Central Construction Co. v. Stansbury Contracting Co.

STURTEVANT, J. In an action to recover from defendants certain sums on their liabilities as stockholders the trial court made findings in favor of the plaintiff and from the judgment entered thereon two of the defendants have appealed.

The defendants make one point. They assert that one in whose name corporate stock certificates are issued is not liable for the debts of the issuing corporation when the stock was originally issued to the alleged stockholder in violation of the permit of the commissioner of corporations to issue stock. In that connection they set forth the following facts: Heretofore Capuchino Golf Corporation was incorporated under the laws of the state of California. It was organized with an authorized capital stock of 100,000 shares having a par value of $10 each. On May 26, 1926, the commissioner of corporations issued to the corporation a permit which, among others, contained the following provisions:

“CAPUCHINO GOLF CORPORATION

a California corporation, is hereby authorized to sell and issue 20,000 shares of its capital stock as herein below set forth:

“1st: To sell and issue to the persons named in its application, not exceeding to each, any or all of them, 10,000 shares of its capital stock, at par for cash, lawful money of the United States, or for 40% in cash, the balance to be evidenced by the promissory note or notes of subscribers payable in six equal monthly installments, without interest, for [415]the uses and purposes recited in its application and so as to net applicant the full amount of the selling price thereof. “2nd: Whenever and as often as a share or shares of its capital stock are sold and issued under paragraph 1st hereof, to issue a like number of shares to Bush Finnell and H. A. Willard, not exceeding in the aggregate to either or both of them, 10,000 shares of its capital stock as partial consideration for promotion services rendered by them to applicant, subject to their right to receive additional shares, as final consideration, when and as authorized by the Commissioner of Corporations.

“(a) . . .

“(b) That, when issued, all certificates evidencing any of the shares authorized herein, in paragraph 2nd to be issued shall be forthwith deposited with a depositary, to be selected by said permit holder and approved by the Commissioner of Corporations, to be held as an escrow pending the further order of said Commissioner; that the receipt of such depositary for such certificates shall be filed with said Commissioner of Corporations; and, that the owner or persons entitled to said shares shall not sell, or offer for sale, or otherwise transfer, or agree to sell, or transfer such shares or any interest therein or right, thereto, until the written consent of said Commissioner shall have been obtained so to do, or said shares shall have been released from escrow. ’ ’