Flagg v. Sloane

MARKS, J.

This is an action to recover the unpaid poi’tion of the purchase price of stock in the California Land Buyers Syndicate, a bankrupt corporation. Judgment was rendered for respondents and this appeal followed. It is taken on the judgment-roll, which is practically incorporated in appellant’s opening brief. Respondent Sloane has moved to dismiss the appeal or affirm the judgment as to him because it appears that as to him the questions presented “are so unsubstantial as not to need further argument” (sec. 3, Rule V of the Rules for the Supreme Court and District Courts of Appeal), and that the appeal is frivolous and for delay.

It appears from the findings that R. L. Stewart promoted the organization and incorporation of California Land Buyers Syndicate, which was incorporated June 11, 1926. On June 2, 1926, Stewart and Sloane entered into a written contract whereby the latter was employed as the legal adviser of the former with his compensation to be paid in shares of the common stock of the corporation which the two would make an “effort” to have issued to Stewart for one dollar per share. The commissioner of corporations issued an amended permit authorizing such purchase by Stewart and providing that the stock should be placed in escrow and not sold, offered for sale, agreed to be sold or otherwise transferred or conveyed until his further order. Stewart purchased 5531 shares of this stock, which was placed in escrow. None of it was transferred to Sloane nor could it have been, as the commissioner of corporations gave no permit for such conveyance.

(First Nat. Bank

v.

Thompson,

212 Cal. 388 [298 Pac. 808].) Sloane never ap

[336]

peared upon the hooks of the corporation as the owner of any of its stock.

The rule prevailing in California governing the liability for an unpaid portion of the purchase price of stock in cases of this kind where fraud, agency or an express trust or other special circumstances are not involved, is that only the record owner of the stock may be compelled to pay the deficit in the purchase price. A “purchaser does not become personally liable to the corporation for subsequent calls until he has his transfer entered on the corporate books, or in some other manner comes into privity with the corporation as a stockholder”.