Shepard v. Drake

Gill J. Plaintiff Shepard, is a judgment creditor of the Oasis Mining Company, a corporation formerly engaged in lead and zinc mining in Jasper county. Defendant Drake is the holder of stock in said corporation. After an unsuccessful effort by judgment and execution to secure satisfaction of his claim against the Mining Company, the plaintiff filed his motion, as provided for in section 2517, Revised Statutes 1889, asking the court to order an execution against the defendant for an alleged balance due on stock held by him. Drake denied any liability, claiming that he had fully paid his subscription, and that he owed no balance on that account. The issues made on the motion were tried by the circuit court, resulting in a finding and judgment for defendant and plaintiff appealed. I. A decision of this case rests upon the question whether or no.t the defendant Drake had paid his stock — 139 — subscription to the Oasis Mining Company. In reviewing causes of this nature it is made our duty to examine the entire evidence, and determine as in equity, whether or not the court below rightly decided both questions of fact and law. In the year 1890, defendant was the owner of a one fourth interest in the right to mine lot 94, of Daugherty & Davey’s mining lands at Carterville,: in Jasper county. In May of that year the defendant-, together with his co-owners in lot 94, and the owners of the adjacent lots 95, 98 and 99, and with the view of more profitably operating said mining interests, organized the Oasis Mining Company with a stated capital of $20,000. Each of said parties took stock proportionate to the extent of his interest, the defendant becoming subscriber to $1250 in stock, or 125 shares at $10 per share. In payment of these stock subscriptions, the lots were transferred to the corporation at the agreed price of $5,000 per lot, defendant’s stock thereby becoming fully paid. With this brief statement of the main facts, we proceed to consider the points urged for reversing the judgment of the circuit court, which as already stated, was to the effect that defendant had paid his stock in full and was not liable any further. II. Counsel for plaintiff first .contends that the mining interest of defendant Drake in said lot “94,” was not such property as could be used in paying up the capital stock of the Oasis Mining Company; that it was not of that substantial, tangible nature as would serve that purpose; that it was a mere license from the. owners of the land with none of the elements of property or property rights. We can not indorse this view. Drake, under the established rules and regulations of Daugherty & Davey, the land owners, had entered upon this mining — 140 — lot, sunk a shaft 150 feet, and was exercising the right, given by such rules, of extracting and selling mineral. He had there a species of property, the right to continue to take mineral, coupled, it is true, with the obligation to continue the work and subjected to forfeiture if abandoned for a certain length of time. But still he had there a property, an incorporeal hereditament, which the land owner could not arbitrarily take from him. This right, it is true, was not technically a lease of land, but was a contractual license, revocable only by consent or by condition broken. Chynowitch v. Smelting Co., 74 Mo. 173. III. The next and perhaps more difficult question presented in this controversy, relates to the charge of over-valuation when Drake and the other stockholders paid their subscription by transferring their mining rights to the corporation. It is now the well settled doctrine in this state,. that while the stock of a corporation may be paid for in money, labor or property of any ¡kind used in the business, yet such stock will not, as to the corporation’s creditors, be deemed fully paid unless such money, labor or property shall, at the time, be the fair equivalent of the stock’s par value. In other words, mere fictitious values placed on labor or property in payment for stock will be ignored, and the shareholder will get credit on his subscription for the real value of the labor or property, nothing more, and be compelled at the suit of a corporation creditor, to pay up the balance. And this rule seems to hold in this state whether the over valuation of the property received by the corporation, be the result of fraud, mistaken estimate or bad judgment. Farmer’s Banh v. Gallagher, 43 Mo. App. 482-493, and cases cited; Garrett v. Coal Mining Co., 113 Mo. 330. — 141 — Now, on this question of fact, whether or not there was an overestimate made when defendent turned over 'his interest in lot 94, in payment of his stock subscription, we have carefully read and considered the entire testimony, and while not wholly satisfied as to what was at the time a fair valuation of the property, we feel constrained to yield to the finding of the trial judge and abide his decision in that respect. The mining right in lot 94, was taken in payment of stock at a valuation of $5,000. There is testimony, coming, too, from several apparently credible witnesses, gentlemen of knowledge and large experience in mining lands in that vicinity, all tending to prove that $5,000 was a fair and conseryative estimate for the property at the time. On the other hand, other witnesses with an equal show of fairness, and gentlemen, too, of' experience, have placed the fair value very much lower. Indeed, the range of values was from about $500 to $7,000. Now the able and intelligent special judge who tried this case was in a much better situation to solve this conflict than we are; the witnesses were before him and were likely known by him, and we can not undertake to say that he gave undue weight to some and unjustly discriminated against others. When the number of witnesses are considered, together with the reasons assigned for their respective judgment, it would seem that the trial judge rightly decided that there was not an overvaluation of the property. IY. In the articles of association for the organization of the Oasis Mining Company, it is stated that “the capital stock of this corporation is $20,000 divided into two thousand shares of the par value of $10 each. The same has been Iona fide subscribed and one half thereof ackmlly paid up,” etc. This paper was signed by the defendant and other original stock — 142 — holders and recorded as the statute provides. Secs. 2768, 2769, R. S. 1889. The contention is that the defendant by force of the above recital is estopped to deny that there remained unpaid, at the organization of the corporation, the one half par value of the stock for which he subscribed. The basis of this contention is that by the statement; “and one half thereof actually paid,” it was declared that the one half, and only the one half, of defendant’s stock subscription had then been paid and that the other half was yet owing. The statute under which the foregoing articles of association were prepared is not very clear. By section 2768 it is provided that the articles of agreement, among other things, shall set out: * * * “third, the amount of the*capital stock of the corporation, the number of shares into which it is divided, and the par value thereof, that the same has been Iona fide subscribed, and one half thereof actually paid up.” Is it meant by this last clause to state that the one half of the aggregate capital has been paid, or that fifty per cent, has been paid on each share of stock subscribed for? If the former is the meaning, then the statement will be verified by showing that half in number of the shares were paid in full and the other half were wholly unpaid. And again, is it meant by this statement that only one half of the capital stock has been paid up, or that at least one half thereof was paid? This same ambiguity appearing in the statute is found in the articles of association now under consideration; and from it, therefore, it is a matter of doubt whether or not the incorporators of the Oasis Company (this defendant among them) meant to declare that Drake and others had each paid the' one half of the amount by them respectively subscribed, or that one — 143 — half of the aggregate stock had been paid, or that at least the one-half thereof had been paid? It is said now, to be “the very essence of' all estoppels, especially where the matters relied on to estop are committed to writing, that as they are intended to preclude a man from alleging the truth, they must be certain to every intent, and are not be sustained by argument or inference; there must be a precise affirmation to have this effect.” * * The reason for the rule being, “for no one shall be denied setting up the truth, unless it is in plain and clear contradiction to his former allegations and acts.” 1 Greenleaf on Evidence, sec. 22. Sutton v. Dameron, 100 Mo. 142, 151, and authorities cited. Manifestly, then, under the foregoing rule the defendant was not estopped from proving the truth in relation to his stock subscription, and what had been paid thereon. The language relied on is too dubious for that purpose. It is clear from a consideration of the evidence in the case, that these articles were prepared from a mere copy of the statute in that regard, or that the certificate of another corporation was used without making the necessary changes. The judgment seems to be for the right party and will be affirmed. All concur.