Court Opinion

ID: 6440873
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:16:54.758732+00
Date Added: 2024-06-11T15:52:34.183919
License: Public Domain

Wait, J.,
dissenting. I am unable to agree with the result of this opinion in so far as it affirms a decree requiring that the defendant Kingston’s stock in the corporation be delivered up for cancellation.
The master’s report, which has been confirmed, shows the following state of affairs with regard to the capital stock of the corporation. By the charter and articles of agreement one thousand shares of capital stock without par value was authorized to be issued; and, at the first meeting, the plaintiffs Black and Bailey and the defendant William E. Taft each subscribed for and received one hundred shares. Later at a meeting of the directors, held on July 30, 1930, it was voted to issue ten shares of the unissued stock to Kingston in payment for services which were fairly worth $100. A certificate for ten shares dated September 22, 1930, signed by the plaintiff Black as president and the defendant William E. Taft as treasurer, was delivered to Kingston. At a special meeting of stockholders on October 3, 1930, at which the plaintiffs Black and Bailey, the defendant William E. Taft and Kingston were present, and at which Kingston was recognized as a stockholder and was elected assistant clerk, it was voted to pay certain accounts on the books by issue of capital stock. These accounts were proper and showed $500 due each of Black, Bailey and Taft. In October, 1930, certificates for fifty shares each were issued to Black, Bailey and Taft. Black and Taft took theirs, *82but Bailey never took his. No certificates pursuant to G. L. c. 156, §§16 and 17, were filed with reference to the votes or issues of stock of July 30, 1930, September and October, 1930. On February 13, 1931, a special meeting of directors voted that the bonus accounts of $500 each established for Black, Bailey and Taft be liquidated by the issue of capital stock and that “a further amount of one hundred . . . dollars be issued to Richard F. Kingston in payment of extra services as rendered”; and, on February 14, 1931, a certificate of issue of capital stock pursuant to G. L. c. 156, § 16, was filed with the commissioner of corporations. It was dated February 13, 1931; recited the vote to issue one hundred sixty shares in addition to the three hundred originally issued, to be paid for $1,500 for expenses and $100 for services to be issued fifty shares each to Black, Bailey and Taft, and ten shares for accounting services. The certificate was approved February 14, 1931. There was no evidence of any execution or delivery of certificates of stock to Black, Bailey, Taft or Kingston after October, 1930.
The plaintiffs Black and Bailey by the second paragraph of the bill alleged themselves on April 3, 1931, to be the owners of one hundred fifty shares each of the capital stock, and the defendant Taft the owner of one hundred fifty shares.
On April 3, 1931, at a meeting of directors properly found to have been called illegally, the directors William E. Taft and Kingston voted to issue one hundred shares to the defendant Mrs. William E. Taft and to the defendant Thomas F. Bannan fifty shares. No certificate of this ■ issue was filed pursuant to G. L. c. 156, § 16.
I agree that, for the reasons stated in the opinion, this latter issue of one hundred .fifty shares was invalid, and that a decree so deciding and calling for the return of the certificates by Mrs. Taft and Bannan is required. I am unable to agree that a similar decree with regard to Kingston and his ten shares is proper.
The record shows that Kingston holds only ten shares; that by votes of July 30, 1930, and October 3, 1930, issue of a certificate to him and to Black, Bailey and Taft for *83these shares was voted by directors and stockholders; that these votes were not followed up by proper filing under G. L. c. 156, § 16; that the issue of one hundred sixty shares (fifty each to Black, Bailey and Taft, and ten to Hingston) was not properly validated; that the vote of February 13, 1931, was passed to bring about a validation of the issue of the one hundred sixty shares; and that the issue was duly validated by approval by the commissioner of corporations on the certificate filed February 13, 1931. As a result Kingston’s certificate for ten shares, part of the one hundred sixty, was validated. The certificate produced by him bore date September 22, 1930, and was signed by Black as president and Taft as treasurer. I am unable to see how it can be invalidated at the suit of Black and Bailey, relying in part on their ownership of fifty shares each which stand exactly as do Kingston’s ten shares; and by a decree which leaves outstanding the remaining fifty of the one hundred sixty shares validated February 14, 1931, in William E. Taft. All the one hundred sixty shares should be treated alike. The ten belonging to Hingston cannot in justice or equity be taken from him. They were not issued to him as a result of the illegal meeting denounced by the decree. As owner of them he has been recognized as a stockholder by the plaintiffs since September of 1930. The by-laws do not require that officers shall be stockholders; but it is a legitimate inference from the history of the corporation set out by the master that its practice was to elect them from stockholders.
There was no impropriety in the votes for the issue of the one hundred sixty shares. There was simply a failure to comply with a statutory requirement for validation. That requirement was met by the action taken on February 13 and 14, 1931. The stock is now valid. G. L. (Ter. Ed.) c. 156, §§16 and 17. The case is covered by the opinion in Mitchell v. Mitchell, Woodbury Co. 263 Mass. 160. I think the decree should be modified by striking out the findings and direction with regard to Hingston and his stock.