Z. C. Miles Co. v. Robertson

• Decision Date: 12 December 1892
• Citation: 31 P. 970,5 Wash. 352
• Parties: Z. C. MILES CO. v. ROBERTSON.
• Court: Washington Supreme Court

31 P. 970

5 Wash. 352

Z. C. MILES CO. v. ROBERTSON.

Supreme Court of Washington

December 12, 1892

Appeal from superior court, King county; I. J. LICHTENBERG, Judge.

Action by the Z. C. Miles Company, a corporation, against W. A Robertson, on a promissory note, and to foreclose a pledgee's lien. From a judgment for plaintiff, defendant appeals. Affirmed.

Stratton, Lewis & Gilman, for appellant.

Wiley, Scott & Bostwick, for respondent.

DUNBAR J.

This action was brought by respondent against appellant to recover the sum of $5,000, with interest, on a promissory note for that amount made by appellant, and payable to the order of respondent, and also to foreclose a pledgee's lien upon 50 shares of the capital stock of the Z. C. Miles Company which respondent claims was pledged with it as collateral security for the payment of said note. Judgment was rendered in accordance with the prayer of the complaint.

This is, in some respects, a peculiar case. It seems that, in the summer of 1889, Z. C. Miles, one E. C. Callahan, representing the Bridge & Beach Company, appellant, (Robertson,) and others formed the plaintiff corporation, with a capital stock of $50,000, of which Miles subscribed $30,000, Callahan $10,000, Robertson $5,000, and the balance of the stock was taken in various amounts by the other members of the corporation. For the appellant's subscription to the capital stock, he gave his note to the corporation for $5,000, bearing interest at 6 per cent. per annum, payable one year after date, and gave his stock as collateral security for the payment of the note. On the 31st day of October, 1890, a dividend was declared of 36 per cent. Appellant contends that this was a dividend on the profits and respondent that it was a dividend on the capital stock; but that, it seems to us, is not a material question here. The dividend was declared, and at that time Miles and Callahan, for reasons that were no doubt satisfactory to themselves, proposed to make Robertson a present of his stock, to the extent, at least, of the face of the note which he had pledged as security; and the corporation thereupon gave up to Robertson the $5,000 note, he paying the accrued interest, and released him from its payment, and in lieu thereof, at the request of Miles and Callahan, charged Miles on their books with $4,000, and Callahan with $1,000. This, it is argued by appellant, constituted a complete novation; and there can be no question, we think, of the correctness of that proposition. The debt was assumed by Miles and Callahan. The corporation consented to release Robertson, and to look to Miles and Callahan for the payment of the debt; and, after that was done, Robertson owed the corporation nothing, so far as the note was concerned, and his stock was free of any incumbrance. In the month of March following, however, at a meeting of the stockholders, it was voted to turn the dividend back into the surplus; and at that meeting, by Robertson's consent, Miles and Callahan were credited back with the respective sums of $4,000 and $1,000, with which they had been charged October 31st, and Robertson executed a new...