Every evening, Wilmington daily commercial., 1921-05-07


Tunnel will be required 10 refund 10
the receiver amy moneys so actually pnid
out by the Company 10 them for THESE
services. Il
2. The charge that on February u, f
1912. seventy shares of stock of the +
I.ewes Fisheries Company were issued 1
by the directors as officers Of the com |
panv To each of the same directors, /
Lofland, Lank. Joseph, B0okhamrner, /
Baylis and Thompson, each of whom
gave hia promiaaory notes for the par |
value of the stock, but paid no money ,,
or other thing of value therefor, me ]
dividends declared on these shares be-
ing credited on the Indebtedness repre-
scented by the notes, and some Of the
moneys voted as payments for esrssesA.
as mentioned above. being alao 20
credited
II was contended by the receiver that
the issue of these seventy shares OF
stock vas fraud on tho other stock
holders, because they were secretly TAX
en- and issued in violation of the consti-
tuition and statutes of tho state, and
therefore. the directors acquired 40
rights as stockholders thereby. For
the directors II was coutended that the
| promissory notes. being personal prop
| erty. could he taken as payment Tor
| tho stock,
The Constitution provides that no
| corporation shall issue stock except for
money paid. labor done or personal
| property. or real estate OF lenses Thereon
actually acquired By such corporation.
The notes were received by the direc-
tors on behalf Of the Company. and the
atoek Issued without the knowledge
e . Ffes f,fta e FEf Il
| holders. and the existence of the notes
were not reported as bills receivable 10
the stockholders at any of their faeet-
ings. and from entries made on the ac-
count books Of the company there was
| evidence Of an attempt 10 conceal their
| existence
After reviewing and commenting upon
some OF the authorities cited by counsel
at tho argument. tho Chancellor held
CbancelIor's Opinion.
Here in this present case where ail
of the directors Of the company. who
wrec alec ita officers issued stock TO
themselves for their individual notes
tn. fRsiie ls declared n have been
violation Of tho Constitution. and as
these notes were not issued by the
company aud the company received no
money from tho makers thereof. thav
viii he required to make reparation 70
the eorturat tion which is simply pro
tectIne legitimate stockholders from
those who seek ~ profit by their own
Illegal acts
Therefore. both because tho directors
had no rights 10 take prOmiseory notes
for shares ~ stock of the company and
, bptutIse they committed breach of
trust IN taking for the corporation their
own notee for shares issued fo them
selves. the transaction will be avoided
and they will be required to make re-
paration thereof
Because n official misconduct and
constructive fraud on tho part n the
, directors In voting 10 themselves and
taking shares Of stock and In voting the
I, salaries, the directors win be required
To pay to tho receiver all the moneys
received by them rs dividends on he
shares Of stock issued 70 themselves ~
above stated and in view of the concert
81 action IN connection with the IT,
suanee Of the stock and payment q
salaries the directors will be required
! IL, flo in the cause. an account ~ whai
Z they have received individually - dtvt
dends upon the shares 90 taken ~ them
' and uf all payments maSe hF them -
4 account of the notes given for sipck
4 | and viii nc required pf3tf@tsf af'1 s+ftt Fl
/, Is 10 pay 10 the Receiver the moneys
found 70 be due from them. william
4 e Tunnel having received tho sum q
: 81 600 voted for services. and The othei
six directors will be ordered TO pay the
same 10 the Receiver with interest from
. date of receipt.
4. The disposal of the plant. In Jul'
. 1917. the directors authorized the presi
dent ~ the company to seek a purchase
for the entire plant. consisting of IN
. steamers .Henlopen." James ~ Gi
. ford" and the manufacturing plant art
equipment at a maximum price ~ $3.50.
600 or a minimum price af fz2a.00f
]. I.ofIand. the President Of the company
!. offered the same for salc to ROTOR
d Pennington and on August 2. 1917. 90
= cured from him an offer of 2225 .9ot
: therefor. provided title 20 the steamer
i Helopen and James II. Clifford. Eoui
d be delivered upon payment Of Si80.0o'
n for both steamers. or $4,000 for n
l. "Hsnlopen and $4,000 FOR the elf
I. ford
= Before action OF the directors on ;hi
d offer Lofland went 70 Eew York. at n
y request OF Robert Pennington and as HI
1 agent TO make resale of one OF bot
ID of the steamers, and on August 3, Lot
a land sold 10 James W. Elwell & Co. fC
* xI75 600 the steamer Henlopen and r.
in ceived a check for sI7.500 on accour
J. of the purchase price. Though reaH
81 acting as agent for Pennington, thes
~ negotiations between LOfiand and Z
70 we'll & Co. were had as though th
steamer belonged to the Lewes Fisherie
ed