Pasadena Rapid Transit Co. v. Munson

WORKS, J.,

pro tem.

The appellant subscribed for certain shares of the capital stock of the respondent and the subscription contract was consummated prior to the organization of the respondent. A promissory note was given by the appellant to cover a part of the amount subscribed by him and this action was commenced to recover on the note. The plaintiff had judgment and the defendant appeals.

After the respondent was organized it issued all of its shares of stock, none of it, however, going to the appellant. A large block of the stock was issued to another corporation in payment for certain property which that corporation conveyed to the respondent; but on the same day that the shares were issued this second corporation transferred a considerable portion of its shares back to the respondent, “to be held,” according to the findings of fact, “as treasury stock of plaintiff and to be sold for the benefit of plaintiff or issued to the subscribers for the capital stock of plaintiff.” It is only out of this returned stock that the respondent is able to issue to the appellant any shares as and for the shares subscribed for by him. The appellant contends that this stock is not the stock for which the subscription was made, that he is entitled to an original issue from the treasury, that the consideration for the note has wholly failed, and that judgment should have been pronounced in his favor.

The theory behind the appellant’s contention is, of course, that the stock which, alone, the respondent is able now to issue to him is charged with a contingent liability under the law (see

R. H. Herron Co.

v.

Shaw,

165 Cal. 668, [Ann. Cas. 1915A, 1265, 133 Pac. 488]), different from the subscription or “trust fund” liability .which would be incident to shares issued to him in the first instance, from the treasury of the respondent. The appellant does not, however, present such a record as enables him to make this contention. The appeal

[354]

comes to ns upon, the judgment-roll alone, without a bill of exceptions. Therefore, the trial court having found that the shares which were returned to respondent were to be held as treasury stock and were to be issued, in part, to the subscribers for the capital stock of the respondent, we are bound to assume that there was evidence to support the finding.