Parrish

This is an appeal by the defendant corporation from an adverse judgment given on a cross-complaint to recover from plaintiff the par value of 997 shares of defendant’s capital stock issued to plaintiff while he was serving as an officer and employee of said corporation. The question presented for determination is whether the trial court erred in holding as it did that the issuance of said stock was violative of the permit granted by the corporation commissioner and therefore constituted an illegal transaction upon which no recovery may be had.

In February, 1921, defendant, being then engaged in the publishing business, entered into a written contract with plaintiff to manage and conduct its affairs for a period of five years for a stated salary and a percentage of the gross receipts. A year later, in February, 1922, plaintiff commenced the instant action to collect wages claimed to be due in the sum of $987.62; also an assigned claim for printing. Besides answering, defendant filed a cross-complaint containing three counts, the second of which was for the recovery of the par value of said stock. The circumstances relating to the issuance of said stock were as follows: After…