Waterbury v. United Telephone Co.

Mr. Justice Burnett delivered the opinion of the court. 1. From the record it appears that the corporation was organized August 12, 1909, at which time the transaction of issuing stock to the son was completed. The note for $4,500 was executed June 1, 1911, and the other note was issued April 18, 1912. Almost without dispute, the testimony shows that the corporation actually received from the plaintiff the money involved in these two notes, and that it was expended in the enterprise in which the concern was engaged. Such circumstances firmly establish the corporation’s obligation to pay the notes: Tyler v. Trustees, 14 Or. 485 (13 Pac. 329); Calvert v. Idaho Stage Co., 25 Or. 412 (36 Pac. 24); Finnegan v. Pacific Vinegar Co., 26 Or. 152 (37 Pac. 457); Schreyer v. Turner Flouring Mill Co., 29 Or. 1 (43 Pac. 719); Columbia Nav. Co. v. Vancouver Trans. Co., 32 Or. 532 (52 Pac. 513); West v. Washington Ry. Co., 49 Or. 436 (90 Pac. 666); Wehrung v. Portland Country Club, 61 Or. 48 (120 Pac. 747 ). 2. The citadel of the defense is contained in the effort to connect the plaintiff with the alleged scheme to defraud the defendant by the issuance of stock which was not paid for, so as to force the defendant to borrow money and suffer the wreck of its affairs by being compelled to pay the indebtedness repre [52] sented by the notes. Except mere suspicion which might attach to transactions between father and son, there is no testimony connecting the plaintiff with the transaction of issuing stock without payment of the subscription for the same. The alleged indebtedness of the son or his failure to pay for stock for which he subscribed is one thing to which such authorities as Macbeth v. Danfield, 45 Or. 553 (78 Pac. 693, 106 Am. St. Rep. 670), McAllister v. American Hospital Assn., 62 Or. 530 (125 Pac. 286), Shipman, Denny, Rhame & Co. v. Portland Construction Co., 64 Or. 1 (128 Pac. 989), might apply. The indebtedness of the corporation to the plaintiff for money loaned to it is another transaction. The indebtedness of the son to the corporation is not a counterclaim in favor of that institution.against the debt which it owes to the plaintiff. It is no defense to say that it has neglected either by itself or its receiver to collect money which the plaintiff’s son owes for stock for which he subscribed. The decree of the Circuit Court is reversed and one entered here in accordance with the prayer of the complaint. Eeversee: Decree Eendbred.