Court Opinion

ID: 6901121
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:55:03.606863+00
Date Added: 2024-06-11T16:06:10.609875
License: Public Domain

On Petition for Rehearing.
[101 Pac. 212.]
Mr. Justice Eakin
delivered the opinion of the court.
Three points are suggested, by the motion, for reversal of the decree: (1) That plaintiffs were not disqualified from purchasing the notes in their individual capacity; (2) that the notes were purchased at their face value, and not at a discount; (3) that defendants have, by their delay, lost their right to question the transaction.
3. As to the first proposition, we have no controversy with counsel as to the law stated in the motion and in the authorities in support thereof. As stated in Cook, Corp., § 660:
“Directors may buy corporate bonds from third parties at a discount and enforce them at par, where there are no special equities against such a purchase, and no present duty in regard to them from him as a director.”
Similar language is used in McIntyre v. Ajax Mining Co., 28 Utah, 163 (77 Pac. 613), and this principle is recognized in every case cited in the motion, and also in the opinion in this case. But the conclusion reached in the opinion is based on the duty of plaintiffs, as disclosed by the facts, to take care of the notes and mortgage for the benefit of the corporation, and therefore comes within the exception to the rule that a director may purchase at a discount for his own benefit. Two of the plaintiffs were directors of defendant corporation at the time of this transaction, and the other three connived at and consented to the purchase, and were the only persons by whom the corporation could act, and it was their fault that provision was not made by the corporation to take care of the notes, which it was well able to do. Therefore there was a present duty devolving upon plaintiffs to take up said notes and mortgage in the interest of the corporation, and consequently they are *446precluded from purchasing at a discount for their own benefit.
' As to the second point, it is true that the evidence does not disclose that at the time the transaction was consummated, anything was said as to the value at which any item was taken over. But it appears that all through the negotiations leading up to this transaction, both with agents of Hammond and with plaintiffs, these two notes of the corporation were offered at $5,000; and from all the evidence we are justified in the conclusion that that was the value at which they were taken over.
4. Defendants cannot be charged with laches in this - transaction, as plaintiffs constituted the majority of the board, and were alone chargeable with the delay.
Motion is denied.
Affirmed: Rehearing Denied.