Case ID: iowa_81/html/0674-01.html
Source: Caselaw Access Project
Author: {"author": "RobiwsoN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Carey, Appellant, v. Des Moines Co-operative Coal & Mining Company, Appellee.
    Corporations : contracts : liabilities. An unincorporated coal and mining company, having become insolvent, and most of its property having been seized by attaching creditors, it was agreed, at a meeting of its members, that they organize a stock company for the conduct of the same business, and that it should assume and pay the debts of the old company. It'was further agreed, at such meeting, that the plaintiff, a member of the old company, should receive, in consideration of a part of its indebtedness to him, paid-up stock in the proposed corporation. Such corporation was organized, but it received no property of value from the old company, and it never ratified the above agreements of that company. Held, that the old company’s promise of stock to the plaintiff could not be enforced against the new company, nor was it liable for the balance of his account against the old company, because of the latter’s agreements.
    
      Appeal from Polk District Court. — How. W. F. CONKAD, Judge.
    Monday, January 26, 1891.
    Action for an accounting, to compel defendant to issue a certificate for stock, and to recover a balance alleged to be due. ■ There was a trial by the court, and a judgment in favor of defendant for costs. The plaintiff appeals.
    
      C. P. Holmes, for appellant.
    
      R. N. Baylies, for appellee.
   RobiwsoN, J.

In September, 1886, the plaintiff and nine other persons associated themselves together, under the name of the United Coal Company, for the purpose, of mining and selling coal. The company was not incorporated, but it was agreed that, if certain land for which they proposed to procure a lease should prove to be good mining property, and the enterprise should seem to be successful, the members of the company would incorporate on or before the first day of June, 1887. Each member of the United Coal Company was to contribute to the capital as much as each of the others contributed, and was to share equally with the others in its profits. All the members were, or claimed to be, practical coal miners, and each was to be employed in the mines and business of the company, and was to have an interest in its property and business in proportion to the amount he contributed to its capital, including wages earned but not drawn. The company procured a lease of Mrs. L. Gf. Bleckman, as proposed, when the organization was effected, for certain lands, including an old coal mine and its appurtenances, for a term of eight months and five days, ending on the first day of June, 1887. The property leased included the mine, shaft, fixtures, buildings, cars and machinery. The lease provided for the payment each month of a royalty on the coal mined ; for a forfeiture of the lease upon a failure to comply with any of its provisions, and for a renewal of the lease to such corporation as the members of the company might form, or to which they should assign their interest, for the term of twenty years. After procuring the lease, the' company removed the water from the old mine, cleaned it out, and put it in order, and commenced taking out and selling coal. It operated the mine until about the first of March, 1887 ; the plaintiff acting as treasurer, and rendering such other service as was needed. He purchased scales, horses, harness, timber and other articles, including tools needed in the opening and operating of the mine. On the first of March, 1887, plaintiff had paid for the company, in addition to what he had received, the sum of six hundred and fourteen dollars and forty cents, besides eighty-one dollars he had paid on account of stock. The company was also indebted to others, and a writ of attachment was levied upon some of its personal property used at the mine. After some preliminary negotiations, several members of-the United Coal Company adopted articles of incorporation, dated March 4, 1887, which, were to take effect on the seventh day of that month; and the defendant was thus organized. Its object was to deal in coal lands, and to prospect for, mine and sell coal. The new company procured a new lease from Mrs. Bleckman for the property originally leased to the old company, and commenced the business for which it was organized.

The plaintiff contends that, at a meeting of the members of the old company, held on the third day of March, 1887, and at other times prior to that date, it was agreed that the company to be organized should assume and pay the debts of the United Coal Company, and that a certificate for paid-up shares of stock in the new company to the amount of five hundred dollars should be issued to plaintiff in payment of that amount of his claim against the old company, and that he is now entitled to such a certificate and to a judgment, in addition, for the sum of one hundred and ninety-five dollars and forty cents. There is much conflict in the evidence as to what was said and proposed, pending the organization of the new company, but we think a fair preponderance of the evidence shows that propositions of the nature claimed by plaintiff were ma,de, and that at one time it was understood by the parties in interest that they would be adopted, and the debts of the old company be paid by the one to be organized. But it appears that Mrs, Bleckman declared a forfeiture of the old lease for non-compliance with its provisions by the United Coal Company before the defendant was organized : that she executed a lease to defendant for the same property, but on different terms; that the new lease required a cash payment of three hundred dollars for the shaft, which was not required by the old lease, and which was paid by defendant; and that defendant has never in any manner ratified the alleged agreement of members of the old company to assume and pay its debts, and to issue a certificate of paid-up stock to plaintiff. We do not find that defendant has received much, if any, benefit from the property of the old company. The lease it now holds was not obtained by virtue of "the old lease, but was the result' of a new agreement made by the defendant with Mrs.' Bleckman. Tlie personal property was in large part, if not wholly, seized and sold by a creditor of the old company. The mine and appurtenances were, doubtless, in much better condition, because of the money and labor expended upon them by the old company ; but that company had forfeited all right to them, and, so far as the record discloses, Mrs. Bleckman may have realized all benefits which could be derived from the improvements in the increased price which she exacted of defendant for the new lease. However that may be, plaintiff has failed to show any obligation on the part of defendant to execute to him any certificate for stock, or to pay him anything ■on account of disbursements he has made.

The judgment of the district court is aeeirmed.