Electric Welding Co. v. Prince

81 N.E. 306, 195 Mass. 242, 1907 Mass. LEXIS 1283
CourtMassachusetts Supreme Judicial Court
DecidedMay 13, 1907
StatusPublished
Cited by15 cases

This text of 81 N.E. 306 (Electric Welding Co. v. Prince) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electric Welding Co. v. Prince, 81 N.E. 306, 195 Mass. 242, 1907 Mass. LEXIS 1283 (Mass. 1907).

Opinion

Loring, J.

Under the titles of these two cases we have before us twenty cases brought to recover certain sums alleged to be due to the plaintiff from the defendants, in payment of their several subscriptions to shares in its (the plaintiff’s) ordinary share capital. The cases were sent to an auditor. The evidence at the trial consisted of his report and other [247]*247evidence, some of which was not before him. The presiding judge directed a verdict for-the defendants and reported the cases to this court.

Before the cases came on for trial, Eaton, the defendant in one of the actions, died, and his executor was summoned in to defend against his objection and exception. The question raised by this exception is also submitted to us by this report.

The circumstances out of which these actions arose are stated at length in the auditor’s report and are in substance as follows:

In October, 1889, the Thomson European Electric Welding Company (which we shall hereafter speak of as the Thomson Company), being the owner of certain patents for Great Britain and Europe for welding iron by electricity, entered into a contract with one Lenon, by which Lenon agreed to form a company to buy its patents. The plaintiff company was incorporated under the English companies acts in pursuance of this agreement. Lenon further agreed in this contract to have thirty thousand ordinary shares of the capital stock of the plaintiff ■corporation underwritten, and, when that had been done, to have the ordinary shares advertised for public sale. It was further provided in this agreement that the transfer of the patents was to take place when thirty thousand ordinary shares had been subscribed for, and that the whole transaction should be completed before June 1,1890. This contract was entered into by Lenon as agent for the London Contract Corporation (which we shall speak of hereafter as the Contract Corporation), and its performance was guaranteed by that corporation.

During the months of April and May of the same year, the promoters procured some sixty-four or sixty-nine underwriting agreements in the United States, most of them in and about Boston. At this time the Contract Corporation was in fact and in law the promoter, for Lenon was acting as its agent in making the contract already spoken of. Later on (as will be stated) he dropped out and a new contract was made between the Thomson Company and the Contract Corporation. Since Lenon acted as agent of the Contract Corporation in all he did, this change did not affect the legal relations of the parties, and we shall hereafter in all cases speak of the promoters generally, without [248]*248regard to the time in question being before or after Lenon dropped out. The sixty-four or sixty-nine underwriters included the twenty defendants now before the court.

These underwriting agreements between the promoters and the defendants were in the form of an underwriting letter signed by each defendant on a blank prepared by the promoters. This letter being accepted by the promoters became a binding contract between the promoters and the several defendants. The auditor found that this letter was an offer by the several defendants to the promoters not accepted by the promoters. In this matter we are of opinion that (on the facts stated in his report) the auditor was wrong. We shall consider this matter later on.

With the underwriting agreement each defendant handed the promoters an application for fifty ordinary shares of ¿£10 each and another application for one founders’ share, and paid to the promoters ¿£25, being ten shillings per share on the fifty ordinary shares, and being payment in full, ¿£10, for the one founders’ share.

The rights of the parties to this contract of underwriting are to be gathered from the four corners of this underwriting letter and the preparatory draft prospectus referred to therein, and will have to be construed with care before this case is disposed of. It is not necessary, however, in stating the sequence of events, to go into that matter now.

On May 1,1890, the plaintiff company was incorporated under the English companies act.

By a series of supplementary agreements the time for bringing out the plaintiff company was postponed until October 27, 1891, when the transfer of the patents to it by the Contract Corporation was carried into effect. In one of these agreements Lenon dropped out, as we already have said. At that time releases were executed by Lenon, the Thomson Company and the Contract Corporation, and a new contract was made between the Thomson Company and the Contract Corporation. Changes also were made in the make up of the plaintiff company, and in the terms on which the purchase of the patents was to be made.

No further underwriting agreements were procured by the promoters between May, 1890, and August of the following [249]*249year. In August, 1891, the promoters procured further underwriting agreements for all the ordinary shares subsequently offered to the public except nineteen hundred and seventeen, and these the Contract Corporation, the promoter, elected to underwrite itself.

On August 28, 1891, sixteen thousand six hundred and sixty-seven ordinary shares were offered to the public. The public took four hundred and seventy-two, a number slightly in excess of two per cent of the amount offered.

The applications for ordinary shares signed by the defendants were each of them for fifty ordinary shares, with the exception that the defendant Wetherbee’s application was for one hundred ordinary shares. The directors of the plaintiff company, on these applications being filed with them, allotted to each ninety-eight per cent of the amount applied for, that is to say, forty-nine shares to each defendant except Wetherbee, and ninety-eight to Wetherbee. At the same time the Contract Corporation paid to the plaintiff company the sums paid it by the defendants, being ten shillings a share on the fifty shares applied for (£25 in ease of each defendant except Wetherbee, and £50 in case of Wetherbee), and payment in full for the founders’ shares applied for (£10 in case of each defendant except Wetherbee, and £20 in case of Wetherbee).

“ Notice of the allotments was duly made,” and “ In due time the names of the defendants were placed upon the list of registered shareholders of ordinary stock and are still upon the list,” to quote the findings of the auditor.

By the terms of the application through its reference to the prospectus issued to the public, a further sum of £8 10s. became due from each holder of ordinary shares on allotment, and a first instalment of £2 a share became due on October 31,1891, under a call duly made. Notices of this call were duly mailed to each defendant.

On May 20, 1892, the defendant Prince paid £171, being the £3 10s. per share due'on his forty-nine ordinary shares on their being allotted to him, and on the same date the defendant Pope paid £98, being the £2 due as the first instalment on each of his forty-nine ordinary shares.

The actions now before us were brought in May, 1894. In [250]*250them the plaintiff seeks to recover from the defendant Prince ¿£98, being the first instalment of ¿£2 a share on forty-nine ordinary shares, and from the defendant Pope ¿£171, being ¿£8 10s. due on allotment on his forty-nine ordinary shares. From the seventeen defendants other than Wetherbee like sums of ¿6171 + ¿£98, or ¿£269 each, and from Wetherbee double that amount, or ¿6538, were sued for.

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Cite This Page — Counsel Stack

Bluebook (online)
81 N.E. 306, 195 Mass. 242, 1907 Mass. LEXIS 1283, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electric-welding-co-v-prince-mass-1907.