Tulare Savings Bank v. Talbot

HENSHAW, J.

This action was brought by plaintiffs and intervenors, judgment creditors of the Paekwood Vineyard and Fruit Company, an insolvent corporation, to compel payment by the stockholders of that corporation of the unpaid portion of their stock. The defendants Pope, Talbot, and Fagan appeal from the judgment given against them, and in support

[47]

of their appeal Talbot and Pope urge that they were not original subscribers to the stock of the corporation, that they purchased their stock from the corporation under written contract and at the agreed price of fifty-six dollars per share, which they had fully paid, and that this purchase was made with the full knowledge of most of the plaintiffs and intervenors, who after that knowledge gave credit to the corporation. They contend still further that plaintiffs and intervenors, having elected to treat them as original subscribers, must be refused any relief in this action npon a showing that they were not such; and finally, they insist that the stock which they purchased was an illegal and void overissue wherefor they are not hable.

The position of the appellant Pagan differs from that of Pope and Talbot only in this: he admits that he was an original subscriber to shares of stock of the corporation to be formed, but asserts that the full five hundred shares of the stock of the corporation was taken before the amount for which he had subscribed was issued to him, and therefore, his stock was an over-issue and void.

E. Linder was the owner of a tract of land in Tulare county. He conceived the idea of forming a corporation and selling to it his land, which was to be planted with trees and vines. In furtherance of his idea he sought subscriptions to the capital stock of the prospective corporation. This capital stock was to be divided into five hundred shares of the par value of two hundred dollars per share. Several subscription papers were circulated, and to them signatures obtained. The corporation was then organized, and in the articles of incorporation the names of Pope and Talbot were inserted for twenty shares each, and Linder was put down as the owner of one hundred and eighty-three shares. Pope’s and Talbot’s names likewise appeared upon one of the subscription papers. Much discussion is devoted to the question whether or not the names of Pope and Talbot were thus placed upon the subscription list and in the articles of incorporation by their authority; but we think, in the light of what was actually done, the determination of this question becomes immaterial. For it is unquestionably true that Pope and Talbot and Fagan took the stock of the corporation, paid value for it, and acted in all respects as stock