Winfred Farmers Co. v. Smith

GATES, J. Plaintiff is a South Dakota corporation for profit organized in 1913 with a capital stock of $30,000, each share then being of the par value of $25. One share of stock was issued to defendant in June, 1914. In July, 1920, the capital stock was enlarged to $65,000 and the par value of the stock raised to $100 per share. In 1919 defendant subscribed for 10 shares of the proposed new stock and gave his promissory note for $975. The share of original stock was applied to make up the total sum of $1,000. This is an action brought to recover upon said note. There was judgment for plaintiff, from which, and from an order denying new trial; defendant appeals. At the time appellant became a stockholder in 1914, the so-called “Blue Sky Law,”' chapter 319, Laws 1913, was in force, but had not been complied with. At the time appellant subscribed for the new stock and gave the said promissory note, the act had not been complied with, but section 10129, Rev. Code 1919, provided that the act should not apply to an increase of stock sold and issued to stockholders. [500] The essence of appellant’s contention is that he was not a stockholder because' the act was not complied with when the one $25 share of stock was issued to him. That is the real and only point worthy of consideration upon this appeal. From June, 1914, to June, 1919, appellant attended generally the stockholders’ meetings; he received dividends upon his one share of stock; he was present at the meeting of June 26, 1920, at which the increase of stock was voted, and knew that respondent relied upon his subscription for the additional stock as a valid asset of the corporation. We are of the opinion that these matters estopped appellant fiom asserting that he was not a stockholder of the corporation at the time he gave the note in suit. Schiller Piano Co v Hyde 39 S. D. 74, 162 N. W. 937. The act of 1913 did not contain the provision enacted by section 4, c. 82, Sp. Session 1920, as new section 10146, to the effect that contracts and evidences of indebtedness or obligations incurred given for stocks or obligations sold in violation of law were void, etc. It is unnecessary to decide, and we do not decide, in what situation appellant would have been had such provision been in force when he purchased the one share in 1914. The judgment and order appealed from are affirmed. Note. — Reported in 199 N. W. 477. See, Headnote, American Key-Numbered Digest, Licenses, Key-No. 39, 14 C. J. Sec. 1003 (1925 Anno.). On validity, interpretation of Blue Sky Laws generally, see notes 111 15 A. L. R. 262, 24 A. L. R. 524, and 27 A. L. R. 1169,