Court Opinion

ID: 6273956
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:53:52.228221+00
Date Added: 2024-06-11T08:59:59.856676
License: Public Domain

Opinion by
William W. Porter, J.,
Judgment was entered in this case for want of sufficient affidavit of defense. -The duty of this court is to determine whether the plaintiff was entitled to such judgment. We have given the statement of claim critical study. From it, even as supplemented by the argument, we are unable to determine upon what right the plaintiff’s claim is founded. The action is based upon writings, copies of which are exhibited and which will doubtless appear in the report of the case. They are in-artificially drawn and their interpretation is a matter of no little difficulty. The statement of claim avers that the defendant subscribed to certain preliminary expenses (prior to incorporation of the plaintiff company) in the taking out of patents and the manufacturing of certain electric motors as invented by one Arnold of, Switzerland, in accordance with the subscription list and agreement appended. This subscription list provided for the contribution of $10,000 and was signed by the plaintiff with others whose names appear. The statement further avers that a sum in excess of the $10,000 was paid in and expended in the said preliminary expenses. It does not aver that these contributions were made by the parties signing the *414agreement with the defendant. It does not appear distinctly to whom the subscriptions were to be paid. It may be that Messrs. Gaylord and Schultz, representing, as the paper says, the proposed company, were to handle the fund for exploiting the patents. The statement then avers that the parties of the first part, probably meaning Gaylord and Schultz, took up an option with Arnold to purchase the patent rights.
The averment then follows that the plaintiff company was incorporated and became by various assignments the successor of Gaylord and Schultz (as well as of one Pfatischer and a corporation called the Pennsylvania Electric Engineer Company) and all other parties having any interests in the said patents as the owner of said patent rights and “ of said subscription.” Then follows an averment of tender by the plaintiff company of shares of stock to the defendant and the demand for the balance of the alleged unpaid subscription.
If the present action is based upon a subscription to the capital stock of the plaintiff company, it presents the case of a contract for the issuance of $3,000 of stock for a payment of $1,000. But the plaintiff in his argument explicitly denies that the action is based upon a subscription to the capital stock of the company, although in other branches of the argument he presents cases to our notice whose application is only possible to the case of a suit for a subscription to the stock of a proposed company. The judgment cannot be sustained upon an interpretation of the writings disavowed by the plaintiff himself.
The plaintiff, as has been seen, also alleges that the company has acquired the right to the unpaid subscription to the original fund, by assignment or succession. This is of course at variance with a claim based upon original subscription. Furthermore, the action is brought in the company’s own name. If the right is to be assumed to be derived from Gaylord and Schultz, it appears, both from the papers and from the averments of the statement, that they were not the sole owners of the interest in the patents, and no consideration is made to appear to support a promise to pay to them the subscription. No obligation is assumed on their part to procure the issuance and delivery of stock. The only apparent consideration for the subscription agreement is found in the mutual promises of all the subscribers. The cosubscribers might enforce contribu*415tion to the fund by the present defendant. To be successful in this, however, the burden would be upon them to show that their own contributions had been paid. If the plaintiff company has succeeded to their rights by assignment (which does not appear) the statement of claim is faulty in failing to aver that these cocontributors did in fact pay the amount of their subscriptions. Furthermore, if the suit is based upon a right derived from the cocontributors, the stock should have been tendered as in their right (if delivered to them for their interests in the patents) whereas the statement avers a tender of stock to the defendant by the company as if to hold him for a direct cash subscription to the stock of the company.
We are now determining only whether the plaintiff was entitled to his judgment and are not passing finally upon the effect of the writings exhibited. It is true that the affidavit of defense is weak in its averments. It does allege, however, that the terms of the agreement as to the time within which all of the subscriptions should be made and paid, in order to make the agreement obligatory, were violated, and it denies indebtedness to the plaintiff corporation in terms. These allegations, in view of the fact that the statement of claim is not sufficiently clear to entitle the plaintiff company to the entry of judgment, requires us to reverse the order of the court below.
The judgment is reversed and a procedendo is awarded, with leave to the plaintiff to amend.