Troup v. Horbach

74 N.W. 326, 53 Neb. 795, 1898 Neb. LEXIS 500
CourtNebraska Supreme Court
DecidedFebruary 17, 1898
DocketNo. 9375
StatusPublished
Cited by11 cases

This text of 74 N.W. 326 (Troup v. Horbach) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Troup v. Horbach, 74 N.W. 326, 53 Neb. 795, 1898 Neb. LEXIS 500 (Neb. 1898).

Opinion

Ryan, C.

This appeal was advanced for hearing upon an agreement of parties in compliance with rule 2. (52 Neb. ix.) The action was brought in the district court of Gage county, wherein there were judgments against the several defendants conformably with the prayer of the petition. Plaintiffs, alleged that they were creditors of the Beatrice Rapid Transit & Power- Company in various sums which were described in separate paragraphs, and in many instances were evidenced by judgments against that company. They further alleged that under a decree of the United States circuit court for the eighth circuit, district of Nebraska, all the property of the Beatrice Rapid Transit Company had been sold and that it was without any property for the payment of its aforesaid indebtedness. The prayer of the petition was as follows: “Wherefore plaintiffs pray that each of said defendants may be held liable for the several amounts hereinbefore claimed due from them upon the stock of the Beatrice Rapid Transit & Power Company, as herein-before alleged, and that said defendants, and each of them, may be required to pay to these several plaintiffs the amounts of their several claims; that the court may adjudge the amount due from, each may be held and decreed to be due to these several plaintiffs the full amount of their respective claims, and that under the order of 'this court the amounts so. found due from said several defendants may be collected of them, severally, the full amount found to be due to these plaintiffs, together with the costs of this proceeding; that the said John A. Horbach and Paul W. I-Iorbach may be held jointly and severally liable for 'the amount of stock issued to the said Paul W. Horbach, as hereinbefore alleged, and that the several plaintiffs may have such other farther and dif[801]*801ferent relief as in equity they may be entitled to, and for their costs.” From this prayer it is clear that the defendants were proceeded against as being liable as holders of shares of the Beatrice Rapid Transit & Power Company capital stock on .the assumption that these shares had not been paid for. Issues were joined by answers, except in the instances wherein there were defaults.

To illustrate the general theory on which it was sought to hold liable certain of the stockholders' it will be sufficient to quote one sample paragraph of the petition. We shall also quote another paragraph which supplements the allegations of that already referred to. The two paragraphs above indicated are in this language:

“The defendant Beatrice Rapid Transit & PoAver Company issued to the defendant George R. Scott 115 shares of their capital stock of the par value of $11,500; that the only consideration paid by said Scott for the issuing of. said stock was services rendered to the said rapid transit company, and real estate transferred by said Scott and wife to said rapid transit company, and that the total amount of said real estate and sendees did not exceed the amount of $7,000; that there is still due from said Scott on his said stock the sum of $4,500.
“The defendant Beatrice Rapid Transit & Power Company issued to the defendants William Ebright, E. S. Cushman, full Christian name unknown, L. P. Easterday, full name unknoAvn, William Bozarth, Jacob Klein, William H. Tichnor, Jonathan S. Grable, John Ellis one or more shares each of its capital stock of the par value of $100 per share; that the only consideration paid therefor was the conveyance of certain real estate conveyed by each of them severally to the said rapid transit company, but these plaintiffs have not the records of said company and cannot give the exact amount of stock issued to each of them severally, nor the amounts in fact paid thereon, nor the value of the property given in pay-[802]*802merit, therefor, but plaintiffs allege that they did not in fact pay the full par value of their said stock and that tlreie is si ill due from each of said defendants a small amount on each of their said shares of stock so issued to them which plaintiffs ask they may be required, upon a hearing and accounting in this court, to pay to these plaintiffs. And plaintiffs allege that said defendants Schell, Brumback, Spencer, Beatrice Real Estate & Trust Company, Johnston, Davis, Blakely, Blakely, Scott, Ryan, Ebriglit, Cushman, Easterday, Bozarth, Klein, Tichnor, Grable, and Ellis, and each of them, had full knowledge that the respective share's of stock issued to them respectively, as alleged, had not. been paid for in full and that the said property and services had been greatly overvalued, and that the payment for-such stock by said property or services at such overvaluation was a fraud on the creditors of said rapid transit company.”

In the petition there was no charge of fraud against the parties first named except the above language, and this, it is quite clear, was a mere conclusion of the pleader deduced from the facts alleged. Whether or not this deduction was correct, is one of the questions which, later, we shall consider. With reference to the liability of Scott the court found in its decree as follows:

“The court further finds that 200 shares of the capital stock of the rapid transit and power company, being certificates 46 to 50 inclusive, were issued to George R. and W. W. Scott in consideration of the conveyance to said company by said George R. Scott of certain real estate; that said shares were of the value of $20,000, and that the property in exchange for which they were issued was of the fair cash value of $6,000; that said property was grossly overvalued.”

■ In the decree there was a paragraph in this language:

“The court, further finds that at the time that the aforesaid shares of stock were issued to the said L. E. Spencer, N. N. Brumback,. G.' M. Johnston, S’ K. Davis, O. L. Schell, Jacob Klein, Nathan Blakely, Mrs. I. W. Funck, [803]*803J. S. Grable, John Ellis, H. O. Bozarth, William Tichnor, William Ebright, George R. Scott, Ira L. Ryan, Beatrice Real Estate & Trust Company, L. F. Easterday, Walter W. Scott, each and all of the persons had full knowledge that the property or services in consideration for which the said shares of stock were issued by the said corporation to said several persons respectively, was greatly disproportionate in value to the face of the shares of stock exchanged therefor, and that the officer of said corporation issuing said stock, and the parties receiving the same, both well knew that said great disparity in value existed, and each of the said issues of stock to each of the several persons aforesaid was made with the full understanding and knowledge that the property exchanged for said stock was worth for the most part only about one-half of the face value of said stock and- was in fact of the value hereinbefore found by the court.”

If we understand correctly the theory upon which the court proceeded in entering judgment pursuant to the above findings, it was that parties who purchased stock and in payment therefor transferred to the company real property, were only entitled to receive credit for the actual value of such real property at the time it was transferred. There was no evidence that there was any misrepresentation as to the value of this property upon which misrepresentation the company had. acted to its injury, indeed, in most instances misrepresentation of value could scarcely have imposed upon the officers of the company, for the property was within the corporate limits of the city of Beatrice.

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Cite This Page — Counsel Stack

Bluebook (online)
74 N.W. 326, 53 Neb. 795, 1898 Neb. LEXIS 500, Counsel Stack Legal Research, https://law.counselstack.com/opinion/troup-v-horbach-neb-1898.