Court Opinion

ID: 7946008
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:20:29.928272+00
Date Added: 2024-06-11T16:33:55.654372
License: Public Domain

Stone, J.
{after stating the facts). 1. Did the Complainant by the Terms of the Contract of Employment Become a Stockholder of the Defendant Corporation ?
The same legal principles govern with regard to the elements of a contract for the sale of stock, as apply in the case of contracts generally. It is a general rule that subscriptions to capital stock must be for a definite number of shares. Peninsular R. Co. v. Duncan, 28 Mich. 130; 1 Cook on Corporations (6th Ed.), § 10; 10 Cyc. pp. 380, 381, 390. In Bostwick v. Young, 118 App. Div. 490 (103 N. Y. Supp. 607), it was held that a railroad construction contract, by which work is paid for by stocks and bonds, is not a stock subscription nor a sale of the stock, but is merely a contract. 1 Cook on Corporations (6th Ed.), § 22.
2. Should Complainant have Demanded the Stock, or Was it the Duty of the Company to Tender it ?
It should be borne in mind that this is not a case where complainant is seeking to rescind a contract and recover the consideration paid. It is rather a case where he seeks to recover upon the contract; the defendant having failed to tender performance by payment, or offer of stock. "We think the case falls within the general rule that, wherever a contract provides for the payment of a given amount in a commodity, the payor has the option to pay in that commodity, or in cash up to, and including, the time payment is due; but, upon failure to pay in the commodity on that date, the obligation becomes one to pay cash. See discussion of this subject in 2 Mechem on Sales, § 1439, et seq., and authorities there cited, including case of Crowl v. Goodenberger, 112 Mich. 683 (71 N. W. 485). Manifestly, this stock was due complainant at the close of each month, as earned. It has been held that, even in case of subscriptions for stock payable in property or labor, the same are not subject to calls, and a demand for the property or labor must be made by the corporation. But upon failure of the subscriber to furnish the property or labor when due, such subscription becomes payable in cash. Here, complainant had fully *211performed on his part; but, the company having failed to tender the stock when due, the obligation became one to pay in cash.
3. Has a Court of Equity Jurisdiction, or Has Complainant an Adequate Remedy at Law ?
The defendant company here sought to dispose of. all of its property, real and personal, to pay all of its creditors. There is authority in this State which holds that such a disposition of property amounts to an assignment for the benefit of creditors. See Charles Maloney & Co. v. Gonhue, 152 Mich. 325 (116 N. W. 436), for a review of the cases. If that is the condition, then by express provision of the statute (section 9549, 3 Comp. Laws) chancery has jurisdiction of all questions and disputes arising under the assignment. Without question, there is here a trust relation between the trustee defendants and a creditor. The complainant asserts by his bill that he is a creditor of the corporation, and that his name should have been included in the list of creditors, but that it has been omitted. He asks that he be decreed to be a creditor, and entitled to the benefits conferred by said mortgages. The jurisdiction of a court of equity to enforce trusts, and to decree the execution of trusts, even as to personalty, is well established. 22 Enc. Pl. & Prac. pp. 9, 14, 15; 1 Pomeroy’s Equity Jurisprudence (3d Ed.), §§ 62, 182; Ledyard’s Appeal, 51 Mich. 623 (17 N. W. 208). Neither do we think that the remedy at law, as pointed out by defendants, is an adequate one. While complainant might recover a money judgment in a suit at law, that court would have no power to compel the trustees to give to complainant the benefit under the mortgages, to which he would be entitled, and he might be compelled to invoke the power of equity to enforce his rights.
4. Is the Bill Multifarious ?
Complainant seeks to enforce his alleged rights under a contract made with the defendant corporation. The mortgages both recognize that if, after the payment of all debts and expenses, any surplus or residue remains, it shall belong to and be returned to said company. We *212think that the corporation is therefore a proper party, and the prayer for general relief would enable the court to enter a proper decree against it. Primarily, the object of the bill is to establish complainant’s alleged rights as a creditor of the corporation and to compel the trustees to recognize and deal with such rights. There can be no question, therefore, that the trustees are proper parties. Incidentally, complainant asks that the trustees pay him for services rendered by him to them, in their trust capacity, in the course of administering the trust. There was nothing in the mortgages, nor in the accompanying agreement, either authorizing or permitting the trustees to continue the business, or hire a manager. The alleged claim against the trustees for services under the agreement of July 16, 1907, did not, therefore, arise under the aforesaid instruments, or either of them. While it may be that for these services complainant can apply to the chancery side of the court for relief, independently of this suit, he cannot have relief here. But mere surplusage will not render a bill multifarious, and therefore a bill is not rendered multifarious if, in addition to stating a case for equitable relief, it contains allegations with reference to another matter, but insufficient to entitle complainant to relief with reference thereto. 16 Cyc. p. 241; Hammond v. Michigan State Bank, Walk. Ch. (Mich.) 214; Stone v. Railroad Co., 139 Mich. 265 (102 N. W. 752); 14 Enc. Pl. & Prac. p. 205. Therefore a bill is not multifarious for adding to an equitable cause of action matter in which there is no equity. Id.; 1 Daniel’s Chancery Pl. & Prac. p. 346, and note.
The demurrers should have been overruled.
The decree of the superior court will be reversed, and the case remanded for further proceedings. The defendants should be permitted to answer within 30 days after said cause is remitted to the court below; the case then to proceed under the rules of court. The complainant will recover his costs in this court.
Ostrander, Hooker, Moore, and Blair, JJ., concurred.