Chandler v. Keith

Miller, Ch. J. It will be seen that the defendant had paid the several installments, amounting to twenty per cent on his stock, in the manner stipulated in the obligation sued on, and that this action is brought to recover the balance, being eighty per cent of the stock purchased by the defendant. By the terms of the contract, this balance was “ subject to the call of the directors as they may be instructed by the majority of the stockholders represented at any regular meeting.” It is not claimed that the directors have acted in the premises or made any call or assessment upon the shares of the stockholders above the twenty per cent payable by the terms of the obligation, but the plaintiff alleges the bankruptcy of the [103] corporation, and bases bis right tb recover upon the .decree of the Superior Court of Coolc county, Illinois. Upon examination of this decree we do not find that any adjudication was made of the amount of the indebtedness of the corporation, so as to show what per cent upon the shares of its stockholders was necessary to pay off such indebtedness, nor does it make, or confer authority upon the receiver to make, an assessment or call upon the stockholders for a per centum found and ascertained to be necessary to pay the debts of the corporation. The defendant can be required to pay the unpaid balance of his stock only in conformity with his contract. He agreed to pay as called upon to do so by the directors as they should be instructed by the majority of the stockholders present. The court, in the event of insolvency and the neglect and refusal 'of the directors and stockholders to act in the premises, can do no more, has no greater authority to compel payment of this eighty per cent unpaid upon the shares of stockholders, than had the directors; and before the defendant can be required to pay more than the twenty per cent specified in his obligation, a call must be made upon the stockholders for the amount assessed upon the shares held by them respectively. Warner v. Beem, 36 Iowa, 385. And this call should be preceded by the fact that losses have been sustained by the corporation, showing a necessity for an assessment and call upon the. stockholders. The Am. Ins. Co. v. Schmidt, 19 Iowa, 502. This fact must be shown by proper averments in the petition. A case exactly like this, brought by this plaintiff in the Circuit Court of the United States, District of Iowa, based upon the same decree, was ruled against the plaintiff on a demurrer to the petition. See Cent. Law Journal, vol. 1, p. 341 — July, 1874. "We are of opinion, and so hold, that the court below did not err in sustaining the demurrer to plaintiff’s petition, and its judgment will be Affirmed.