Grove v. Charles W. Barrett Co.

California Court of Appeal Nov 29, 1927 No. Docket No. 5469.Published

Before: Strother

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Holding. The court held that subscribers were entitled to recover money paid for stock subscriptions when the corporation failed to deliver the agreed-upon consideration, and that the defendants failed to establish defenses of estoppel or lack of capacity to sue.

Issues

Whether a common count for money had and received lies to recover money paid for stock subscriptions when the corporation fails to deliver the agreed-upon consideration.
Whether the subscribers were estopped from refusing the modified stock offer by failing to object to the proposed change.
Whether the plaintiff lacked capacity to sue because the claims were community property under her husband's control.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The common count will always lie for money paid to one in consideration of his agreement to deliver or do something which he is either unwilling or unable to deliver or to do.”

“No issue was made by the pleadings as to plaintiff’s capacity to sue.”

STROTHER, J.,

pro tem.

Plaintiff in this action had judgment against the defendants for the recovery of moneys paid by her and her assignors on account of subscriptions made for stock of the defendant corporation. From this judgment defendants appeal.

It was specifically provided in the subscription agreements entered into between the several subscribers and the defendant Marehus that the subscribers should receive in consideration of their advance subscriptions for the stock two shares for the par value of one. The payments were made to Marehus, one of the promoters of the company, as “interim trustee,” the interim being the time between the subscription and the incorporation and organization of the defendant Charles W. Barrett Co." Following the organization of the defendant company application was made to the commissioner of corporations for a permit to issue stock to the subscribers in accordance with the agreements with them, but it was refused. Thereafter the action of the commissioner of corporations was explained to the subscribers, and they were asked to accept one share of stock instead of two for the par value of one, but none of them either agreed to or refused to consent to the change. A meeting of the board of directors of the corporation was then held and an amended application was authorized, asking for a permit to issue one share of stock for each amount of par subscribed. Plaintiff’s husband, one of her assignors,

[167]

was a member of and secretary of the board and voted for the amendment. A permit was issued by the commissioner in accordance with the amended application, certificates for the stock were prepared and signed by Grove as secretary, and tendered to the subscribers, who refused to receive them. They assigned their claims to the plaintiff and this action was brought.

The complaint sets out each of the claims in several counts, some for money had and received and some alleging the facts of the transaction.

Numerous assignments of error are made by appellants in a bill of exceptions both as to the findings of the court and its conclusions therefrom. They are all, however, directed to a few propositions of law which are contended for by appellants.

Grove v. Charles W. Barrett Co.

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STROTHER, J.,

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