Silica Brick Co. v. Winsor

MELVIN, J.

In this case judgment was entered on the pleadings in favor of plaintiff. The defendant appeals from the judgment and from the court’s order denying his motion for leave to amend his second amended answer.

The action was one to recover the amount of a subscription for the capital stock of the plaintiff. Defendant admitted the due execution by him of the document, set forth by copy in the complaint, by which he subscribed for five thousand shares of the preferred stock of the plaintiff corporation agreeing to pay five thousand dollars for said stock at the option and on demand of the Silica Brick Company. This document was dated July 21, 1910. He also admitted that demand had been made for payment of this amount and that he had refused to comply with said demand. But in excuse for his conduct it is alleged in the second amended answer'that defendant was one of the board of directors of the plaintiff corporation, the other members being Messrs. Dargitz, Walton, Brinkmeyer, and Pierce; that on July 26, 1910, defendant entered into an agreement of employment with the Silica Brick Company by which he promised to devote his skill and industry to the business of the plaintiff for five years at a stated salary and for thirty thousand shares of the common stock of said corporation which were duly assigned to him; that on November 1,1910, at a special meeting of stockholders, ten thousand shares of common stock were voted to directors Dargitz, Walton, and Pierce each, in consideration of their promise to finance the company; that thereafter at a special meeting of the directors of the corporation this action was affirmed; that on December 24, 1910, a meeting of the directors was held at plaintiff’s office and the three directors, who had agreed to finance the enterprise, declared that it was impossible to accomplish the desired purpose while sixty thousand shares of the common stock were outstanding (thirty

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thousand shares in the hands of director Winsor and a like amount in the possession of director Brinkmeyer) ; that it was accordingly agreed between Winsor and Brinkmeyer on the one hand and the three remaining directors on the other, that the former should return their shares of common stock receiving each, instead thereof, five thousand shares of preferred stock together with all wages due to that date and that the subscription which each had made for five thousand shares of preferred stock at par value should be canceled and returned to the subscriber; that thereafter a written agreement embodying all of the stipulations between Winsor and Brinkmeyer and the other directors except the cancellation of the stock subscriptions was submitted for signature and that defendant thereupon protested against signing said agreement because of such omission; that on December 27, 1910, at a special meeting of the stockholders of the corporation the agreement made by the directors was approved and adopted by a resolution which is set forth in the answer; that thereafter the defendant and Brinkmeyer surrendered their common stock and received each five thousand shares of preferred stock; and that at the time of carrying out the provisions of the resolution of the stockholders defendant demanded the cancellation and the surrender of the stock subscription upon which this action is based. It is also averred that the agreement between defendant and the other directors was made in good faith, and was for the benefit of the corporation and that the thirty thousand shares of common stock had not been returned to defendant.