Strickler v. McElroy

Opinion by

Beavee, J.,

The plaintiff, who was a stockholder, sought to recover in the court below from the defendants, who were directors, or representatives of a director, of the Wrighfsville Hardware Co., his proportion of the difference between the price paid for certain stock of the corporation purchased by the defendants as individuals from themselves as directors at par, and that at which it was subsequently sold by them, on the ground that the action of the directors was a fraud upon the rights of the other stockholders.

In the trial of the cause there were offered in evidence certain certificates of stock representing this transaction. The offer was rejected by the court on the ground that the certificates were dated March 13, 1901, and the suit, in which the recovery was sought to be made, was brought March 22, 1907, more than six years after the date of these certificates. When the offer was first made, there was no intimation therein that the plaintiff would show later that the certificates were not delivered to the defendants nor paid for by them until April 2 following their date. It subsequently appeared, upon the examination of one of the defendants, who was called by the plaintiff as a witness for cross-examination, that, although dated March 13, the certificates were not delivered to the defendants nor paid for by them until April 2, the sale being completed by the delivery of, and payment for, the stock at that time. The offer was then made, in which it is distinctly stated “that they (the defendants) did not consummate the transaction, or give any notice to the plaintiff, or to any of the stockholders, in regard thereto, until April 2, 1901, at which time the whole 172 shares were paid for by the check of Henry McElroy, one of the defendants, for $1,720, for the purpose of sustaining the issue on the part of the plaintiff, and showing the liability of these defendants to him for his proportion of the profit realized by them from the 172 shares of stock.”

When this evidence was first offered, it did not appear that the sale was not completed as of the date of the certificate and the court may have had reason to assume that that day was the actual date of the sale. The plaintiff was probably unable to accompany the offer by what would be subsequently proved as to the time that the sale was completed, in view of the fact that the testimony was elicited from one of the defendants as on cross-examination, and, therefore, it is difficult for us to determine that either the plaintiff could have made his offer more full or that the court was not justified, as it was made, in rejecting it. That, however, is a question of little practical value, because the subsequent offer raised the entire question of the admissibility of these certificates of stock as evidence under the facts, as they were finally brought out by the cross-examination of one of the defendants, as stated.

It appears to us that this last offer was admissible for the reason that these shares of stock did not become the property of the defendants, until they were delivered by the proper officers of the corporation and paid for, and, inasmuch as this time was less than six years from the date of the writ, the offer was proper and should have been received. It seems to us that, if the plaintiff had brought his action on March 14, 1901, an entirely proper defense to it would have been the fact that no stock had been transferred to the defendants and no money paid-by them, and that, therefore, no sale had been completed. It would have been impossible for the plaintiff to have maintained an action at law for the excess of the value of the stock above the price paid therefor, before the consummation of the transaction, which took place on April 2, 1901. The plaintiff was, therefore, entirely within his rights under the statute of limitations in bringing his action at any time within six years from April 2, 1901.

The charge of the court is also assigned for error, in which it is said, as the conclusion thereof: “Therefore, we have excluded his (plaintiff’s) testimony as to the issuing of these shares of stock. That ends his contention in this court to recover in this case, I presume, as he has failed to overcome the bar of the statute of limitations. It will be your duty, on account of the plaintiff not being able to sustain his claim, to render a verdict in favor of the defendants.”

Holding as we have already said, that the sale was not completed and the ownership of the stock transferred from the corporation to the defendants until April 2, the court was in error as to the application of the bar of the statute of limitations. The third and fourth assignments of error are, therefore, sustained-.

Judgment reversed, -with a new venire.