claim of the defendant, and that, when the trial judge admitted the foregoing stipulation over the objection of the plaintiff, he committed error prejudicial to plaintiff. [3] The third claim of the defendant is that his subscription was conditional and that he withdrew it before it was accepted by the company. On the 19th day of December, 1919, the authorized capital stock of the company was $10,000,000, $5,000,000 of which was 7 per cent. cumulative preferred stock, divided into 50.000 shares of $100 each, and $5,000,000 of which was common stock, divided into 50,000 shares of $100 each, and on said day there was issued and outstanding 11,344 shares of its authorized preferred stock, and 23,619 shares of its authorized common stock. On that day the directors of the company passed the following resolution, to wit: "Whereas, in order to obtain additional capital for the purpose of enlarging its plant and providing the funds necessary to take care of the growth and increase in its business, the board of directors of the Portage Rubber Company deemed it advisable to sell a certain amount of its unissued capital stock, both preferred and common. "Therefore be it resolved that there be offered to the present holders of common stock five thousand (5,000) shares each of the unissued preferred and common stock of the corporation, each stockholder to be entitled to subscribe for both preferred and common stock at par, in an amount of each equal to twenty per cent. (20%) of his present holdings of common stock, all subscriptions to be on file in the company's office at Barberton, Ohio, on or before the close of business on the 10th day of January, 1920, and to be payable either in full February 5, 1920, or 25 per cent. on that date, 25 per cent. March 5, 1920, 25 per cent. April 5, 1920, and 25 per cent. May 5, 1920." In pursuance of the provisions of this resolution the president of the company sent on December 24, 1919, to its common stockholders, of which the defendant was one, a letter, of which the following is a copy: "We are pleased to advise you that since the change in management which became effective on September 17, 1919, our business has been stimulated to such an extent that we must provide for future expansion and take care in a satisfactory way of the additional volume already booked. "With these facts developing under their immediate observation, your directors realize that to take care of the increased business, which will make necessary plant additions, as well as largely increased inventories of materials, there will have to be provided additional funds. They have therefore voted to sell five thousand (5,000) shares each of common and preferred stock of the company now in its treasury to our stockholders at par. "Each stockholder will be entitled to subscribe for one share each of common and preferred stock for each five shares of common stock now owned; in other words, each stockhlder has the right to subscribe for the new stock up to twenty (20) per cent. of his present holdings of common stock, but he must subscribe for both common and preferred in equal amounts. He cannot subscribe for common alone, nor for preferred alone. "The directors requested me to advise the stockholders accordingly, and to caution each one to send his subscription to the office at Barberton on or before January 10, 1920. The right to subscribe will absolutely end on that day. tion blanks; one to be mailed to the company; "Inclosed herewith you will find two subscripthe other to be kept by you for reference. Do not neglect to make your subscription at once, for the time within which it can be made is short and will quickly slip by. "It is with great personal pleasure that I convey the foregoing information to you stockholders, and bespeak for our company a very prosperous year 1920." This letter was received by defendant, and on the 5th day of January he filled out and signed the subscription blank therein referred to, a copy of such subscription being as follows: "I, the undersigned, being a holder of common stock of the Portage Rubber Company, hereby subscribe for my pro rata share of the common and preferred stock of said the Portage Rubber Company offered for sale by you when, as and if issued as set forth in the letter of Mr. M. S. Long, President of said the Portage Rubber Company, addressed to the stockholders of the company under date of December 24, 1919. "My holdings of common stock of the Portage Rubber Company at the opening of the stock books of said company on the morning of January 3, 1920, were 150 shares, as evidenced by certificates for said number of shares duly signed and executed, now in my possession and registered in my name. My subscription, therefore, based on 20 per cent. of such holdings, is and I hereby subscribe for 30 shares of each of common and preferred stock, for which I hereby agree to pay to the company at the rate of one hundred dollars ($100) per share, each of both common and preferred stock, payable as follows: 25 per cent. thereof on February 5, 1920; 25 per cent. thereof on March 5, 1920; 25 per cent. thereof on April 5, 1920; 25 per cent. thereof on May 5, 1920; or payable in full on February 5, 1920, at my election. " letter of same date, a copy of which is: The subscription was accompanied by his "Find inclosed subscription as per notice. I ask for information. If I pay for all of my pro rata stock as soon as notified by the company, will my stock be entitled to a dividend from the date of payment, or will the stock be dated from May 5, 1920. I write this as I could as well pay the cash now as well as later if I am allowed dividends from the time of payment. Will you please answer this and say just what stock I am entitled to, and, if the stock is to draw dividends from the date of payment, I probably will pay for the same at once. "What about the balance of stock left not taken by stockholders; is this to be pro rated to those that are willing to take more or sold on the market?" (153 N.E.) On January 6, 1920, the company, in an-1. swer to this letter, sent to defendant a lctter, of which the following is a copy: "Replying to yours of the 5th inst. will say that all stock paid for on or before February 5th will be dated February 6, 1920, and will draw pro rata dividends thereafter. "According to our records you held on or before January 3, 1920, 150 shares of common stock, which entitles you to subscribe for 30 shares each of common and preferred. "With reference to the balance of the stock left which is not taken by stockholders, of course, we cannot tell at the present time whether there will be any or not. That will be taken care of later. " On January 10, 1920, the defendant wrote a letter to the company, of which the following is a copy: It is conceded that the company had the authorized and unissued capital stock as claimed in the petition, and as hereinbefore set forth, before the resolution was passed, and that the board of directors passed the foregoing resolution, and that, in pursuance thereof and the letter of said president, the defendant sent in said subscription. It is the contention of the defendant that the words "when, as and if issued" contained in the written subscription, made it a conditional one, which gave the defendant the right to withdraw it before it was accepted. The defendant further claims that these words required the company to accept the subscription by an actual tender of the stock for which the defendant subscribed, and that certificates representing the number of shares before such tender, which was never made, he could withdraw his subscription; which he did in his letter of January 10. The defendant also claims that it was incumbent upon the company to take affirmative action of some sort to accept said subscription, which it did not do after it was received by it, and that the said subscription constituted merely a continuing offer to the company to take the stock, which was not accepted by the company, and that defendant had a right to withdraw it before it was accepted. "I have read the report of the Portage Rubber Company in the Plain Dealer and am surprised at this report. Before I purchased my stock in 1917 I called at your factory for information concerning the financial standing of the company and was informed that it was all 'O. K.' and the stock was worth $165 per share and at about this price I paid for my common stock. Now after over two years of the best times in the history of the rubber business I see that the common stock is quoted worth $85 per share and within this period hundreds of new rubber companies have been organized and have made good. It does appear that there must be someThe foregoing section of the Code gave the thing radical out of place or there has been a defendant and other stockholders the right great game of profiteering-so much so that I to subscribe for their proportionate amount don't care to take my proportion of stock that of the new stock. How and under what conI have notified you that I would take before I dition? Why, "when and as issued," deread this report. So I hereby ask you to can-pendent upon the action of the board of dicel this order from me through a letter. If you had given us a true report, which you should have done before you sent out your offer, I should have rejected it at once. The question, therefore, arises as a matter of law from the conceded facts set forth in the foregoing copies: Did the defendant have a right to withdraw his subscription, or when he sent his subscription to the company, and it was received by the company, did it constitute a completed contract between him and the company? Section 8699, General Code, under which the stock was to be issued, provides as follows: "The holders of record of the common stock of a corporation shall have the right, when and as issued, to subscribe for the increase stock or for new issues of stock of such corporation in such proportion as their respective common shares bear to the whole number of common shares already issued, at such price as the board of directors may fix. If any holder fails to avail himself of such right within the time fixed by the board of directors, the stock so unsubscribed may be disposed of in such manner as the board of directors prescribe. The right of any stockholders to subscribe for such stock shall not apply to any authorized and unissued stock appropriated by the board of directors, either for the purpose of retiring preferred stock or for any other purpose." rectors. So, when said board passed the resolution of December 19, 1919, the stock mentioned therein, so far as the company and its stockholders were concerned, was immediately changed in contemplation of law from unissued to issued stock, and the words "when and as issued," in the section, and the words "when, as and if issued," in said subscription, had the same meaning, so far as this case is concerned, and do not mean subsequent action by the board of directors, but refer to and mean the prior action of the board of directors upon which the letter of December 24, 1919, was based. This meaning is clearly implied in the language used in said section of the Code, and the stock had to be issued before a subscription could be made or received for any part of it, and the issuance or nonissuance of stock certificates, or a tender or nontender of them to defendant, did not affect the rights of either party. Therefore, when the company received the subscription from defendant, it was a full and unconditional acceptance by him of the company's offer, made and authorized under section 8699, to subscribe and take the number of shares to which he was entitled under said section, being the number set forth in his subscription. This, then, became an executed contract between the parties; the obliga the allegations of fraud by a preponderance of the evidence, and refused to charge that it was necessary to do so by clear and convincing evidence, as claimed by the plaintiff, to which general charge the plaintiff duly excepted. It must be borne in mind in this connection that by the plaintiff's petition he had an action at law for money only and that the second ground of defense alleged in the answer was also one in law wherein the defendant set up the alleged fraud and misrepresentation to defeat the apparent legal obligation growing out of his subscription. tion of the company being to allot and set, it was incumbent upon the defendant to prove aside upon its stock book and records to and for the defendant the shares of stock for which the defendant had subscribed, and, upon receipt by it of the price therefor, to issue to him certificates of stock as evidence of his new shares in said company. A corporation being an invisible and intangible thing, and existing only in contemplation of law, the shares which each shareholder owns, or to which he becomes entitled, are also an invisible and intangible thing, existing only in contemplation of law and in the minds of the parties interested therein. When a certificate of stock is issued, it is like a promissory note, which is not the debt itself, but only evidence thereof; and so the stock certificates are not the shares which the shareholder owns, but only evidence of the interest of the stockholder in the company. We are, therefore, of the opinion that the subscription to said stock by said defendant was not a conditional subscription which could be withdrawn by him, and constituted in law a written promise to pay to said company the amount stated in said subscription upon the terms contained therein, and a tender of the certificates of stock was not a necessary action precedent to the right of the plaintiff to recover on such subscription. We, of course, recognize the difference between a sale of stock and a subscription for stock, holding as we have before indicated that this is a subscription. We therefore hold that there is no merit in this claim of the defendant. [2] Having disposed of all of the claims of the defendant, we will now proceed to determine whether there is any merit in the errors alleged by the plaintiff, which he claims occurred upon the trial of the cause to the jury. The first assignment of error claimed by the plaintiff relates to the refusal of the court to charge before argument, as requested, and to the charge of the court as given, wherein it was stated that the defendant was entitled to a verdict at the hands of the jury if he proved the charges of fraud and misrepresentation by a preponderance of the evidence. The plaintiff submitted three requests to be given before argument, one of which was given and two of which were refused, but there was no exception taken by the plaintiff to the court's refusal to give these requests; but, after argument, and before the general charge was given, the court was again requested to give the requests refused as a part of its general charge, which the court refused to do, and exception was taken. These at least had the effect of challenging the court's attention to the claims of the plaintiff as to the amount of proof required to sustain the allegations of fraud and misrepresentation set up by the defendant, but the court in its general charge told the jury that It will be observed that the defendant in his answer tendered an issue of fact, to be determined by the jury, and which, if proved, constituted a complete and full defense. Quebec Bank of Toronto v. Weyand & Jung, 30 Ohio St. at page 130. In his answer defendant admitted that he signed the written subscription which was the basis of this suit, and did not deny upon the trial that the subscription set forth accurately its terms and conditions, and there was no claim made that it did not fully set forth what the defendant intended to have contained therein, the contention of the defendant being that he signed the subscription through the fraud and misrepresentation of the officers and agents of the company; that this fraud and misrepre sentation were what induced bim to sign the same. It will be observed that the defendant was not attempting to avoid the subscription because of any inherent misrepresentations in it, but solely through the representations which induced him to sign it, and the plaintiff claims that under these facts, it being a case of fraud, the defendant ought to have proved these allegations by clear and convincing evidence. With this contention of the plaintiff we do not agree, although we recognize such a rule in various cases and under various circumstances, but mostly in equity, and in cases where the complaining party seeks to establish by parol testimony a modification or cancellation of the instrument which he signed. In these cases the evidence is introduced to annul, contradict, or vary the terms of a written instrument; the claim being that the instrument itself does not set forth the terms intended to be therein; the courts holding that, if the complaining party desires to modify or avoid what he has put in writing, because the writing does not accurately set forth what he intended to have therein, he ought to prove by clear and convincing evidence that what he has written and signed is incorrect. In the instant case the terms in the writing are admitted to be correct and accurately stated, and the evidence of the defendant does not attempt to vary or contradict them, but the defendant claims that wholly through the inducement of plaintiff's (153 N.E.) agents, made prior thereto, he signed said fraud. The Supreme Court held that there writing. was no error in the refusal to charge as reThe plaintiff has cited several cases in sup-quested, or in the charge as given by the trial port of his claim that the proof in this case | court, and, in setting forth the law of that ought to have been established by clear and case, the syllabus reads: convincing evidence. "On the trial of a civil action wherein the claim or defense is based on an alleged fraud, the issue may be determined in acordance with the preponderance or weight of evidence, whether the facts constituting the alleged fraud do, or do not, amount to an indictable offense." The cases of Jones v. Pickle, 7 Ohio App. 33, 27 O. C. A. 413, and Edwards Mfg. Co. v. Perry, 4 Ohio App. 390, 22 Ohio Cir. Ct. R. (N. S.) 422, were cases of fraud, where the releases were signed by the parties upon the theory that they were signing receipts for In the case of Mason v. Moore, supra, Mamoney instead of releases; in other words, where the parties signed one sort of an in- son purchased some stock in a national bank, strument when they thought they were sign-in which Moore and others were directors, ing another, which, if proved, made the instrument void, and not voidable, and falling within the rule hereinbefore stated where evidence is introduced to contradict or vary or annul something that the parties had put in writing. The case of McDonald & Frazier v. Schervish, 26 Ohio Cir. Ct. R. (N. S.) 394, cited by the plaintiff, was also, according to the opinion, a suit to set aside a contract in writing, to wit, a policy of insurance, and the court in that case held that it must be done by clear and convincing evidence. his claim being that the directors had put out dition of the bank; that relying upon the shares of stock in the bank and paid $1,000 same he purchased, from a third person, 10 therefor; and that after the failure of the chased the stock, he was required to pay an bank, which occurred shortly after he puradditional $1,000 under the national banking law. In his charge to the jury, the trial judge said: a false and fraudulent statement of the con evidence that, at the time of the attesting and "It must appear by a preponderance of the publication of said report, the directors so attesting this report, or who assented to and directed the publication of the same, did so know The other cases cited by plaintiff likewise do not contain facts similar to the ones in the instant case, and all of the facts are easi-ing the report to be false, or under such circumly distinguishable from the facts in the instant case. For that reason we do not think they are controlling. We think the law upon this question in Ohio is settled, and settled correctly, in the cases of Jones, Stranathan & Co. v. Greaves, 26 Ohio St. 2, 20 Am. Rep. 752, and Mason v. Moore, 73 Ohio St. 275, 76 N. E. 932, 4 L. R. A. (N. S.) 597, 4 Ann. Cas. 240. stances as will warrant the jury in finding by a preponderance of the evidence, that such directors, by the exercise of ordinary care and prufalse in some one or more of the particulars set dence would have known that said report was forth in the petition." This charge of the court was approved by the Supreme Court in the third syllabus of the foregoing case, and it seems to us these two cases clearly settle the law of this state in cases of this kind. We know of no reason why a person alleging frand, as the defendant did in this case, should be required to prove it by any higher degree of proof than is required in the trial of an ordinary civil case to a jury. We therefore hold that the first ground of error alleged by the plaintiff is not well taken, and that the court did charge properly upon this subject. The second assignment of error urged by the plaintiff is that the verdict of the jury is manifestly against the weight of the evidence. In the Stranathan Case, Greaves sued to recover a balance for labor and material in tin roofing a building of Jones, Stranathan & Co., under a special contract; he claiming that he was to furnish "the best quality of roofing tin" and was to be paid $1,100, which Jones, Stranathan & Co. agreed to pay. Afterwards Greaves furnished the foregoing quality of tin, and Jones, Stranathan & Co. claimed that he was to furnish a better quality of tin, which was worth $4 per box more, and in order to induce him to rebate $4 a box for the tin used they fraudulently changed the specifications upon which the contract was based Having already taken much time and space by inserting the words "IX charcoal tin." in setting forth our decision in this case, we After the contract was modified, rebating will say that we have read all of the evidence the price, Greaves discovered the fraud and contained in the bill of exceptions, and, alsued for the original amount of the contract, though we find some evidence justifying and $1,100. On trial in the lower court, the de- requiring the submission to the jury of the fendants requested the judge to charge that, issue of fraud and bad faith tendered in the before the jury could find them guilty of the pleadings, without setting out in detail and fraud alleged by Greaves, the jury must be analyzing such evidence, we are unanimously satisfied from the evidence beyond a reason-of the opinion that the verdict of the jury able doubt. This the trial court refused to is manifestly against the weight of the evido, but charged that a preponderance of the evidence would be sufficient to prove the dence. We also desire to say that the evidence of the defendant relative to what he saw and read in the newspaper was hearsay, and was improperly admitted for the consideration of the jury, and, taken in connection with the improper admission of the evidence in regard to the noncompliance of said company with the Blue Sky Law, was prejudicial to the plaintiff. For the reasons stated the judgment of the trial court is reversed, and the cause remanded to that court for further proceedings as provided by law. Judgment reversed, and cause remanded. FUNK, P. J., and WASHBURN, J., concur. (20 Ohio App. 123) ASCHERENKA v. LONSDALE MFG. CO. (Court of Appeals of Ohio, Hamilton County. Sept. 25, 1923. Motion to Certify Rec ord Overruled Feb. 26, 1924.) 1. Garnishment 148-Garnishee's answer denying indebtedness to defendant held not of itself to warrant discharge of attachment. The answer of a garnishee that he is not indebted to the defendant is not of itself suffi cient to warrant the discharge of an attach ment. 2. Attachment 248-Statement in motion to discharge attachment, that plaintiff had entered appearance and elected to pursue remedy in chancery in another jurisdiction and was enjoined from prosecuting claim in any other cause, held matters of defense, not available on motion to discharge. The grounds stated in a motion to discharge an attachment, that plaintiff had entered his appearance and elected to pursue his remedy in a chancery court of another jurisdiction and was enjoined by said chancery proceeding from prosecuting his claim against defendant in any other cause, are matters of defense, and cannot be presented on a hearing on such motion to discharge. Action by Louis M. Ascherenka against the Lonsdale Manufacturing Company, in which the Marietta Chair Company was made a defendant in attachment. To review an order discharging the attachment and dismissing the case, plaintiff brings error. Judgment reversed, and cause remanded.—[By Editorial Staff.] An affidavit for attachment was filed, which set forth that the defendant company was a nonresident corporation, had not complied with the laws of Ohio, and that the Marietta Chair Company had in its possession money owing to the defendant company. The Marietta Chair Company filed an answer, averring that it was not indebted to the Lonsdale Manufacturing Company; that a petition in involuntary bankruptcy had been filed in Knoxville, Tenn., against that company, that Robert L. Bright had been appointed receiver; that, at the same time, a creditors' bill was filed in the chancery court against the defendant company; that the pe tition in bankruptcy was dismissed on July 15, 1922, Robert L. Bright then being appointed receiver by the chancery court, and acting as such receiver ever since; that in September, 1922, the plaintiff filed an intervening petition in said chancery court, setting up his claim for commissions and claiming a preference as a labor claim; and that said cause is still pending. The answer of the Marietta Chair Company further states that on September 12, 1922, it purchased from Robert L. Bright, receiver of the Lonsdale Manufacturing Company, certain goods in excess of the amount of plantiff's claim, and that the amount due for these goods is unpaid. The plaintiff served defendant by publication, and defendant then filed a motion to discharge the attachment on three grounds: (1) That the Marietta Chair Company is not indebted to the defendant. (2) That plaintiff had entered his appearance and elected to pursue his remedy in the chancery court at Knoxville. (3) That in said chancery proceedings said plaintiff was enjoined from prosecuting his claim against the defendant in any other cause or proceeding. At the hearing, on motion, defendant offered certain duly certified copies of the proceedings had in the chancery court in Ten nessee, showing the entering of the appearand also the injunction granted by that court. ance of defendant, the amount of his claim, The court of common pleas sustained the defendant's motion, entered an order discharging the attachment, and dismissed the cause. To this order, plaintiff now prosecutes error. [1] As to the first ground stated, that the Leonard H. Freiberg, of Cincinnati, for Marietta Chair Company is not indebted to plaintiff in error. the Lonsdale Manufacturing Company, that W. B. Mente, of Cincinnati, for defendant question is only presented by the answer of in error. BUCHWALTER, J. The action below filed in the court of common pleas of Hamilton county by Louis M. Ascherenka, was for money for commissions claimed to be due the plaintiff under a contract with the defendant, the Lonsdale Manufacturing Company, a corporation under the laws of Tennessee. the garnishee, which, of itself, is not sufficient to warrant the discharge of the attachment. It was held in Penn. Rd. Co. v. Peoples, 31 Ohio St. 537, paragraph 1 of the syllabus: "An attachment will not be discharged on the ground that it appears from the answer of the garnishee that he is not indebted and has no property in his possession belonging to the defendant." For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |