Stolte v. Kehrlein

TYLER, P. J.

Action upon a stockholder’s liability for corporate debts. On November 4, 1916, the Franklin Amusement Corporation was incorporated with an authorized capital stock of $50,000, divided into 5,000 shares of the par value of $10 each. On November 15, 1916, a permit was obtained from the commissioner of corporations, authorizing the issuance of 2,800 of these shares. About the

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year 1919 the shares so issued were purchased by appellants and Emil Kehrlein, Jr. On September 28, 1923, the Kehrleins entered into an agreement with J. M. Maurer, George W. Tatterson and L. B. Gross, to sell all the assets and property of the corporation to them and to transfer the 2,800 shares of issued stock. The unissued stock, consisting of the remaining 2,200 shares formed part of the consideration of the sale, and they were also transferred to the purchasers. Subsequently, on October 14, 1923, the purchasers took possession of the Franklin Theatre, the property of the corporation, and operated the same for a period of some twenty weeks, after which they surrendered the property to the sellers, the Kehrleins, and served them with a notice of rescission, claiming that they had been defrauded. Demand was made for a return of the consideration paid and certain other sums expended and lost by reason of alleged fraudulent misrepresentations. Thereafter the purchasers brought an action and recovered judgment against the sellers, which judgment was subsequently affirmed by this court

(Tatterson

v.

Kehrlein,

88 Cal. App. 34 [263 Pac. 285]).

In the present action plaintiff sued both the sellers and the buyers on a stockholder’s liability for obligations incurred during the interim the theater was operated and managed by the purchasers. Judgment was rendered in favor of plaintiff and against the Kehrleins only, and in favor of the co-defendants, Gross, Maurer and Tatterson, the purchasers.

Appellants here claim that they are not liable for bills incurred by the Franklin Amusement Corporation while it was being managed by the purchasers, as they were not stockholders during the period the obligations were incurred and had no authority or power, and did not incur the obligations, or bind the corporation for the same. In