Court Opinion

ID: 8194434
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:17:35.175576+00
Date Added: 2024-06-11T16:40:43.083656
License: Public Domain

Owen, J.
The most substantial proposition pressed upon this court by the appellant for a reversal of the judgment is the fact that the articles of incorporation did not provide for the character of capital stock contemplated-by the proposal which Spiegel made to the Belgium Shoe Company and the agreement of Labahn to take $10,000 of the common stock of said proposed corporation. It will be- borne in mind that the initial proposal was to form a corporation with a capital stock of $150,000, $50,000 of which was to be common and $100,000 preferred. The articles of incorporation provided for 750 shares of common stock of no par value and 750 shares of preferred stock of the par value of $100 per share. However, we do not deem it necessary to consider whether this change was of such a fundamental character as to relieve Labahn from his agreement to take 100 shares, as the court found, upon ample evidence that Labahn was advised of the change before the articles of incorporation were executed or filed, and consented thereto.
The evidence shows that Spiegel frequently interviewed Labahn prior to the filing of the articles; that he kept him advised concerning the progress of events; and that Labahn *263knew of this change in the articles- of incorporation. Furthermore, this change in the articles of incorporation from that contained in Spiegel’s proposal was ratified by a resolution of the stockholders of the Belgium Shoe Company, in which Labahn was represented by his proxy. The court found that that resolution could not have been adopted except by a vote of Labahn’s proxy at that meeting. Had it not been adopted, it is quite likely that the entire scheme for rescuing the Belgium Shoe Company from its financial situation would have fallen through. At no time did Labahn offer any objection to this change. He did not assign it as a reason for refusing to carry out his agreement, nor. did he set it up in his answer as a defense to the cross-complaint of the Allen-Spiegel Shoe Manufacturing Company. All of these circumstances confirm the conclusion of the trial court that Labahn knew of and consented to such change, and that, if he did not, he at least acquiesced, therein, and plaintiff is in no position to urge that circumstance before this court as a ground for. a reversal of the judgment.
It is next urged by appellant that Labahn was released from his contract because he was not notified of the preliminary meeting of the subscribers of the common stock to ' perfect the organization of the corporation. This contention is without substance, for the reason that Labahn was not a subscriber of the stock of the corporation within the contemplation of sec. 180.06, Stats. 1923. His contract was with the promoter. It might or might not be ratified by the corporation. It is such contract as was under consideration in Samuel Meyers, Inc. v. Ogden Shoe Co. 173 Wis. 317, 181 N. W. 306. It was an entire contract and contemplated payment for the stock by cancellation of his notes, against the Belgium Shoe Company. This was a matter upon which the corporation could not be bound by the contract of the promoter. Labahn could not compel the issuance of the stock to him unless the company agreed to accept payment in the manner provided. At the time of the meeting of sub*264scribers of stock, therefore, Labahn was in no manner related to the corporation, and never would be unless the corporation ratified the contract between Labahn and Spie-gel. . Consequently it was not necessary that he have notice of the meeting of the subscribers to the capital stock.
It is also contended that the restriction placed upon the sale of the common stock by virtue of the resolution set forth in the statement of facts, adopted at the preliminary meeting of subscribers for stock, placed it beyond the power of the corporation to issue this stock to Labalm. Whatever rights this resolution secured to the then stockholders, they were rights which they could waive. 1 Cook, Corp. § 286. These subscribers of stock were all elected directors of the corporation. After their election as directors this stock was issued, presumably with full corporate authority and with the acquiescence of all the stockholders, protected by the resolution referred to. If they had not consented to .the issuance of the stock when tendered, they certainly are now estopped from questioning the power of the corporation to issue it. Since the directors have charge of the defense of this action, they are here ratifying what the officers of the corporation did in the manner of issuing and tendering the stock to Labalm and are accepting the benefits of the' judgment entered by the lower court. Furthermore, it is not certain that Labahn’s title to this stock would be affected by the resolution referred to unless the stock was issued for an ulterior purpose and he was a party to the fraud. See Dousman v. Wis. & L. S. M. & S. Co. 40 Wis. 418; Luther v. C. J. Luther Co. 118 Wis. 112, 94 N. W. 69; 1 Cook, Corp. § 286. We can discover no substance to this contention.
It is further contended that the assets of the Belgium Shoe Company were transferred to the new corporation in violation of the Bulk Sales Act. We can discover nothing in that circumstance that in any way affects the validity of Labahn’s contract here under consideration. If a creditor *265of the Belgium Shoe Company might take advantage of that circumstance, it certainly does not in any manner affect Labahn's obligation.
It is further urged that the trial court had no authority to provide for a sale of Labahn’s stock in case the judgment for $3,500 rendered against him was not paid within thirty days. This is a matter in which appellant has no interest whatever. Labahn has not appealed, and there is no one here authorized to challenge the propriety of that feature of the judgment.
It is further claimed that the court erred in not rendering judgment in favor of the plaintiff and against Labahn upon his liability as indorser of the note. The failure of the judgment so to provide must have been the result of an oversight. Although the notes were transferred after due, nevertheless the liability of an indorser of negotiable paper attaches as between the indorser and his immediate indorsee. 1 Daniel, Neg. Inst. (6th ed.) § 664.
We cannot modify the judgment in this respect because we are" not in a position to compute the amount due on the notes. It will therefore be necessary to reverse the judgment, and remand the case with instructions to enter a new judgment in conformity with the present judgment, and, in addition thereto, allow a recovery by the plaintiff against Labahn for the amount due on the notes.
By the Court. — So ordered. Allen-Spiegel Shoe Manufacturing Company to recover costs. No other costs to be taxed.