W. S. PRICE AND THE SULU DEVELOPMENT COMPANY, PLAINTIFFS AND APPELLANTS, VS. H. MARTIN, DEFENDANT AND APPELLANT. THE AGUSAN COCONUT COMPANY, DEFENDANT AND APPELLEE.

Plaintiffs
brought suit in the Court of First Instance of Manila praying that a
mortgage executed by the Sulu Development Company on its properties in
favor of the Agusan Coconut Company be dissolved and declared null and
void, the principal contentions being that at the stockholders’ meeting
in which the officers of the Sulu Development Company were elected and
at which the proposed mortgage was approved of, 97 shares of stock of
the Sulu Development Company were voted by the proxy of Mrs. Worcester,
in whose name the stock at that time stood upon the books of the
company, whereas defendant Martin claimed that he was the true owner
and that he should have voted the stock.

From the records of
the Sulu Development Company it appears that at the meeting of November
12, 1925, Martin presented evidence to the effect that he, and not Mrs.
Worcester, was the owner of the 97 shares of stock. Copies of the
documents relied upon by Martin were made a part of the record, but
apparently no action was taken by the stockholders or by the directors,
and at the meetings of November 12, 17, and 19, Mrs. Worcester’s proxy
apparently voted the stock without protest on the part of Martin or any
other stockholder.

As far as the record shows, every formal
action taken at those three meetings was unanimous, and Martin at the
last two meetings was accompanied by two members of the Bar of the
Philippine Islands as his counsel.

The Sulu Development
Company from its inception up to the time of executing the contract was
virtually owned and controlled by Martin. Price purchased one share of
stock about a month before the called meeting but was not present at
the meetings in question.

Another ground relied upon by
plaintiffs is a claim that the mortgage was without consideration. The
evidence shows that for years the Agusan Coconut Company, through its
general manager, had been advancing sums through Martin in order that
the Sulu Development Company might secure good and sufficient title to
a large tract of land situated near Siasi and thereon develop a coconut
plantation. The amount of money so advanced was in dispute, but between
the meeting on November 12 and the final action on November 19, the
attorneys of the Sulu Development Company, one of whom was also an
accountant, and the attorneys of the Agusan Coconut Company went over
the mutual accounts with care and arrived at the sum set forth in the
mortgage. Had there been no agreement, suit would have been instituted
by the Agusan Company against the Sulu Development Company.

There is also a claim that there was a parol agreement between Martin
and Worcester, representing the two companies, that after the death of
Mr. Worcester on May 2, 1924, the Agusan Coconut Company failed to
comply with the terms and conditions of the so-called cultivation
agreement, and Martin prayed in his special cross-complaint and
counter-claim that the defendant Agusan Coconut Company be required to
make such further cash advances to “carry out the full scale
development of the tract of land in the cultivation agreement and as
contemplated therein.”

The trial court, on timely objection,
refused to receive the parol evidence as to the cultivation agreement,
and after trial and a lengthy opinion, held that the mortgage in
question was valid and refused to order its cancellation.

From that decision plaintiffs appeal and make the following assignments of error:

“The trial court erred:

“1.
In refusing appellants the right to introduce evidence as to the
‘cultivation agreement’ extensively referred to by the parties herein.

“2.
In refusing to reopen the case on motion filed in due form and manner
by the plaintiffs and appellants herein, on the ground of newly
discovered evidence, such motion having been filed before the rendition
of the judgment herein.

“3. In finding that the plaintiff,
W. S. Price, did not appear here as a plaintiff to defend his own right
but for the purpose of giving aid to the defendant, Harry Martin.

“4. In ruling that altho the 97 shares voted by Mrs. Nanon L. Worcester
at the meetings in question thru her proxy belonged to Harry Martin and
were only held in trust by her late husband, Dean C. Worcester, yet
such trusteeship was for the benefit of the Agusan Coconut Company, and
that such company is the actual cestui que trust thereunder, in violation of the express terms of the trust agreement.

“5.
In holding that Mrs. Nanon L. Worcester could legally vote the said 97
shares which she actually voted at the meetings in question,
notwithstanding the facts as found by said court, that said shares
belonged to H. Martin and were merely held in trust by her deceased
husband.

“6. In finding that the 97 shares of stock in
question had been adjudicated to Mrs. Nanon L. Worcester by the
commissioners on claims against the estate of her deceased husband;
that such adjudication had been approved by the Court of First Instance
of the City of Manila, and that the said Nanon L. Worcester had
inherited said shares by virtue of the will of her deceased husband.

“7. In holding in effect that there was a quorum
in the pretended meetings of the stockholders of the Sulu Development
Company alleged to have taken place on November 12, 17 and 19, 1925,
particularly that one asserted to have been held on November 19, 1925,
when in law and in fact there was no such quorum.

“8.
In finding in effect that the meetings pretended to be held by the Sulu
Development Company on the dates aforementioned were validly and
legally held and that the action taken and proceedings had thereat were
valid and effective.

“9. In finding that if the defendant
H. Martin had had the 97 shares in question in his own name at the
alleged meetings of the Sulu Development Company, he would have voted
them in the same way and to the same effect as the said Nanon L.
Worcester voted them.

“10. In not finding that there was
attendant fraud, misrepresentation and deceit in the execution and
issuance of the mortgage contract, Exhibit U.

“11. In not holding that said mortgage is null and void for want of legal consideration.

“12. In finding that the plaintiffs and appellants herein are legally bound by the said mortgage contract Exhibit U.

“13. In holding that the plaintiffs and appellants herein are legally
estopped to contest the efficacy and validity of the mortgage contract,
Exhibit U.

“14. In dismissing plaintiffs’ complaint herein.

“15. In denying plaintiffs’ motion for a new trial.”

While defendant Martin appeals and assigns the following errors:

“1.
The trial court erred in refusing to find that the one hundred shares
of the capital stock of the appellant, the Sulu Development Company,
delivered on November 23, 1922, by the appellant, H. Martin, to the
late Dean C. Worcester, were so delivered in trust to be held and used
for the benefit of the said H. Martin.

“2. The trial court
erred in finding that the voting by Mrs. Nanon L. Worcester, in the
meetings held by the stockholders of the appellant, the Sulu
Development Company, on November 12, 17, and 19, 1925, was legal.

“3. The trial court erred in refusing to find that the mortgage
involved in this litigation, purported to have been executed by the
appellant, the Sulu Development Company, in favor of the appellee, the
Agusan Coconut Company, is null and void.

“4. The trial
court erred in excluding, as being within the statute of frauds,
testimony regarding a certain verbal agreement entered into by and
between the appellee, the Agusan Coconut Company, and the appellant, H.
Martin, which agreement had been fully performed by the latter.

“5.
The trial court erred in excluding as ‘Hearsay Evidence’, testimony
regarding statements made by certain officials of the appellee, the
Agusan Coconut Company.

“6. The trial court erred in
excluding the testimony of the appellant, H. Martin, regarding matters
of fact which occurred between him and certain officials of the
appellee, the Agusan Coconut Company, who had died prior to the trial
of this action.”

An examination of the
assignments of error will show that although this case in its main
aspects is a simple one and confined to the questions, first, as to
whether the mortgage was duly executed by the Sulu Development Company
and, second, whether it was given for a valuable consideration, many
side issues of no moment were urged upon the trial court, which
probably accounts for the voluminous record with which we are
confronted and numerous assignments of error which we do not deem it
necessary to discuss in detail.

Plaintiffs contend that the
transference on the books of the company of 97 shares of stock in the
name of Mrs. Worcester was fraudulent and illegal. The evidence of
record, however, under all the circumstances of the case, fails to
demonstrate the allegation of fraud, and this court believes that she
acted in good faith and in the honest belief that she had not only a
legal right but a duty to participate in the stockholders’ meeting.

As to whether the stock was rightfully the property of Martin, that is
a question for the courts and not for a stockholder’s meeting. Until
challenged in a proper proceeding, a stockholder according to the books
of the company has a right to participate in that meeting, and in the
absence of fraud the action of the stockholders’ meeting cannot be
collaterally attacked on account of such participation. “A person who
has purchased stock, and who desires to be recognized as a stockholder,
for the purpose of voting, must secure such a standing by having the
transfer recorded upon the books. If the transfer is not duly made upon
request, he has, as his remedy, to compel it to be made.” (Morrill vs. Little Falls Mfg. Co., 53 Minn., 371; 21 L. R. A., 175-178, citing Cook, Stock & Stockholders, par. 611; People vs. Robinson, 64 Cal., 373; Downing vs. Potts, 23 N. J. L., 66; State vs. Ferris, 42 Conn., 560; New York & N. H. R. Co. vs. Schuyler, 34 N. Y., 80; Bank of Commerce’s App., 73 Pa., 59; Hoppin vs. Buffum, 9 R. I., 513; 11 Am. Rep., 291; Re St. Lawrence S. B. Co., 44 N. J. L., 529.)

As to the question of lack of consideration for the mortgage,
throughout the brief for appellants it appears by the constant
reiteration of the phrase that all the advances were made “by the
Agusan Coconut Company and/or its then General Manager, the late Dean
C. Worcester, to H. Martin and/or the Sulu Development Company.”

It must be remembered that there is no dispute between the Worcester
interests and the Agusan Coconut Company as to who advanced the money,
namely, the Agusan Coconut Company, nor is there any difficulty in
determining to whom the money was advanced. Although Martin was
virtually the owner of all the capital stock of the Sulu Development
Company, business was carried on in the name of the company, and the
land and properties were secured in the name of the company, and up to
the time of the execution of the mortgage and some time thereafter
there was no claim from anybody that the money had been advanced to
Martin instead of to the company. Even a repeated use of the
questionable phrase “and/or” as to the grantor “and/or” as to the
grantee, will not fabricate a life-raft on which a recalcitrant debtor
can reach a safe harbor of repudiation.

We are therefore
convinced that the contention that the mortgage was made without
consideration was an afterthought without foundation in fact and in a
vain attempt to avoid a legal and binding obligation.

We
find no merit in the contention that the trial court should have
concerned itself with an alleged parol contract between Martin and Dean
C. Worcester, deceased. The alleged contract not being in writing or to
be executed within a year, it is within the statute of frauds. The
value of the rule is shown in this case as it was some time after Mr.
Worcester’s death before anything was heard of such an alleged
agreement. Even if such an agreement had been made and it had been
proper to receive proof thereof, it would not benefit plaintiffs as the
mortgage was executed pursuant to a compromise agreement to settle the
affairs between the two companies, and all the transactions between the
two companies were merged and settled by that compromise.

The contention that a new trial should have been granted in order that
plaintiffs could present in evidence a letter from Mr. Worcester to the
late Governor-General Wood, is likewise without merit. The letter, even
if admitted, would not have changed the result of these proceedings, as
a fair reading of the letter is not repugnant to a single contention of
defendant-appellee.

The judgment appealed from is therefore affirmed. Costs against appellants. So ordered.

Malcolm, Villa-Real, Abad Santos, and Imperial, JJ., concur.