Zoeller v. Schneider

VALLÉE, J. Appeal by plaintiff from an adverse judgment in an action for money paid and services allegedly rendered pursuant to a written contract between plaintiff and defendant. Plaintiff contends the findings are not supported by the evidence.

On October 13, 1950, the parties entered into a written contract whereby they agreed to organize a corporation with an authorized capital of $252,500 to be divided 2,500 shares of preferred and 2,500 shares of common stock. Defendant agreed to transfer his plant and equipment to the corporation. Plaintiff agreed to buy 50 shares of preferred for $5,000. It was agreed that the corporation would enter into an employment contract with plaintiff at a salary of $1,000 a month.1 The corporation was organized and began to [686]function with defendant’s plant and equipment; plaintiff paid the corporation the $5,000, and he was elected president. Plaintiff performed services which he alleged were performed at the request of defendant and were of the value of $3,500. The suit is to recover from defendant the $5,000 paid to the corporation and $3,500 alleged to be the value of the services.

The court found: (1) on October 13, 1950 the parties entered into the contract; (2) Torrance Forge and Steel, Inc., a corporation, was formed; (3) plaintiff advanced $5,000 to the corporation for his own use and benefit; (4) the $5,000 was used by the corporation and it was not expended or used for the benefit of defendant; (5) plaintiff did not render any services at defendant’s request of the value of $3,500 or in any other sum; (6) defendant rescinded the contract, gave notice thereof, and was justified in so doing. Judgment for defendant followed, from which plaintiff appeals.

There was evidence of the following facts: The corporation was organized and began to function. A resolution was adopted by the board of directors for issuance of stock in accord with the contract. A permit was then obtained to issue the stock to plaintiff. He paid the $5,000 to the corporation for the stock. No stock was issued. The money was deposited in the bank account of the corporation. Defendant paid some $4,500 of the expenses of the corporation. Plaintiff performed services for the corporation. There is no evidence that he performed any services for defendant. He received about $1,000 from the corporation for his services. [687]