Cordes v. Hammond

California Court of Appeal Nov 3, 1921 No. Civ. No. 3949.Published

Before: Kerrigan

AI Brief

AI-generated · verify before citing

Holding. The court held that while a plaintiff must generally show exhaustion of legal remedies to recover unpaid stock subscriptions, this requirement is satisfied by alleging corporate insolvency; however, the judgment was reversed as to defendants Chamberlin and Hammond due to a lack of evidence of their subscription contracts.

Issues

Whether the complaint sufficiently alleged the exhaustion of legal remedies against the defunct corporation.
Whether the appellants waived objections to the late filing of an amended complaint by answering and proceeding to trial.
Whether the evidence sufficiently established that specific defendants were subscribers to the corporation's capital stock.
Whether the underlying judgment was void due to improper service of summons on the corporation.

Disposition. Affirmed in part and reversed in part.

Quotations verified verbatim against the opinion

“The return of an execution nulla bona, says the court, is not a prerequisite for maintaining an action of this character when the complaint shows that the corporation is wholly insolvent and has no assets upon which to levy an execution.”

“As to Chamberlin and Hammond, no subscription contracts entered into by them were introduced in evidence, nor does the record show that either of them entered into such an agreement.”

Synopsis

APPEAL from a judgment of the Superior Court of the City and County of San Francisco. George E. Crothers, Judge. Reversed and affirmed.

The facts are stated in the opinion of the court.

William S. Downing, O. C. Wilson, H. L. McAllister and Alfred J. Harwood for Appellants.

KERRIGAN, J.

This is an action brought by the plaintiff, as assignee of numerous creditors of the Combined Amusements Company, a defunct corporation, on a default judgment taken against that concern, to recover from the defendants various sums on account of unpaid subscriptions to the capital stock of said corporation. . Plaintiff recovered judgment against the defendants, certain of whom prosecute this appeal, namely, L. C. Hammond, W. C. Chamberlin, Adolph Lehman, R. G. Matzene, Mark H. Manning, and Wm. L. McGuire.

[1]

In actions of this character it is necessary for the plaintiff to show that prior to the beginning of the action he had exhausted his legal remedies in an effort to collect the judgment; which is usually done by alleging the return of an execution unsatisfied.

[2]

Here the plaintiff alleged the issuance of the execution upon a certain day and its return unsatisfied on the day following., This failed to comply with this provision of section 683 of the Code of Civil Procedure, which directs that no return on an execution may be made in less than ten days nor more than sixty days after its receipt by the sheriff.

[3]

At the trial the plaintiff amended paragraph Y of his complaint by bringing it within the modification of the rule followed in

Barnes

Babcock,

95 Cal. 581 [29 Am. St. Rep. 133, 16 L. R. A. 745, 30 Pac. 605], and as announced in

Merchants' M. Adj. Agency

Davidson,

23 Cal. App. 274 [137 Pac. 1091] (see, 'also,

Sherman

S. K. D. Oil Co.,

185 Cal. 534 [197 Pac. 799]), where it is held that if the plaintiff does not aver a valid return of an unsatisfied execution, but does allege facts showing that the corporation defendant was insolvent and that the execution could not have been satisfied out of

Cordes v. Hammond

AI Brief

Synopsis

KERRIGAN, J.

More from California Court of Appeal

Related research

AI Brief