Anderson v. Avey

ROSS, Circuit Judge (after stating the facts as above). It is, of course, clear that a corporation has no power to agree with subscribers to its stock upon any terms that are in violation of its articles of in [666] corporation or of any constitutional or statutory provision. The statutes of Idaho relating to the powers of corporations, * while declaring (in section 4752 of the Compiled Statutes of 1919) that no preferred stock shall be issued for less than its par value, either in cash or its equivalent, makes no such limitation or restriction regarding the common stock, for the preceding section 4728, relating to stock and stockholders, provides that: “No corporation shall issue any stock as paid up, in whole or in part, or credit any amount, assessment or call as paid upon any of its stock, except lor money, property, labor or services, actually received by the corporation, or actually paid upon the indebtedness of the corporation, as provided in this section, to the full value of the amount credited upon such stock.” —and the concluding clause of section 4752 is in these words: “When any corporation shall issue stock or bonds for labor done, services performed or property actually received, the judgment of the directors of such corporation as to the value of such labor, services or property shall, in the absence of fraud in the transaction, be conclusive.” There was a similar statute in the state of Washington, and in the case of Cunningham v. Holley, Mason, Marks & Co. et al., 121 Fed. 720, 58 C. C. A. 140, this court held that where on the organization of a corporation by mutual agreement full paid stock was issued to the in-corporators in payment for property transferred by them to the corporation, one of tire incorporators who participated in such agreement and who became a creditor of the corporation, cannot assert its invalidity, for the purpose of holding the other stockholders liable for unpaid subscriptions on the ground that the property was not in fact equal in value to the par value of the stock, saying, among other things: “A party to such an agreement cannot, as against other stockholders with whom he agreed and' contracted, assert the invalidity of the transaction. There is in Washington no statutory prohibition against the payment of stock subscriptions by the transfer of property to the corporation in place of cash. * * * When stock is so paid for and property is so taken in payment, it is the general rule that the transaction cannot be impeached, even at the suit of a creditor of the corporation, except for fraud. ‘Where full-paid stock is issued for property received, there must be actual fraud in the transaction to enable creditors of the corporation to call the stockholders to account’ ” —citing a number of cases which need not be again cited. [1] The present suit was not by or on behalf of any creditor, but, according to the express allegation of the bill, was brought by the appellant “in the name of and for the benefit of the corporation, to require and compel the defendant above named (Avey) to pay the amount due upon his purchase of said stock”; so surely, if the corporation would not have been entitled to maintain the suit, the complainant was not so entitled. [2] The bill is absolutely bare of any allegation tending to show any fraud on the part of the appellee Avey, or on the part of any of the other directors of the company, and the contention that the interests in the land therein referred to, conveyed to the corporation by the seven directors' who organized it, was of no value, is clearly shown to [667] lie unfounded by the express allegation of the bill that the same directors paid in cash one-fourth of the par value of 662 of the shares of the stock of the company, obviously for a working- capital. Not only was the course pursued in the instant case sanctioned by the Idaho statute, and hi accordance with the law as declared by the Supreme Court and numerous other courts, but it is a matter of common knowledge that it was the course adopted almost every day in all parts of this country. See Old Dominion Copper Co. v. Lewishown, 210 U. S. 206, 212, 28 Sup. Ct. 634, 52 L. Ed. 1025; Coit v. Gold Amalgamating Co., 119 U. S. 343, 7 Sup. Ct. 231, 30 L. Ed. 420; Northern Trust Co. v. Columbia Straw-Paper Co. (C. C.) 75 Fed. 936; Clinton M. & M. Co. v. Jamison, 256 Fed. 577, 167 C. C. A. 607; O’Dea v. Hollywood Cemetery Association et al., 154 Cal. 53, 97 Pac. 1, 6; Inland Nursery & Floral Co. v. Rice, 57 Wash. 67, 106 Pac. 499. The judgment is affirmed.