Stover v. . Flack

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 66 One ground of defense interposed is the statute of limitations, and that has no application, except to the payment of the stock. It is contended, on the part of the defendant, that such payment was made by Stover in his lifetime by the delivery of the flax, and that such purchase of the flax by the company from Stover, produced an indebtedness on his part to the company for the stock. But it is to be borne in mind that Bradshaw, the treasurer of the company, testified that in fact such application of the mutual indebtedness was not made until the 23d day *Page 67 of March, 1859, when a settlement of the indebtedness of the company to Stover for the flax purchased, and his indebtedness to it for the stock, was made between the company and the plaintiffs as the representatives of Stover, and a balance being found due to the plaintiffs, the same was paid to them. But a conclusive answer to this view is found in the statement of the case, that this stock was paid for by the estate of Stover. This necessarily implies that it was not paid for by Stover in his lifetime, but by his representatives after his death, and there is no ground for any suggestion that they paid for it at any other time, or in any other manner than by the adjustment and settlement of accounts on the 23d of March, 1853, as detailed by Bradshaw. The defendant's liability did not accrue until the stock was paid for by Stover, or his representatives; and the statute consequently did not commence to run until such payment. It being made as we have seen, on the 23d of March, 1853, and this action having been commenced on the 22d of March, 1859, this ground of defense has entirely failed. Neither does the statute of frauds interpose any difficulty in the way of the plaintiff's recovery. He did not become a purchaser of the stock from their intestate. The authority given by the defendant was, that Stover should subscribe, take and pay for the stock in his, Stover's name, and that the defendant was to own the one-half part thereof. This arrangement constituted Stover his agent for those purposes, and the law implies a promise on his part to repay to Stover whatever sum he should advance and pay for the defendant's stock. Although the stock stood in the name of Stover, it became and was the defendant's stock. By virtue of this arrangement he became a stockholder in the company, and as such, liable to contribute and pay towards the discharge of the debts of the company, an amount equal to the amount of the stock so taken and owned by him. (Burr v. Wilcox, 22 N.Y. 551.) The money paid for the stock was so much *Page 68 money paid, laid out and expended for the defendant, and at his request. The defendant was not entitled to a transfer of the stock until payment of the amount paid therefor. If he wished to terminate his liability under the arrangement proven, it was his duty to have required the plaintiffs to sell the stock, and if there was any deficiency, to pay the same. From the facts testified to on the trial, it is quite apparent that the defendant was willing to let the stock remain with the plaintiffs under the arrangement made with their intestate. Without any call from the defendant, no duty was imposed on them to sell the stock, and it being shown on the trial that the same was worthless and of no value, they were not precluded from calling upon the defendant for payment, without making such sale. It would have been an idle ceremony, and in no manner could have tended to the benefit or advantage of the defendant. This reservation of the right to sell and charge the defendant with the deficiency, was made for the benefit of Stover, to secure him for the moneys advanced, and not as a condition of the defendant's liability. It was a cumulative remedy to ensure a reimbursement to him of the money advanced for the defendant, and did not in any sense, impair his right to call upon the defendant for repayment. We must take the whole agreement together; and by its terms we find that the defendant expressly promised to pay to the deceased the cost of over one-half of the stock taken by him. The agreement actually made, and in compliance with the terms of which the deceased subscribed for the stock, and incurred the liabilities of a stockholder, was not abrogated, or rendered ineffectual by reason of the parties thereto not having subsequently reduced the same to writing, as was contemplated to be done, at the time the same was entered into. We have seen that it was not essential to its validity that it should have been in writing, and the omission, or the unwillingness of the party to reduce the same to writing, did *Page 69 not terminate the obligations, which the agreement actually made created. Stover was liable to the extent of the stock standing in his name, for the debts of the company. The creditors of the company under the authority of Burr v. Wilcox (supra), could also have compelled the defendant to contribute to the amount of stock actually owned by him, although standing in Stover's name. No question appears to have been made on the trial, that the company was insolvent, and that the amount held by each stockholder was necessary to be contributed for the payment of its debts. The payment was made by the agent on account of his principal, and no point was made on the trial, that the defendant was not liable to reimburse the same, if he was adjudged to be the owner of the stock purchased under the arrangement proven. We think clearly he was, and that he was legally bound, not only to pay the sum advanced in payment of the stock, but also the amount paid by the plaintiffs to discharge the statute liability, created in favor of the creditors of the company. We arrive at the conclusion, therefore, that the judgment should be affirmed.