Pac. Fruit Co. v. Coon
Before: Vanclief
Synopsis
Corporations—Action for Assessment Exceeding Ten Per Cent of Stock—Burden of Proof—Presumption.—In an action by a private corporation organized in this state for commercial and manufacturing purposes, to recover an assessment which exceeds ten per cent of the capital stock of the corporation, the burden of proving a valid assessment is on the plaintiff; and where there is no evidence to prove that its subscribed capital stock had not been fully paid, an assessment exceeding ten per cent of the amount of the capital stock named in the articles of incorporation must be presumed to be void, and cannot be . enforced.
Id.—Subscription to Stock—Cancellation of Unissued Certificate— Power of Direction.—The cancellation of an- unissued certificate of stock does not effect a cancellation of the subscription for such stock; and such subscription cannot he canceled, even by order of the hoard of directors,without the unanimous consent of all the stockholders, except for fraud or mistake.
Id.—Ownership of Stock—Assessability.—The issuance of a certificate of corporate stock is not necessarily preliminary to the ownership or assessability of stock.
Id.—Testimony as to Amount of Assessable Stock—Books of Corporation.—The testimony of the secretary of the corporation as to the amount of the outstanding assessable stock, based upon the books of the corporation as understood by the witness, may he properly corrected by the court by reference to the legal effect of the contents of the books in evidence.
Id.—B-esoission of Subscription to Stock— Circumstantial Evidence— Burden of Proof.—The cancellation or rescission of a subscription for corporate stock may be proved by circumstantial evidence; but, where such rescission is a necessary part of the plaintiff’s ease, the burden devolves upon plaintiff to prove such rescission, and, where the plaintiff fails to sustain such burden, a finding of the court against the rescission will not he disturbed.
Vanclief, C. The plaintiff is a private corporation, organized in this state for commercial and manufacturing purposes, whose principal place of business “is San Francisco, California,” and brought this action to recover from the defendant an assessment of five dollars per share on his stock (100 shares) in the corporation.
The judgment of the court was in favor of the defendant, and the plaintiff appeals therefrom, and from an order denying his motion for a new trial.
It is alleged in the complaint, among other things:
“ That on the 11th day of May, 1891, said corporation, plaintiff herein, in accordance with the laws of the state of California, levied an assessment upon the capital stock of said corporation, for the purpose of paying the indebtedness of said corporation, being assessment No. six (6), of five dollars ($5) upon each and every of the shares of the capital stock of said corporation.
“That said assessment, so as aforesaid levied, did not exceed ten per cent of the amount of the capital stock named in the articles of incorporation.”
The answer of the defendant specifically denies each of these allegations.
The court found that the whole capital stock named in the articles of incorporation is $250,000, divided into 10,000 shares of the par value of $25 per share, and that all said shares.were subscribed at the time of the organization of the corporation as follows:
By N. K. Hasten, 1,000 shares...........$ 25,000
By W. C. Blackwood, 1,000 shares........ 25,000
By W. W. Cozzens, 1,000 shares......... 25,000
By Clifford Saville, 1,000 shares......... 25,000
By A. W. Bryant, 1,000 shares........... 25,000
By W. K. Hasten, 5,000 shares.......... 125,00.0 ,
[450](This subscription is certified in the articles of incorporation, acknowledged on June 13, 1883, and is not disputed.)
The court further found that a part of said stock, not exceeding 1,705 shares, had been sold for assessments and purchased by the corporation prior to the levy of the assessment in question, leaving outstanding and subject to assessment, on May 11, 1891,' not less than 8,295 shares. And further found that the total indebtedness of the corporation on May 11,1891, did not exceed $15,000; that said assessment exceeded ten per cent of the whole capital stock named in the articles of incorporation, and greatly exceeded the indebtedness of the incorporation. And further found, as a conclusion from the foregoing facts, “ that said pretended assessment was not levied in accordance with the laws of the state of California,” and therefore was void.
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