Court Opinion

ID: 6666779
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:06:41.260106+00
Date Added: 2024-06-11T16:00:21.792405
License: Public Domain

ON THE MERITS.
The defendant admitted that he had subscribed for eight shares and that he had paid $40.00 on account, as alleged in the petition, but denied his indebtedness for $160; he further averred that in order to induce him and others to subscribe, the Exposition Company had obtained from a number of persons a written guarantee that if the Exposition should not take place that those who • subscribed to its stock would be held harmless and not compelled to pay; that the Exposition was not given and therefore the guarantors became liable and it was the duty of the receiver to proceed against them and to apply any sum recovered from them to the credit of the subscribers of stock.
There are two answers to this defense. The first is that the above guaranty can only be considered as an additional asset of the corporation, and that the receiver is not under *176any obligation to recover upon it as a condition precedent to suing the subscribers.
The second is that no action of the directors can affect or diminish the liability of subscribers to stock as far as the creditors of the corporation are concerned.
In 10 R., 440, quoted above, it was said:
“The Company could not by any acts of theirs to the prejudice of their creditors, liberate any of its stockholders from their obligations to pay the full price of the shares subscribed for by them.” 11 R., 252; 23An., 732; 24 An., 404; Morawetz, Sec. 109, Sec. 841; 16 Wall, 390.
The defendant further pleads that practically the entire indebtedness of the Exposition Company was incurred on account of its purchase from the New Orleans Land Company of a tract of land; that the directors of the two companies were practically the same; that the New Orleans Land Company was thus enabled to sell to the Exposition Company the tract of land at an exorbitant and ruinous price, and that the Exposition Company gave a confession of judgment to the New Orleans Land Company for a large sum of money, being practically the entire price of said land; that thereupon the New Orleans Land Company caused the land to be sold and became the purchaser for $16,000, or about one-eighth of the original price; and in this manner the Land Company has resumed ownership of the land and remains creditor for the greater part of the price; that the receiver, instead of pursuing the shareholders to compel them to carry out an unfair bargain, should proceed to rescind the unconscionable sale.
We do not perceive that the above statement, even if true, would constitute a defense to this action. There is no law of this State prohibiting dealings between corpora*177tions whose board of directors is composed partly of the same individuals, or, as it is called, the interlocking of directors. Their action is not necessarily. void. Morawetz, Se.c 520, Sec. 530. The validity of their action cannot be tested collaterally in a suit to compel the payment of subscriptions to stock.
Opinion and decree, March 19th, 1917.
Rehearing refused, April 16th, 1917.
Writ denied, June 13th, 1917.
Nor is there any law authorizing an action on the bare allegation of a purchaser that he paid an “unconscionable” price for a thing.
If, at a judicial sale; the vendor buys back for a nominal price the property sold by him on credit, it is. his good fortune and the purchasers’ misfortune, but no cause to, invalidate the sale when no irregularities are alleged.
It is, therefore, ordered that the judgment be affirmed.
Godchaux, J., recused.