Gulley v. Bache

Hart, J., (after stating the facts). The contention of counsel for the plaintiff is that, because the board of directors of the Witteville Coal Company authorized the issuance and sale of $12,500 of capital stock, defendant purchased two-fifths of that amount of stock when he purchased a two-fifths interest. They insist that their contention is sustained by the following quotation from the testimony of the defendant himself: “Q. Did you think you were acquiring a two-fifths -interest in the company? A. Yes. Q. If, instead of losing money, the company had made $10,000, what would you have expected to receive for your interest? A. Two-fifths of it. Q. In that case w-ould you have returned the certificate you did receive without -asking for the two-fifths you say you were to receive? A. If -the company had made money, I would most certainly have insisted on getting all that was coming to me.” We do not think so. It will be noted that defendant had no knowledge whatever of the passage of the resolution of July 2. 1907. He knew nothing whatever of the adoption of the report of July 10, 1907, showing that the stock had been sold for 40 cents on the dollar. On the contrary, it appears from his testimony that he was purchasing stock at its par value. When he purchased an interest in the first venture, only $2,500 of capital stock had been subscribed and issued. Defendant purchased a fifth interest then and paid $500 for it. Now, 500 is one-fifth of 2,500, and when that lease -was sold out defendant was given back his $500 and one-fifth of the profits of the venture. He was informed iby Judge Spradling that the lease on the Panama mine and a stock of goods there, valued at $5,000, could both be purchased for $5,000. He understood that only $5,000 of stock would be issued and sold, and that he was purchasing a two-fifth interest in this. That $2,000 would give him two-fifths of this at par value is obvious. In this way his testimony is reasonable and consistent with itself, and is not contradicted. We think it fairly deducible from his testimony, when considered as a whole, that he understood that he was buying $2,000 of stock at its par value, and that it was fully paid and non-assessable. That he spoke of it as a two-fifths interest because he understood that only $5,000 in stock was to be issued and sold. It is evident that the defendant -understood that only stock of the par value of $5,000 was to be issued and sold, and that when he purchased a two-fifths interest he intended and understood that he was purchasing two-fifths of this amount. This being true, the stock purchased by him was fully paid up. A certificate for 100 shares of stock was issued to defendant, and delivered to him by Judge Spradling. Defendant says that he put the certificate away without looking at it, supposing it to represent the $2,000 of stock he had purchased. It appears that he never examined the certificate until some time afterward when he was informed by Judge Spradling that the corporation was in danger of becoming insolvent. Under these circumstances, the chancellor held that he was estopped from claiming that he had -not subscribed for the whole 100 shares, and rendered judgment against him for $500, the balance due on said shares. Defendant prayed a cross-appeal; but he has not favored us with an argument on it, and his cross-appeal will be treated as abandoned. 2. It is insisted that the defendant in his answer admits his liability. We do not think so. The answer is lengthy, and we have not set it -out. It contains, however, in substance the matters which the defendant narrated in his testimony, and we have already held that it does not show that defendant was liable 3. When the cause was heard in the court below, Judge Spradling was dead, and plaintiff offered to -introduce in evidence his deposition taken by the referee in bankruptcy, which the chancellor refused to consider. This was not error. The object of the examination there was to inquire generally into the affairs of the bankrupt corporation. The referee had no power to adjudicate the question at issue here, and no identity of issues exists. In order for the testimony to be admissible, the plaintiff must establish that the deposition was taken in a suit between the same parties -regarding the same issues. McTighe v. Herman, 42 Ark. 285; 16 Cyc. pp. 1088-1094. The decree will be affirmed.