Court Opinion

ID: 5224135
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:40:51.843368+00
Date Added: 2024-06-11T08:27:33.668541
License: Public Domain

McLaughlin, J. (dissenting):
At the conclusion of the trial the conceded or undisputed facts did not justify a recovery by the plaintiff of the dividend Sought to be recovered- -on the theory that he was the owner and holder of ninety fully paid shares of defendant’s stock. The plaintiff was "vice-president of the defendant and chairman of its board of directors. One Welsh was also a vice-president and had authority to sell stock for the bank for the sum of $155 per share, $100 for par value, $50 for surplus and $5 for organization expenses. The plaintiff knew Welsh had this authority, and he also knew that the bank would not issue any fully paid stock except at $155 per share. Prior to May 1, 1907, he had purchased ten shares, for which he had paid that price. On the 1st of May, 1907, Welsh went to the plaintiff for the purpose of inducing him to purchase two hundred addi-' tional shares. This the plaintiff declined to do, but finally agreed to purchase ninety additional shares,, providing he could *151pay for the same by giving Welsh, personally, his promissory note. This Welsh agreed to, and thereupon plaintiff gave to him his promissory note, dated May 1, 1907, for $13,9.50, payable four months thereafter. The note was discounted by the defendant, and the proceeds, less the discount, placed to the credit of Welsh’s personal account, and he subsequently used the same, but for what purpose does not appear. On the 5th or 6th of May, 1907, he mailed to the plaintiff two certificates of stock, one for ninety shares issued to one McCartney, and one for forty-five shares issued to one Shinn, both indorsed in blank. On the face of each certificate was indorsed in red ink, “ One hundred dollars per share paid on this certificate,” and the plaintiff testified that he knew only $100 per share had been paid, and there still remained due $55 per share. Upon receipt of them he wrote Welsh acknowledging their receipt, calling attention to the fact that only $100 per share had been paid, and that he had only agreed to purchase ninety shares, which were to be fully paid, and asking why one hundred and thirty-five shares had been sent to him with only $100 per share paid. He also stated that he did not wish to hold the certificates; would not become responsible for the unpaid portion of the subscription price, and asked if he should return them to the president of the bank. A few days later- Welsh saw the plaintiff, and then stated that he had sent the one hundred and thirty-five shares so that a report could be made to the Comptroller of the Currency, and asked that plaintiff hold the same for a short time, and he would in the meantime sell forty-five shares, when he would have a certificate for ninety fully paid shares issued to him.' Plaintiff acquiesced in this arrangement and nothing further was done by him until some time in July following, when he took the certificates to Welsh and asked him to have a certificate for ninety fully paid shares issued in place thereof. This interview, it is true, took place at the bank, but so far as appears it was not participated in by anybody but Welsh; nor did it result in anything, plaintiff testifying that Welsh put him off, saying that the president of the bank was out of town, and on his return he would have the matter attended to. Plaintiff thereafter • did not offer to return the two certificates, nor did he make any further claim that he was *152entitled to have issued to him in place of them a certificate for ninety fully paid! shares until nearly three years later, when he commenced this action.
On the 30th of October, 1907, at a meeting of the board of directors of the bank, at which he presided, the following resolution was passed: “Resolved, That all persons holding certificates of stock in the Beaver National Bank, which are not fully paid as to capital and surplus, be notified that their certificate must be surrendered, in exchange for which interim receipts will be issued for the amount actually paid; and further, that notice be given that the unpaid surplus must be paid in within thirty days; and further, that certificates which are now outstanding and not wholly paid as to capital and surplus will not be -transferred upon the books of this institution until fully paid.” The plaintiff testified that he knew when the resolution was passed that it referred to the certificates for one hundred and thirty-five shares held by him, and that only $100 a share had been paid on the stock represented by such certificates. He did not object to the passage of' the resolution, nor did he make any claim that he was entitled to have a certificate for ninety shares fully paid issued in place of those which he held, or that he was not liable thereon for $55 per share; nor did he thereafter make any such claim until he commenced this action. When the resolution was passed he was obviously willing to be treated as the owner and holder of certificates for one hundred and thirty-five shares, and continued in the same frame of mind Until after the bank had passed into voluntary liquidation, and some two years later a dividend of $60 per share was declared on the fully paid stock. Then, for the first time after the interview with Welsh in 1907, he discovered that it would be for his interest to make the claim which he now does. Having thus held the certificates he ought to be treated as the owner of them and liable for the unpaid subscription, certainly in so far as he asserts a claim based on them for the dividend declared.
The prevailing opinion proceeds upon the theory that he is entitled to the dividend declared on the McCartney stock— ninety shares — but is not liable to the bank for the unpaid subscription thereon, and this is upon the theory that the. pro*153ceeds of the plaintiff’s note given to Welsh “were used to pay par on said one hundred and thirty-five shares.” It is conceded there is no direct testimony to this effect, but it is urged such fact is to be inferred. There is not only no testimony to that effect, but all of the evidence bearing on the subject is directly to the contrary, and that there is not more evidence on that subject is due to the objections of plaintiff’s counsel.
The action is predicated upon certificate No. 98 — that is, the one issued to McCartney for ninety shares. ■ The president of the bank testified that certificate No. 98 was issued to McCartney; that no one was present but McCartney when it was delivered to him, and that he paid $100 per share thereon. Defendant sought to show the entire transaction connected with the payment by McCartney and the delivery of the certificate to him, but its efforts were unavailing, plaintiff’s objections to the introduction of evidence bearing on that subject being sustained by the court. Under such circumstances it cannot “ be inferred that the proceeds of the plaintiff’s note were used to pay par on said one hundred and thirty-five shares,” to say nothing of the uncontradicted testimony of the president of the bank that the proceeds were credited to Welsh’s personal account and thereafter used by him.
It is true Welsh had authority, as already indicated, to sell stock for the bank at $155. That authority was to sell for cash. He had no authority to sell stock and take in payment a promissory note payable four months later to his own order. Nor did he have authority to agree with the plaintiff that if he would hold the one hundred and thirty-five shares for a short time he would sell forty-five of them and then have ninety fully paid shares issued to the plaintiff. The plaintiff’s loss, therefore, is not due to the breach of any agreement with the bank, but to the agreement made with Welsh, to whom he must look for his damage. The truth is that after the interview with Welsh in 1901, plaintiff was perfectly willing to be treated as the owner and holder of the 135 shares so long as there was any prospect of the stock increasing in value. It was not until after it appeared there would be a loss upon the stock that he claimed to the contrary. His claim was obviously made for the sole purpose of escaping the payment of the bal*154anee due and getting the dividend declared without any deduction therefrom. The trial court held that he was entitled to the dividend declared on the certificate for ninety shares, but there must be deducted therefrom $55 per share, the unpaid subscription, and. directed a verdict for the difference. This was fair to the plaintiff and fair to the other stockholders.
For these reasons I dissent from the opinion of Mr. Justice Miller and vote for an affirmance.
Judgment reversed, new trial ordered, costs to appellant to abide event.