Court Opinion

ID: 7895310
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:52:08.281469+00
Date Added: 2024-06-11T16:32:03.605614
License: Public Domain

Grason, J.,
delivered the opinion of the Court.
This cause was argued and decided at April Term, 1878, and upon motion of the appellee was ordered to be. re-argued on notes, and the case has been again carefully considered. The suit was instituted by the appellee, a stockholder and creditor of the Baltimore County Marble Company of Baltimore County, against the appellant, also a stockholder in the same company, for the recovery, under sec. 52 of Art. 26 of the Code, of the amount of a judgment, which the appellee had recovered against the corporation in the Circuit Court for Baltimore County. The declaration, as originally filed, contained two counts, the second of which was held insufficient on demurrer. An amended narr. containing a single count was then *510filed, to which, there was also a demurrer, which was overruled. The defendant then filed twenty-two pleas, to the fourteenth, fifteenth, twentieth and twenty-second of which the plaintiff demurred, and the demurrer was sustained. During the «progress of the trial nine exceptions were taken hy the defendant, the last of which was to the granting of the appellee’s prayers, and to the rejection of all the prayers offered hy the appellant, except the thirteenth which was conceded, and the sixth and eleventh which were withdrawn. We shall consider, these exceptions in the order in which they were taken; and first the demurrer. This case was before this Court at the April Term, 1877, when the judgment was reversed because the declaration was defective in not alleging that the plaintiff had fully paid his subscription to ten shares of the capital stock of the corporation held hy him, and further, because it did not charge that the defendant was a stockholder at the time the debt to the plaintiff was incurred hy the corporation. The declaration in this case contains both allegations, and is in all other respects formal and sufficient, and the demurrer was, therefore, properly overruled. The counsel for the appellant admitted, at the argument of this cause, that the demurrer to his fourteenth, fifteenth and twenty-second pleas was .well taken; hut contended that his twentieth plea was good, and that the demurrer to it ought not to have been sustained.
The twentieth plea was pleaded as a bar to the action upon the ground as therein alleged, that the appellee as President of the Marble Company did not keep a full, fair and correct account of the transactions of the corporation as required hy the fifth section of the Act, and because the appellee was President during the time the debt was contracted hy the corporation. Section 5 of the Act of 1868, ch. 471, requires that the President and directors shall keep, “full, fair and correct accounts of their transac*511tions,” and shall annually prepare “a full and true statement of the affairs of the corporation, which shall he certified to hy the President and Secretary, and submitted at the annual meeting of' the stockholders.” Admitting for the sake of the argument, that the failure to comply with the provisions of the fifth section was owing entirely to the conduct of the President of the corporation, the appellee in this case, it could not have the effect of releasing either the corporation, or its stockholders from the liability which the law had imposed upon them, for the debts which it had contracted.
The facts stated in the plea may have been literally true, and yet they did not constitute a bar to the plaintiff's recovery. But the plea alleges that the plaintiff refused to keep an account and make the certificate, while the law imposes that duty, not on the plaintiff, hut upon the President and Directors, and without the co-operation of the directors, the President of the corporation had no power or authority to perform either of the duties required hy the fifth section.
We are of opinion that the demurrer to the twentieth plea, was, therefore, properly sustained.
The first exception was taken to the refusal of the Superior Court to postpone the trial of the cause, on the ground that thirty days notice had not been given before trial, as provided hy sec. 16 of Art. 5 of the Code. That section relates to cases in which a writ of procedendo is awarded hy the Court of Appeals. Under the eighth rule of that Court, passed under authority given hy the Constitution no procedendo now goes, but when the judgment appealed from is reversed, a new trial is awarded, and the case is sent hack and goes upon the trial docket of the Court below.
This case was sent hack under said rule to the Superior Court of Baltimore City, was placed upon the trial docket of that Court, was on the 10th day of September marked *512for trial at the regular call of the trial docket, and was reached on the 80th day of November following, and was then called for trial. This was ample notice to the defendant, and the Court below was right in requiring the trial to be proceeded with. We find no error in the ruling of the Court below in the second exception. The demand for a bill of particulars was made after a former demand had been complied with, which compliance the Court helow decided was a satisfaction of the demand, and after the trial had begun. Even if no former demand had heen made and satisfied, this demand came too late under the rules of that Court. The third exception was taken to the admission in evidence of the certificate of incorporation. This exception was abandoned at the argument, and we could not notice it further than to say, that the certificate is in conformity with the requirements of the law, and was clearly admissible as evidence.
The fourth exception was taken to the admission in evidence of the record of the judgment recovered by the appellee against the Marble Company. The only ground of objection urged against its admissibility is, that the record of the judgment shows that it was recovered by Frederick Fickey, Jr., while the amended narr. in -this case names the plaintiff as Frederick Fickey. It was contended that this is such a variance as to make the record inadmissible. It is nowhere alleged or proved that there are two persons bearing the name of Frederick Fickey, so that the addition of “Jr.” was necessary to distinguish the one from the other. It has heen held in various cases, that “ Jr.” is no part of a man’s name. We refer only to Headley vs. Shaw, 39 Illinois Reps., 354; State vs. Weave, 38 N. H, 314; Gobb vs. Lucas, 15 Pick., 7. The record of the judgment was properly admitted. From what we have said with respect to this exception, it necessarily follows that the first and second prayers of the appellant were rightly refused. The *513appellee then proved that the corporation was in existence on the 11th day of November, 1870, and that he was present and presided; that he kept no record of the proceedings, hut supposed that Miller, the secretary did; had asked Miller for it, who could not find it; had inquired for it, and was told that it was lost. That all the incorporators and stockholders were at the meeting, which was called a few days afterwards, for the purpose of organization, and that Miller was there as secretary. Miller being then called by the Court, testified that he was not at that meeting, and was not then secretary; that afterwards he was secretary, but that no hooks ever came into his hands, hut that the hooks were kept from him, and was sure they were kept by Fickey. That the hooks contain his, Miller’s writing, hut that he saw no hooks of the organization, and that he did not know of any record. Fickey then testified that he knew of no record of the organization, and did not know that one was kept. Proof was then offered by him that a meeting was called for the purpose of organization and considering Holloway’s proposition, and that Holloway proposed to sell the property, that he, Fickey, was elected President, and was directed to issue 440 shares of full paid up stock, in consideration of Holloway’s assigning all his interest in the quarry in Baltimore County, which was accordingly done. This proof was objected to as inadmissible, hut the Court overruled the objection, and admitted the evidence, and this ruling forms the subject of the fifth exception. It appears that either no written evidence of organization ever existed, or that if it did, the writing had been lost and could not he found, and in this state of the case, the evidence objected to was clearly admissible, and the ruling of the Court below, on this exception, is affirmed. The appellee further proved that the subscribers to the stock signed no paper; that the stock hook from which the certificates were issued, was *514the only writing kept in relation to stock. The hook from which the certificates were issued, was then handed •to the witness, who read from it entries, showing that fifty shares of stock had heen issued to the appellant; and then further testified that said hook showed the number of certificates of shares issued, and to whom ; that the appellant paid five hundred dollars on account of the shares issued to him, that the balance remained unpaid, and payment thereof had heen frequently demanded. That witness could not say that the appellant was the owner of the stock at the time he was testifying, hut that he was owner all the time the advances were made by the witness. That on January 30th, witness became the owner of ten shares of the stock, which had been issued to Holloway, and then read the entry in the stock hook to show that he had thus become the owner of the ten shares of said stock. The appellant objected to the admission of all said evidence, beginning with the words, “he was owner,” hut the evidence was admitted and he took his sixth exception to this ruling. This evidence was most material to the appellee’s recovery, which depended upon his proving that he was the owner of shares of stock fully paid up at the time he made the advances to the corporation, and also that the appellant at that time was the owner of stock which had not heen fully paid for. We cannot perceive in what manner these facts could have heen proved, except by the production of the stock hook and the parol evidence offered in connection therewith, we can discover no objection to its admissibility. At the time Holloway offered his property in payment of subscription to stock, and the corporation agreed to take it, it appears from the record, that there was an equity suit pending in the Circuit Court for Baltimore County, in which Denmead and Davis, trading as Denmead & Son, mortgagees, had sold the quarry property in Baltimore County to Holloway, and that under the agreement *515between the parties to the suit and the Marhle Company, the latter was substituted as the purchaser in the place of Holloway. The record of said equity case was offered in ■evidence, for the purpose of showing a transfer of Holloway’s interest in the quarry property to the Marble Company, certain receipts for payments made on account of the purchase were also offered in evidence, and were objected to by the appellant. The ohjections were overruled, and the record and receipts admitted, and these rulings form the subjects of the seventh and eighth exceptions respectively. We cannot discover any valid objection to the proofs offered in these exceptions, and the rulings of the Court below upon them are affirmed. At the close of the evidence, the appellee presented four prayers, which were granted, and the appellant seventeen, of which the thirteenth was conceded, the sixth and eleventh were withdrawn, and all the others were rejected, •and to the granting of the appellee’s prayers, and the refusal of those offered by the appellant, the latter took his ninth exception. The appellee’s first prayer was specially ■excepted to, on the ground that there was no evidence tending to prove that there was any agreement that the Marble Company would accept from Holloway, all his interest in certain stone quarries in Baltimore County, and pay all encumbrances thereon held by Denmead & Son. The receipts of payment to Denmead & Son from the Marble Company, on account of the mortgage executed by Holloway and John M. Dennison were in evidence. This mortgage was the foundation of the equity proceedings, the record of which was offered in evidence, and that record proved that the Marble Company was substituted in place of Holloway as the purchaser of the premises thus mortgaged, and the receipts show that payments were made by the corporation on account of the mortgage, and the proof offered by the appellee, proved that 440 shares of paid up stock of the corporation was issued to Holloway, as the considera*516tion of his agreeing that the corporation should he substituted as purchaser of the mortgaged premises. All this proof was in the case and tended to prove that there was an agreement that the Marble Company would accept from Holloway, all his interest in certain stone quarries in Baltimore County, and pay all encumbrances thereon, held by Denmead & Son. There was, therefore, proof to sustain this prayer. But it was contended that the appellee was not entitled to recover, because the president and directors of the corporation had not kept books, “ so as to show at all times fully what property was received for said stock, at what value and the number of shares of the capital stock issued for the same,” as required by the 51th section of the Act of'1868. From a careful examination of sections 56 and 51 of the Act, we think it clear that this provision of the latter section is directory merely, and not essential to the validity of a subscription to the capital stock, payable in property. In such a case, the owner of the property conveys the property, and the corporation issues the stock to him, and the contract thus becomes an executed contract. The failure of the corporation to keep a book, showing the particulars of such a transaction cannot invalidate it. When the contract is executed by a transfer of the property and the issue of the stock, the corporation is estopped from setting up the invalidity of the contract. Oil Creek and Allegany R. R. Co. vs. Penn. Transportation Co., 83 Penna. Reps., 160; East N. G. and Jamaica R. R. Co. vs. Lightall, 5 Abb. Pr. N. S., 458; Smith vs. Sheely, 12 Wall., 358.
It may be further remarked that it appears that the. appellant was one of the directors or managers of the corporation during the time these transactions took place, and is therefore as much in default in not having the books kept, as directed by the 51th section, as is the appellee. The appellee’s four prayers put the law of the case correctly and fairly to the jury, and submitted to them all the *517facts necessary to be found by them, to establish the appellee’s right to recover, and they were properly granted. The appellant’s first and second prayers have been disposed of by what we have said with respect to the fourth exception. His third prayer asks an instruction that the evidence offered to show that the appellee held stock paid for by land or other property, is not legally sufficient to exempt him from liability for the debts of the corporation at the suit of a creditor of the corporation. We have already stated that, if the stock held by the appellee was part of the same stock which had been issued to Holloway in consideration of his interest in the stone quarries which had been transferred to the corporation, then he was liable, as stockholder, to the creditors of the corporation. The appellant’s third prayer is also in direct conflict with the appellee’s prayers, which, we have stated, were properly granted. His fourth prayer relies upon the fact that there was no averment in the narr. to support the proof offered tending to show that the ten shares of stock held by the appellee had been paid for by land or other property. The narr. does allege that these ten shares had been fully paid for and it was not necessary to allege in what manner they had been paid for. The mode of payment Was properly to be shown by the proof. This prayer was therefore properly rejected. The fifth prayer was also properly rejected because it seeks to exclude from the consideration of the jury evidence, which, in considering the exceptions to evidence, we have said was properly admissible. The sixth prayer having been withdrawn is omitted from the record, and is not therefore before us for consideration. The seventh prayer is based upon the evidence of Thomas M. Green, who testified that he had bought one hundred and forty shares of the stock of the Marble Company from the appellee, while the latter testified that he had sold but one hundred shares, but that all the shares which he did sell to Green had been held by him only as collateral *518security for a debt due him by Robinson, and there was no> evidence whatever offered tending to show that the shares so transferred to Green, were not so held. Eor this reason-the seventh prayer was also rightly refused. The eighth prayer was properly rejected for the same reasons we have given to show that the evidence in the fifth exception was admissible. The ninth prayer was rightly refused because under the Act of 1868, chap. 471, sec. 56, subscriptions te stock may be paid in land or' other property. The tenth prayer was also rightly rejected, because it assumes a statement made by a party is conclusive even as against bis positive evidence. The prayer, numbered eleven and a half, states as a proposition of law that the agreement to be substituted as purchaser, in consideration of the payment of the purchase money of $10,000 or thereabouts, and the issual of stock to the extent of 440 shares could not by any agreement or arrangement of stockholders, be taken to be worth the value of 440 shares of full paid stock, so as to constitute payment in full under the personal liability clause of the Act, because the actual value of the interest sold at public auction is shown to have been but ten thousand dollars. To this it may be answered that Holloway had paid part of the purchase money at the time the corporation was substituted as purchaser, and also, that the stockholders may have supposed that Holloway’s interests in the quarry property were worth much more than ten thousand dollars. But whether this be so or not, after issuing the stock and becoming liable to pay the purchase money and receiving the property from Holloway, neither the corporation nor a stockholder can be permitted to escape responsibility by showing that more has been paid for the property than it were actually worth. This prayer was therefore properly rejected. The twelfth prayer was rightly refused. There is not only evidence of an agreement to give Holloway 440 shares of stock for being substituted as purchaser of the property, but the *519evidence shows that the agreement was actually executed hy issuing that number of shares of stock to him. The fourteenth prayer was also properly refused for the reasons we have assigned for the admission of the record of the equity proceedings, when considering the eighth exception.
(Decided 17th July, 1879.)
It was not necessary for the appellee to produce in evidence the lease under which Holloway held the quarry property. It is to he presumed that the stockholders of the Marble Company informed themselves, before purchasing, as to the interests in the property held hy Holloway as purchaser at the sale of the mortgaged premises, and in this suit it was not incumbent on the appellee to show by proof what those interests were. The fifteenth prayer was therefore rightly rejected. The sixteenth prayer assumes the fact that ten shares of stock were issued to the appellee when that question should have been submitted to the jury. Besides this there was no evidence offered tending to prove that said shares were original stock; the only evidence in regard to said shares being that they were part of the stock issued to Holloway in consideration for his interest in the land transferred to the corporation. With respect to the seventeenth prayer it is only necessary to say that there is no proof that any “other property ” than Holloway’s interest in the land was received hy the stockholders in payment of his subscription to the 440 shares of stock issued to him, and therefore this prayer was properly refused. There was also a motion in arrest of judgment filed in the Superior Court, which was overruled. Ho point was made in the appellant’s brief or argument in this Court, nor does it appear upon what ground it was based, and we can find no valid ground for it in the record. Finding no error in the rulings of the Superior Court in the various exceptions set out in the record, the judgment appealed from will he affirmed.

Judgment affirmed.