vance, amounting in all to 144 shares, or $3,600, the par value of each share being $25. There was great stress laid in the argument upon the erroneous supposition that there had been two subscriptions of stock, one by ...