Court Opinion

ID: 8867667
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:10:59.262425+00
Date Added: 2024-06-11T17:06:03.563570
License: Public Domain

WOODS, Circuit Judge,
after making the foregoing statement, •delivered the opinion of the court.
It is urged that the original bill should not have been dismissed, because the appellant was at least.entitled to a decree thereon determining the amount of his indebtedness for which the shares of stock were pledged, and fixing a time within which he might redeem. The question is not one of substance. On the cross bill the court entered a decree determining the debt, and fixing a time for redemption, and in addition authorized, in case of default of payment, a sale of the pledged shares in discharge of the debt. It was, of course, within the discretionary power of the court to permit the filing of the cross bill. The objection that the cross hill *787did not pray process, and that process was not issued and served, might be important, if the record did not show the presence and participation of the appellant in the hearing, which was upon both the original and the cross bill. While in the equity practice it is not necessary to state an exception or objection in order to preserve a question for consideration on appeal, still, “there is a large class of cases in which it has been held that objections not taken in' the court btílow will not be allowed to be taken in this court.” it was so said in Railroad Co. v. Bradleys, 10 Wall. 299, 19 L. Ed. 894; and there is not in this case, as there was in that, “such a combination of errors, and errors of so grave a character,” as to make the principle inapplicable. The cross hill in this case was put at issue by the order, made plainly for the convenience, and, it is not unfair to assume, with the silent acquiescence, of the appellant, that the original bill should stand as an answer thereto. The recital of the appearance of the parties at the hearing implies the voluntary act of the appellant; and, if he desired to object that a hearing upon the cross hill could not he had until process had been issued and served, it was bis duly then to make his position plain. The objection pointed out in the assignment of errors.is, not that process had not: issued, but that the court did not allow the appellant “any time nor enter any rule upon him to answer the said cross bill,” but without his consent ordered that his original bill stand as the answer. No other or different answer, except in matter of form, was possible, and manifestly no injury resulted from the peremptory action of the court. The objection that the cross bill contains no allegation of demand, at best, has only technical merit; and, in view of the denial of the debt and pledge contained in the original bill, an averment of demand was probably unnecessary.
The suggestions of variance between allegation and proof, and that the evidence does not sustain the finding in respect to the $44,-800 alleged to have been advanced by William M. Van Nortwiek to Troendle, are better founded. The allegation “that the said sum of $44,800 was, at the time the 1,120 shares of stock were so issued to the said Troendle in his name, advanced by the said William M. Van Nortwiek to the said Troendle at his request, so that the stock of said Troendle might be fully paid up stock,” means an advancement of cash, and of that there was no evidence whatever. That, however, is as much a matter of form as of substance, and of less importance than the lack of evidence that upon any consideration Troendle became indebted to William M. Van Nortwiek in a sum so large as that stated. The facts in brief are these: In the spring of 185)5 there were two corporations, — the Western Paper-Bag Company of Wisconsin, and the Kaukauna Paper Company of Wisconsin. The Van Nortwicks were interested in both companies, but Troendle only in the first-named company, of whose capital stock, amounting to $50,000, 113 of the entire 500 shares stood in his name, but were pledged to secure the payment of his notes, then held by William M. Van Nortwiek, for $2,800 and $4,000, given in part payment for the stock. Troendle then proposed, and William M. Van Nortwiek consented to join him in, the organization of a new cor*788poration, called tbe Western Paper-Bag Company of Illinois, to which, the assets of the two companies named should be transferred; and to that end William M. Van Nortwick purchased the interest of John S. Van Nortwick in the Kaukauna Paper Company, thereby becoming the sole owner of that property. For the purposes of the transfer the assets of the existing paper-bag company were estimated at $300,000,- and the Kaukauna property at $200,000, making $500,000, the amount of the capital stock of the new company, which was divided, into 5,000. shares, of $100 each. The capital stock of the original paper company being but $50,000, each share of stock therein entitled the holder to six shares of the new stock, and Troendle’s 112 shares'entitled him to 672 shares; but, in order to make his relative interest in the new company the same as in the old, William M. Van Nortwick consented to sell and to cause to be issued to him 448 additional shares, which, however, with the other 672 shares, with a blank indorsement by Troendle, he stipulated should remain in his possession as a collateral for Troendle’s indebtedness to him. There can be no question on these facts that there was a sale by Van Nortwick to Troendle of the 448 shares, but, aside from the variance from the allegation of money advanced, the question is at' what price was the sale made. The corporation having been just then organized, and the stock newly issued, under a statute which forbade the issue of stock by any corporation “except in consideration of money, or labor, or property estimated at its true money value, actually received by it, equal to the par value thereof” (Rev. St. Wis. § 1753), there might arise a presumption, in the absence of contrary evidence, that the stock was worth, and therefore was sold at, its par value; but on the evidence in this record it is impossible to believe that the assets of the two companies, which were turned over to the new company as the consideration for the issue of its stock, were estimated at their true money value. The estimated values, agreed upon in palpable evasion of the statute, were vastly exaggerated. There is in the record no direct evidence of those values, or, if there is such evidence, it has not been pointed out. There was no express agreement to pay the par value. Van Nortwick himself testified that no mention was made of the amount to be paid for the stock, and did not in direct terms assert even an understanding on his own part that par value was to be paid. He sold to his attorney about that time one hundred shares at sixty cents on the dollar, and that purchase the attorney testified Troendle induced him to make by fraudulent representations. In order to make the property of the original paper-bag company worth $300,000, “we had,” said a witness, “to value the patents, trade-marks, and privileges, as we called them, at $150,000”; and there has been no suggestion or evidence that the $50,000 of stock which represented the property of that company was ever worth more than par in the market, or in any transaction other than the organization of the new company. The only ground disclosed on which it is possible to believe that Troendle intended to promise to pay for the stock its nominal or par value is the patent fact that he was totally irresponsible, and, never intending to perform, may *789have been ready to buy at any price whatever could be obtained upon a promise to pay. But the case cannot be disposed of in that way, and the lack of proof in support of the cross bill cannot be supplied or compensated by the frequent references made to the very convincing proofs that Troendle, as a witness, was unworthy of belief. He is bound by no estoppel, and the decree on the cross bill must stand on its own merits, or must fall.
in so far as it was found and decreed that Troendle became indebted in the sum of $44,800 for the 448 additional shares of stock issued in his name, we deem the decree erroneous, and, there being in the record no satisfactory evidence of the value of that stock, the decree to that extent will be reversed, and the cause remanded, with directions to grant a reference to determine that value: provided, that within ten days the appellee may remit §20,000, and file with the clerk of this court proof of the remittitur, and thereupon the decree below shall stand affirmed. The costs of the appeal shall be paid by the appellant.