Zierath v. Superior Court

CONREY, P. J.

This is a proceeding by writ of review whereby petitioners are seeking to have annulled an order setting aside a default judgment entered against one A. B. Small in an action of

Zierath et al.

v.

Midway Southern Oil Company of Long Beach et al.

In that action the plaintiffs, as judgment creditors of the corporation, sued to obtain judgment against stockholders for the amount due on said previous judgment, but not exceeding as to any stockholder the amount of his liability for the unpaid portion of the amount subscribed by him or by his predecessor in ownership of the stock as a subscribing purchaser of such stock. An amended complaint was filed, in the ninth paragraph of which it was alleged that upon each of the shares of stock of said corporation there has been paid by the subscriber, owner, and holder thereof an amount equal to twenty cents and no more per share; also that each of the defendant stockholders agreed with said corporation at the time when he subscribed to and became the owner and holder of the shares of stock charged to him in the complaint that he would pay the balance of the par value of said shares of stock so remaining unpaid to said corporation, or for its use, when legally called upon to so do. On March 1, 1915, the summons and a copy of this amended complaint were served upon the defendant A. B. Small, and his default for not appearing in the action was duly entered

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on January 19, 1916. No judgment was entered against him, except as hereinafter stated. On November 17, 1916, an amended complaint was filed in two counts. The first count duplicated the allegations of the first amended complaint. The second count was a copy of the first count, except that it omitted the ninth paragraph and substituted therefor other allegations. These substituted allegations described certain transactions whereby all of the capital stock of the corporation, except five one-dollar shares theretofore issued, was originally issued to C. E. Faulstick as fully paid and non-assessable stock at the par value of one dollar per share; the defendants being transferees of portions of that stock. It was alleged that the stock was so issued in consideration of the transfer by Faulstick to the corporation of certain interests in real property; that said property was not at that time worth any sum ‘substantially near the value at which it was received, and that neither Faulstick nor the directors of the company who consummated said transaction with him either knew, thought, or believed that said interests in real property had a market value of the sum of one million dollars, at which it was received, or a market value substantially near said sum. Further allegations were made tending to show that said transaction and the issuance of said stock for said insufficient consideration was intended to operate as a fraud upon future creditors of the corporation. The allegations of said substituted paragraph did not admit that the consideration paid to the corporation for said stock was equal in value to twenty cents per share of the stock or equal to any other specified sum.