Court Opinion

ID: 8059930
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:37:05.368799+00
Date Added: 2024-06-11T16:38:01.039213
License: Public Domain

The opinion of the court was delivered by
Van Syckel, J.
This is an application for a mandamus to the president, treasurer' and secretary of the American District Telegraph Company of Hoboken, to issue one hundred and fifty shares of the capital stock of said company to the relators.
At a meeting of the stockholders of the company, held August 28th, 1884, the following resolutions were passed :
Resolved, That in consideration of valuable services, and in further consideration of the sum of $8.33 per share, to be paid by said incorporators and subscribers, certificates of stock of this company, of the par value of $25 each, be issued to each of said incorporators and subscribers to date, each *88share of said stock to be full paid and unassessable, and to be endorsed for property purchased.
Whereas, Horace H. Farrier, Theo. L. Parker, Robert Morton and J. C. Chamberlin have devoted a great deal of labor and expense in organizing and obtaining valuable franchises for this company; and whereas, it is fitting and proper that the above-named parties should be compensated; therefore,
Resolved,, That one hundred and fifty shares of the stock of this company be and are hereby directed to be issued and der livered to them for their services aforesaid, the said stock to be full paid and unassessable, for property purchased.
The relators base their application upon the latter resolution.
In the first place the action sought to be enforced is not free from a taint of illegality, if not of fraud.
The subscribers paid only $8.33 per share for the stock, and yet, by the first resolution, certificates of the par value of $25 each were to be issued to them, each share to be full paid and unassessable, and to be endorsed for property purchased.
Thus these certificates of stock were to contain the false assertion that $25 for each share had been paid by the incorporator by the transfer of property to the company.
The effect of this would be, if the real transaction was not exposed, to shield the stockholders from further assessment on their shares, if it subsequently became necessary, to satisfy the claims of creditors.
The second resolution declares that the relators had rendered the company valuable services, for which they should be paid, but there is nothing to show that an account had been stated between them, or that the relators had a claim equal to the sum which would represent one hundred and fifty shares of stock at par.
The resolution, without specifying the amount due to the relators, directs a certificate for one hundred and fifty shares of the capital stock to be issued to them, to be endorsed like the other shares, full paid and unassessable for property purchased.
I think the fair presumption from this action of the stockholders is that the indebtedness to the relators did not exceed *89the value of one hundred and fifty shares, estimated at $8.33 per share.
At all events the transaction is not so free from the appearance of wrong that the court should lend its sanction to the consummation of it.
Aside from this objection the relators have an adequate remedy in a suit for damages, and are not entitled to a writ of mandamus in such case. Goldbraith v. Building Association, 14 Vroom 389.
The mandamus is refused.