Whitewater Tile & Pressed Brick Manufacturing Co. v. Johnson

The following opinion was filed January 13, 1920: Vinje, J. The claim that plaintiff cannot maintain an action in equity for an accounting is not well taken. Where fraud in a fiduciary relation is alleged, as it. is here, equity will take jurisdiction. 1 Ruling Case Law, 224; 1 Corp. Jur. p. 623, § 70, par. 9. The issue of stock at less than its par value,-or with an understanding that part of it is not to be paid for, is contrary to the provisions of sec. 1753, Stats. 1898, and when such facts appear then the issue is fraudulent in law irrespective of the intent. The trial court-therefore erred in drawing the conclusion from the facts found that there was no fraud, so far as each individual issue was concerned. Its finding, however, must be taken as negativing any conspiracy being entered into between the stockholders receiving an over-issue for the purpose of defrauding the corporation. We cannot say that such finding has no support in the evidence. That being so, only an individual and not a joint liability results. Under the facts found and under the rule laid down in Whitewater T & P. B. M. Co. v. Baker, 142 Wis. 420, 125 N. W. 984, the court should have entered judgment against the defendant for the difference between the par value of the stock issued to him and the amount he paid therefor, to wit, the sum of $2,400, together with interest thereon at six per cent, per annum from May 26, 1903, when the stock was issued to him, and costs. ‘By the Court. — Judgment reversed, and cause remanded with directions to enter judgment as indicated in the opinion. The respondents moved for a rehearing. In support of the motion there was a brief by E. T. Cass [85] of Whitewater and F. K. Shuttlew'orth of Madison, attorneys for the respondents. In opposition thereto there was a brief by F. Henry Kiser of Whitewater and Page •& Ferris of Elkhorn, attorneys, and Kopp & Brunckhorst of Platteville, of counsel. The motion was denied, with $25 costs, on March 9, 1920.