Pullman v. Upton - 96 U.S. 328 (1877)
U.S. Supreme Court
Pullman v. Upton, 96 U.S. 328 (1877)
Pullman v. Upton
96 U.S. 328
Assumpsit by an assignee in bankruptcy of an insurance company against the holder of shares of its stock to enforce the collection of the balance due thereon, the same not having been paid pursuant to the order of the court sitting in bankruptcy. Plea, non assumpsit.
1. That the plea admits the existence of the corporation, and that the state alone can raise the question whether the corporate stock had been properly increased.
2. That the transferee of stock, who caused the transfer to be made to himself on the books of the corporation, although he holds it as collateral security for a debt of his transferror, is liable for such balance to such assignee.
This was assumpsit by Clark W. Upton, assignee in bankruptcy of the Great Western Insurance Company, against Albert B. Pullman, a stockholder in said company, to recover the balance remaining unpaid upon his stock.
The capital stock of the company was originally $100,000, and it was, Aug. 22, 1870, by the alleged consent and action of the stockholders, increased to $5,000,000. The company sustained heavy losses by the fire at Chicago, on the 8th and 9th of October, 1871, and it was duly adjudicated a bankrupt Feb. 6, 1872, and Upton was appointed its assignee. The court in which the proceedings in bankruptcy were pending ordered, July 7, 1872, that the entire amount unpaid on the capital stock of the company be paid to the assignee on or before the 15th of August then next ensuing, and that, in default of payment, the assignee proceed to collect the same. Conformably to the directions of the court, notice of this order was given to the stockholders.
One Myers owned twenty-five shares of the stock, of $100 each, whereon twenty percent had been paid, and, being indebted to Pullman, assigned them to him, in the summer of 1871, as collateral security. Pullman, on the 7th of the following October, caused them to be transferred to him on the books of the company, and he then surrendered the old certificate and took a new one for the same number of shares.
On the trial, Upton offered, and the court admitted in evidence, certain papers, to the admission of which Pullman objected on
the ground that each of them was immaterial. The court having admitted said order directing the payment of the balance due upon the stock, Pullman offered to prove that a less assessment would have sufficed to cover the losses of the company. To the rejection of said offer and to the overruling his objection to each paper so admitted he in due time excepted. Judgment having been rendered against him by the district court, which was affirmed in the circuit court, he sued out this writ, and assigns for error the rulings of the district court, upon his objection to the offered evidence, as follows:
The district court erred in admitting in evidence (1) the pamphlet copy of the charter of said company; (2) the certified copy of the proceedings for increase of the capital stock of said company; (3) the certified copy of the amended charter of said company, and the certified copy of the report of said company, dated December, 1870, and the license of said company to do business, and the auditor's report of the examination of the affairs of said company; (4) the order of said district court in bankruptcy making an assessment on the stock of said company; (5) the notice to Pullman of said assessment.