White v. Greene

• Decision Date: 08 February 1897
• Citation: 70 N.W. 182
• Parties: WHITE ET AL. v. GREENE.
• Court: Iowa Supreme Court

70 N.W. 182

WHITE ET AL.

v.GREENE.

Supreme Court of Iowa.

Feb. 8, 1897.

Appeal from district court, Polk county; W. F. Conrad, Judge.

Action at law, in which plaintiffs seek to recover from defendant, a stockholder in a corporation known as the Zoological Park Company, the amount of a judgment obtained by them against the corporation. It is alleged that the defendant is the owner of 10 shares of stock, upon which there has been paid but 20 per cent. of the par value thereof, which is $100 per share, and they ask judgment for the sum of $800 against the defendant. The defendant, in his answer, averred that he had purchased the stock in the open market, for a valuable consideration, upon the faith of a statement on the certificates that it was fully paid up, and that he did not know to the contrary. He also pleaded that he was not the owner of the stock, and had not been since long prior to the commencement of the suit. He further pleaded that plaintiff N. A. White was one of the original incorporators, and that the stock was all issued upon an agreement between the incorporators and promoters that no other or further sum of money should be required of the stockholders than what was exchanged therefor at the time the corporation formed, which was certain real estate in the city of Des Moines, and a sum sufficient to pay $40,000 in bonds, issued to one L. M. Mann, and a further sum equal to 10 per cent. of the capital stock, to pay improvements and necessary expenses; that by reason of these facts and this agreement plaintiffs were not entitled to recover. Plaintiffs, in reply, admitted that N. A. White was one of the original incorporators, but further averred that he thereafter sold his stock, and severed his connection with the company. And they further pleaded an amendment to the by-laws of the corporation, which gave the corporation power to assess the capital stock at such times and amounts as might be necessary to meet all annual payments of principal and interest upon all the mortgage incumbrances on the lands and personal property of the company, and for improving and repairing the property; the total of which, however, should not exceed the aggregate of the unpaid installments of the capital stock outstanding. On these issues a trial was had to the court, a jury being waived, resulting in a judgment for plaintiffs in the sum of $700, to which defendant excepted, and from which he appeals. Affirmed.Bishop, Bowen & Fleming, for appellant.

Dowell & Parrish and Earl & Prouty, for appellees.

DEEMER, J.

The Zoological Park Company was organized in the year 1889, with a capital stock of $200,000, $120,000 of which was issued at the time of the organization of the company. Prior to the time of its organization, a syndicate, composed of W. W. Fink, N. A. White, one of the plaintiffs, and other parties, entered into an agreement with one L. M. Mann to purchase from him certain real estate in the city of Des Moines known as the “Zoo Park,” and had agreed to pay him the sum of $20,000 in money and real estate, and to issue him bonds of the corporation to be thereafter formed in the sum of $40,000 secured by mortgage upon the real estate. The parties composing this syndicate thereafter organized the corporation, and issued to themselves $120,000 of the stock, and also issued $40,000 in bonds, which were secured by mortgage or trust deed upon the real estate which they delivered to Mann in payment of the purchase price of the real estate, in accordance with the agreement theretofore made. The stock so issued contained this provision: “Subject to the articles of incorporation of the company and to the terms and conditions printed upon the back thereof,” and upon the back of the certificate was indorsed: “This stock is fully paid up, but may be assessed at such times and in such amounts as may be necessary to meet the several payments of principal and interest upon the mortgage incumbrance upon the land and personal property owned by the company as such payments become due; said mortgage incumbrance being for the sum of $40,000. * * * It may also be assessed for the purpose of improving said property, and for other necessary expenses of the company. All such assessments for purposes other than the payment of the mortgage incumbrance and interest above referred to not to exceed in the aggregate 10 per cent. of the capital stock outstanding, and no such assessments shall be made oftener than once in sixty days, and no one assessment shall exceed in amount 2 per cent. of the capital stock outstanding.” Assessments were made from time to time for the purpose of making improvements and incidental expenses, and for a part of the principal of the mortgage debt, all of which had been paid by the owners of the stock in controversy. Defendant was not one of the promoters or original incorporators. He purchased his stock on the 31st day of March, 1891, from one H. L. Chaffee, Chaffee being represented by one E. B. Whitcomb. On the 15th day of September, 1890, the stockholders of the corporation made the following amendment to its by-laws: “That the by-laws be amended by striking out article 10 entire, and the following article be hereby enacted instead: ‘The board of directors shall have power to assess the capital stock of this corporation at such times and in such amounts as may be necessary to meet the annual payments of principal and interest upon all mortgage incumbrance upon the lands and personal property of the company as such payments become due. It shall also have power to assess said capital stock for the purpose of improving said property, and for other necessary expenses of the company. The total assessments above referred to shall not exceed in the aggregate the unpaid installments of the capital stock outstanding. Such assessments for purposes other than the payment of the mortgage incumbrance and interest above referred to shall not be made oftener than once in sixty days, and no one assessment shall exceed in amount 2 per cent. of the capital stock outstanding.’ ” On the 15th day of August, 1891, the corporation issued a new series of bonds, and the plaintiffs became the owners of certain thereof. Afterwards, and on March 22, 1894, they brought suit upon these obligations and obtained judgment...