Southwestern Slate Co. v. Stephens

The following opinion was filed March 30, 1909:

. Barnes, J.

Sec. II10b, Stats. (1898), as amended by ch. 506, Laws of 1905, was in force when the transactions out of which this action arose took place. The law forbade any *623foreign corporation to “transact business or acquire, hold or dispose of property in this state until such corporation” complied with the law. It also provided that “every contract made by or on behalf of any such foreign corporation affecting the personal liability thereof or relating to property within this state,” before it complied with the law, should be wholly void and unenforceable by the corporation, but might •be enforced against it.

The defendant seeks to defeat this action on two grounds: (1) That plaintiff was transacting business in this state in violation of law; and (2) that the contract upon which the suit is brought was made in Wisconsin and affected the personal liability of the defendant and was therefore void. The trial court found as a matter of fact that the subscription contract was made in Wisconsin and that it affected the personal liability of the plaintiff. If there is sufficient evidence in the record to sustain this finding the judgment must be affirmed. This result must follow regardless of whether the plaintiff was or was not transacting business in this state within the meaning of subd. 2, see. 1, of the 1905 law. We do not 'think the contracts inhibited by subd. 10 of sec. 1 of the act are limited to those made by a corporation doing business within the meaning of subd. 2. Such a construction would render the quoted portion of subd. 10 superfluous. The important question, therefore, becomes almost wholly one of fact and of legal inferences to be drawn therefrom.

In July of 1905 the secretary of the corporation was authorized to negotiate the sale of a portion of the unsubscribed ■stock of the company. In December Mr. Wootton was employed as a broker, by either the president or the secretary of the corporation, to make the sale. The court found that he was employed by the president. He was assisted in securing subscribers by Mr. N. B. Van Slyke, the president of the ■company, and by Mr. Higham, it being understood that the latter should be employed as manager of the company if *624$100,000 of the capital stock were disposed of so as to insure the necessary working capital to finance the enterprise. Mr.. Higham submitted his proposition to the board of directors of the corporation at Chicago at a meeting held on January 29, 1906. Mr. N. B. Van Slyke was authorized by the directors at such meeting to offer for sale, in accordance with a-subscription form agreed upon, and to sell, a sufficient amount of the treasury stock of the company to insure the permanent financing of it. He was also authorized to enter into a contract with Higham whenever the subscription was completed' as provided in the form of subscription proposed. Such subscription form contained two conditions, by one of which it was provided that not less than $100,000 should be subscribed, and by the other that Mr. Higham was to undertalcethe management of the business under a five-year contract. As we read the subscription contract, it would not be binding on the subscribers unless both conditions were fulfilled. N. B. Van Slyke, Higham, and Wootton all resided at Madison. All of the subscriptions were obtained in Wisconsin. The requisite amount was subscribed about March 1st. The-subscriptions were apparently approved by Van Slyke. The stock issued was sent him and collections therefor were made-through the bank in which he was interested. After the requisite subscriptions were obtained Mr. Van Slyke apparently exercised his authority to hire Higham. At a meeting of the-directors held at Chicago March 16th a resolution was passed approving of the contract made by Mr. Van Slyke with Mr. Higham on March 6th. It appears that the formal contract with Higham was actually signed after the meeting of March-16 th.

We think this testimony clearly shows an offer made by the plaintiff to sell its stock and to sell it in Wisconsin. When this offer was accepted by the subscribers and the requisite-$100,000 was subscribed, a completed contract was made, and it was made in this state. It might be avoided by failure or-*625refusal to employ Higham, but as a matter of fact he was employed at Madisou and the contract became complete in every particular. Greer v. Chartiers R. Co. 96 Pa. St. 391; European & N. A. R. Co. v. McLeod, 16 New Brunswick, 3; 10 Cyc. 384. The plaintiff was an organized corporation and as such had the right to offer its unsubscribed stock for sale and to make a valid sale of the same. Blunt v. Walker, 11 Wis. 334, 350. Having offered to sell its stock at a stipulated figure, no good reason is apparent why an acceptance of the offer would not make a binding contract, subject to repudiation by the purchaser if the manager stipulated for was not employed. The case before us is unlike Badger P. Co. v. Rose, 95 Wis. 145, 70 N. W. 302; Smith v. Burns B. & Mfg. Co. 132 Wis. 177, 111 N. W. 1123; and Franey v. Warner, 96 Wis. 222, 71 N. W. 81, where the corporations were not organized when the subscriptions were made; nor like Rehbein v. Rahr, 109 Wis. 136, 85 N. W. 315, where the statute required the subscriptions to be a part of the articles of organization as filed;. nor like Gilman v. Gross, 97 Wis. 224, 72 N. W. 885, where the transaction between the corporation and the prospective stockholder took the form of an offer to purchase by the latter and there was no acceptance by the former. We know of no case in this court holding that where a corporation offers for sale its unsold stock and such offer is accepted, there must be an acceptance of the acceptance to make a binding contract. Moreover, if acceptance of the subscriptions by the corporation were necessary to make a binding contract, we think the evidence is sufficient to sustain the finding of the trial court that such acceptance was made in Wisconsin by the duly authorized officer of the corporation, Mr. Van Slyke.

The contract having been made in Wisconsin, the subscribers became members of the corporation, and the plaintiff was hound to deliver the muniments of title showing the interest they had acquired in the corporation, and, in the event of its *626failure so to do, delivery might be compelled by appropriate proceedings in the courts. Furthermore, by virtue of such contract of purchase the subscribers became entitled to enforce the ordinary rights of stockholders against the corporation. 1 Cook, Corp. § 192, and cases cited. A single contract falls within the ban of the statute. Allen v. Milwaukee, 128 Wis. 678, 106 N. W. 1099. It follows, therefore, that the contract was not only made within the state, but that it affected the personal liability of the plaintiff and was void under our statute. What was really sold was a fractional interest in the corporation, and we do not think the transaction involved any question of interstate commerce. International T. Co. v. Peterson, 133 Wis. 302, 113 N. W. 730. Neither do we think that the act of 1905 was intended to amend the law as it existed so as to relieve all foreign corporations that did not have a portion of their capital invested in Wisconsin from complying with the act if such corporations actually transacted business within the state or made contracts therein upon which they assumed a personal liability.

By the Court. — Judgment affirmed.

Winslow, O. J., took no part.

A motion for a rehearing was denied June 3, 1909.