Harriage v. Daley , 121 Ark. 23 ( 1915 )

Wood, J.,

(after stating the facts.) Appellant fails to prove the -allegations of his complaint that the shares of stock “were falsely and fraudulently issued by the president .and secretary of the coal company, and that the president 'and secretary falsely and fraudulently represented that they had the right and authority to issue said certificate of stock. ’ ’ The undisputed evidence shows that $500 was paid by Harrison into the corporation when it was organized, and that thereafter $5,050 of stock was issued to Harrison for services he had rendered 'the company; that when the deal with appellant was closed the certificate of this stock was cancelled and reissued- for the same amount to appellant. Harrison, the secretary of the .coal company, testified to these facts and that he had authority to issue the stock. Daley, the president, testified in substance that the stock issued to Harrison was for money spent and services rendered on behalf of the coal company.

(1) It is well settled that in the absence of prohibitory law a corporation may issue stock in payment for services rendered it. Our Constitution provides “no private corporation shall issue stock or bonds except for money or property actually received or labor done.” Const. Art. 12, Sec. 8. Thus the authority to issue such stock is -expressly conferred. See Cook on Corporations, p. 111, section 18; Vineland Grapejuice Co. v. Chandler, 85 Atl. 213; Lee v. Cutrer, 96 Miss. 355; Rose Hill Cemetery Co. v. Dempster, 223 Ill. 567.

(2) There was no evidence to prove that the certificate of stock held by Harrison was illegally issued. Therefore such certificate is at least prima facie evidence of its valid issuance ; and appellant having alleged that it was issued without authority, the burden was upon him to prove the charge. The Sherman Center Town Co. v. Wm. B. Swigart, 43 Kan. 292.

If the stock was legally issued to Harrison in payment for services rendered the coal company, as the evidence shows, then it was paid up stock, and when this stock was reissued to appellant he received all that his contract called for, even according to his own contention. Appellant does not allege or prove any misrepresentations made by Daley or Harrison as to the value of the stock. They show that they made no such representations. True, the trial court found that the stock was not fully paid up, and that Daley and Harrison had no power to issue the original stock, but there is no evidence on behalf of appellant to sustain these findings, and 'the evidence on behalf of appellees shows the contrary. A judgment that is correct will not be reversed because the court has based its judgment upon erroneous grounds or given erroneous reasons therefor. Simpson v. Dicken, 117 Ark. 304.

(3) Appellant alleged that Daley and Harrison falsely represented that the lands were “to be held for and developed >by the coal company, that this representation was the inducement for him to accept the stock in part consideration for the sale of his lands. ’ ’ But these representations, if made, and if false and made with the intention to deceive, were promissory in character. They related to something that appellees Harrison and Daley said that they intended to do and promised to do in the future. Such representations could not form the basis of an action for deceit and fraud. Conoway v. Newman, 91 Ark. 324; Miller v. Sutliff, et al., 241 Ill. 521, 24 L. R. A. (N. S.) 735, and note; Moore v. Barksdale, 25 S. E. 529; McAllister v. Ind. & Cin. Rd. Co., 15 Ind. 11; Watkins v. West Wytheville Land & Imp. Company, 92 Va. 1.

The .decree is in all things correct, and is therefore affirmed.