Chilberg v. Cross Land Co.

WORKS, J.

Plaintiff, an assignee, brought suit against defendant to recover the sum of ten thousand dollars. His predecessor in interest had bought shares of the capital stock of defendant, paying therefor the amount mentioned, at par, and there were issued to him by defendant at the same time certain obligations, or certificates, aggregating the same amount. These papers, each entitled “Refunding Certificate,” were in the following form:

“The Cross Land Company, a corporation, organized and existing under and by virtue of the laws of the State of California, certify [hereby (?)] certifies and agrees:

“That Eugene Chilberg has paid into the Treasury of said corporation the sum of $1000.00, for the purpose of carrying out the present project of said corporation, to subdivide and sell in small tracts, a portion of the Rancho La Puente; that as a partial consideration for said money so paid, ten shares of the fully paid up Capital Stock of said corporation have been issued to said Eugene Chilberg.

“As a further consideration for the payment of said money, the Cross Land Company hereby agrees that it will

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refund said $1000.00, so paid, to Eugene Chilberg, his heirs, executors, administrators or assigns without interest, in the following manner, to-wit:

“Thirty-three and one-third per cent (33-1/3%) of all the moneys received by said corporation from the sale of two thousand sixty-six acres, more or less, of said Rancho La Puente, more particularly described in a certain deed from Purcell, Gray & Gale, Incorporated, to said Cross Land Company, except that portion of said land to be conveyed to a water company for the purpose of placing water upon said land, shall be placed in a separate fund by said corporation for the purpose of refunding said above amount and other sums due to subscribers of stock holding like certificates. All certificate holders shall be paid from said funds in proportion to the amount set forth in their respective certificates, and said payments shall be made on the first day of July, 1912, and every six months thereafter.

“Said Cross Land Company agrees that it will not issue certificates to subscribers of stock in an amount in excess of One Hundred Fifty-five Thousand Dollars ($155,000.00) and that during the existence of this certificate and until the full amount thereof has been fully refunded that it will not cause any dividends to be declared or paid upon the capital stock of said corporation.