Smoot v. Larsen

BUDGE, J. This action was brought by respondent as a. creditor of the Boise Natural Hot Water Heating Company, Ltd., a corporation, to recover an amount owed him by the corporation from appellant, a stockholder therein, upon the theory that the stock was issued in exchange for fraudulently overvalued property, and that the stockholder is liable for the balance actually unpaid upon the par or face value of the stock held by him. A demurrer, both general and special, was interposed to the complaint and was overruled. Appellant answered. The cause was tried by the court. At the conclusion of the respondent’s case appellant made a motion for a nonsuit, one of the grounds being that the complaint did not state facts sufficient to state a cause of action. The motion for nonsuit was denied, and the appellant refusing to introduce any evidence, findings of fact and conclusions of law were entered in favor of respondent as prayed in his complaint. A motion for a new trial was overruled. This appeal is from the judgment and from the order overruling the motion for a new trial. It will not be necessary to discuss all of the assignments of error, for we have taken the view that the case can be decided on the demurrer to the complaint. Nor is it necessary to recite in detail the allegations thereof. It is sufficient to observe that those allegations are to the effect that the stock of the corporation was originally issued in ex — 74 — change for property grossly overvalued, that appellant was not one of the original incorporators, or a purchaser of treasury stock, but was a transferee, and that the stock which he held was a part of the stock originally issued to one Boggs. Nowhere in the complaint is it alleged that appellant either had knowledge or such notice as would impute to him knowledge that the stock had not been fully paid for. In other words, the complaint does not allege that appellant was not a holder of stock in good faith and without notice, and that is an indispensable element of the liability sought to be enforced against him. The rule is that a transferee of certificates of stock is prima facie presumed to be a bona fide holder, and it is incumbent upon a corporate creditor seeking to hold such transferee for any balance actually unpaid upon the face or par value of his stock to allege that the latter was not a holder in good faith without notice that the stock had not been fully paid for. (Feehan v. Kendrick, 32 Ida. 220, 179 Pac. 507, wherein the leading American authorities are collected; Burkinshaw v. Nicolls, L. R. 3 App. Cas. 1004, 1017; Cleveland Rolling-Mill Co. v. Texas & St. L. Ry. Co., 27 Fed. 250.) The demurrer to the complaint should have been sustained. The judgment is reversed. Costs are awarded to appellant. Morgan, C. J., concurs.