Court Opinion

ID: 3286758
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:01:43.252502+00
Date Added: 2024-06-11T14:00:26.456140
License: Public Domain

I concur in the judgment. The action is brought to recover upon the statutory liability of defendant Phelps as a stockholder, to pay a proportionate part of money due on a promissory note executed by Wilmont Auto Livery, a corporation, in favor of Wilmont Auto Works and Garage Company, a corporation, which note passed by assignment through successive holders, until it came into the hands of the plaintiff. The intervener, claiming prior rights by assignment of the note, seeks to enforce the same obligation.
The note was dated July 12, 1928. At the trial, defendant admitted that on that day he was the owner of 249 shares of the 500 shares of subscribed stock of the maker of the note, and admitted his liability to the extent measured by that ownership. He claimed, however, and it appears to be the fact, that he did not become the owner of the additional 249 shares charged against him, until after the date of the note. He also contends that the note was given only as evidence of prior indebtedness, and that there is no evidence of the amount of stock owned by him at the time when the indebtedness was originally incurred. *Page 356
[1] The court should have found as a fact that the note was given in full payment of the prior obligation. This is required by the uncontradicted evidence of the two men who represented the corporations in the transaction, one of them being the defendant Phelps himself. (Reporter's Transcript, pp. 47 and 44.) [2] The decisions are to the effect that "Where there is no understanding that a note shall be accepted in payment and satisfaction of the indebtedness, the liability of the corporation upon the original indebtedness and the derivative liability of those who were stockholders at the time of the creation of the original indebtedness continues." (Tierney  Lawford, Inc., v. WilshireCafe Co., 209 Cal. 605, 608 [289 P. 621, 622].) Inferentially, it would appear that if there be such an understanding, whereby the first indebtedness is extinguished, then a new liability arises.
[3] The evidence also proves that the note, although dated July 12th, was not delivered until August, on a date subsequent to the transfer to the defendant of the aforesaid additional 249 shares. The defendant himself testified that these additional shares were transferred to him on August 1st, and that the note was actually made on or about August 1st and delivered "perhaps the day after".
[4] As between the intervener and the plaintiff, I think that the court was justified in finding in favor of the plaintiff. The note was assigned and delivered for value, and prior to maturity, to plaintiff's assignor and without notice of the adverse claim of the intervener. There is some evidence that, prior to such assignment, there had been an agreement between the intervener and the payee of the note by which agreement the payee had promised to assign and deliver the note to the intervener, but that the intervener never acquired possession of the note. Under these circumstances, the court was justified in holding that the note became the property of the plaintiff. This being so, the incidental stockholder's liability was a liability to the plaintiff and not to the intervener.
Houser, J., concurred. *Page 357