Court Opinion

ID: 6678848
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:18:45.621554+00
Date Added: 2024-06-11T16:00:47.003734
License: Public Domain

The opinion of the Court was delivered by
Mr. Chiff Justice McIver.
The plaintiff, suing in behalf of herself and all other creditors of the Cherokee Medicine Company who shall in due time come into and seek relief by this action and contribute to the expense thereof, practically for the purpose of recovering judgment against the stockholders in said company to the extent of their unpaid subscriptions to the stock, the said company being alleged to be insolvent, and the execution issued to enforce a judgment recovered by plaintiff against said company having been returned nulla bona, an order was granted referring all the issues, both of law and fact, to the master for his determination; and also calling in all the creditors of the said company to prove their claims. Under this order, the master called in the creditors, took the testimony, and made his report, which is set out in the “Case.” To this report, the defendant, T. A. Honour, jr., alone excepted, and the case was heard by his Honor, Judge Benet, who rendered judgment, which, so far as the questions raised by this appeal are concerned, simply confirmed the report of the master, making it the judgment of the Court. From this judgment the defendant, T. A. Hqnour, jr., alone appeals, and hence the only question for us to determine is, whether there is any error in the judgment, so far as the rights of T. A. Honour, jr., are concerned — the other matters mentioned in the report of the master and in the judgment of the Circuit Judge not being before us for consideration.
The report of the master, which should be incorporated in the report of this case, so fully and clearly sets forth the facts upon which this controversy depends as to supersede the necessity of any further statement, except that it appears to be a conceded fact that the defendant, T. A. Honour, jr., and one Charles H. Hicks were originally engaged in the business of compounding and selling certain patent medicines, according to formulas owned by them, and that when the defendant company was formed, they sold out to *223said company, and in consideration thereof they each received a paid up- certificate for ten shares of the capital stock of said company, and they each subscribed for two shares of such stock, to be paid for as the other stockholders who signed the subscription list. The master found as matter of fact that some time after the stock had been subscribed and the company had been organized, Hicks and Honour erased their names from the subscription list, which originally showed that each of those persons had subscribed for two shares, and that “these erasures were made without the knowledge or consent of the corporation, or any of its authorized agents or officers, and without the knowledge or consent of the defendants in this action” (no doubt meaning the other defendants in this action). And he found as matter of law that these unauthorized alterations in the contract, evidenced by the subscription list, being material, deprived the said Hicks and Honour of the right to rely upon such contract, so altered in a material respect, to hold the other defendants liable for the claims which they had presented, under the call for creditors, against the said company.
The grounds of appeal presented by the defendant, T. A. Honour, jr., seem to be based, in part, at least, upon what we consider an entire misconception of what we understand to have been the finding of the master, affirmed by the Circuit Judge. For this reason it is necessary that a copy of these grounds should be embraced in the report of this case. Appellant, in these grounds, assumes, erroneously, as we think, that the master found that Honour had forfeited his right to the ten paid up shares, by reason of his erasure of his name from the subscription list. What effect, if any, such erasure may have had upon the rights of Honour to his ten paid up shares, was not a question before the master, and, so far as we can perceive, he made no finding whatever as to that matter. It will be observed that the action was not brought for the purpose of winding up the affairs of the corporation, and adjusting the rights and *224equities of the several stockholders as amongst themselves; but, on the contrary, the action was brought by a creditor of the corporation, into which all the other creditors were invited to come, for the purpose of requiring such of the stockholders as had not paid up their subscriptions, to pay the same for the relief of the creditors of the corporation. The defendant, Honour, amongst others, came in under the call for creditors, and undertook to establish his claim against the corporation, and to make such of the stockholders as had not paid up their stock, contribute to the payment of his claim. But as the master held that such claim on the part of Honour was based solely upon the contract evidenced by the subscription list which Honour had altered, without authority, in a material respect, to the prejudice of the other stockholders, by erasing his name therefrom, he had thereby destroyed his right to make any such claim against the other stockholders. So that, as it seems to us, this appeal, practically, raises but two questions: 1st, whether the master erred in finding that Honour had erased his name from the subscription list without authority, and whether the Circuit Judge erred in confirming such finding; 2d, whether this unauthorized alteration in the contract, upon which Honour’s claim was based, deprived him of the right to rely upon such contract.
1 The first is a pure question of fact; and, as we think, the testimony was amply sufficient to sustain the finding of the master, there was no error on the part of the Circuit Judge in affirming such finding.
2 As to the second question, we agree entirely with the master and the Circuit Judge. The proposition that one who bases his claim upon a contract, which he has seen fit to alter in a material respect, without authority, cannot sustain such claim, is too well settled to need the citation of any other authority. Here the appellant must, necessarily, base his claim to recover, as against the other stockholders, upon the contract evidenced by the subscription list; and if he chose to alter that con*225tract in a material respect, by erasing his name therefrom, without authority, he has thereby destroyed the foundation of his claim.
The judgment of this Court is, that the judgment of the Circuit Court be affirmed. ¡