Court Opinion

ID: 6818580
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:04:23.623025+00
Date Added: 2024-06-11T16:04:00.638707
License: Public Domain

Epes, J.,
dissenting.
As I understand the opinion in the case of Grace Securities Corporation v. Roberts, 158 Va. 792, 164 S. E. 700, it is therein held that in Virginia if a corporation’s power to buy its own stock is not restricted by its charter, it *150may buy its own stock if the interests or creditors or other stockholders be not adversely affected by the purchase; and that where it is sought to avoid a purchase of its own stock by a corporation on the ground that the interests of creditors were adversely affected thereby the burden rests upon the person asserting that creditors were adversely affected to establish that fact. My understanding also is that within the purview of the doctrine of that case the interests of the creditors must have been adversely affected at the time stock purchase was consummated and not at some time long thereafter.'
In the instant case I find no evidence whatever that this corporation was insolvent at the time that it made the stock purchase which is here complained of or that after the consummation of such purchase the corporation did not have sufficient property over and above all other obligations to pay the creditors here complaining. This stock purchase took place in August, 1919. The suit was instituted in December, 1925. There is ample evidence to show that at the time this suit was instituted the Fredericksburg Lumber Company, Inc., was insolvent; but the evidence is wholly insufficient to warrant the inference that the corporation was insolvent when this stock purchase was made or that it was rendered insolvent by the purchase. So far as this record shows it may well have been that at the time this stock purchase was made and at the time the note given for the stock was paid, the assets of the corporation were sufficient, if the corporation had then been liquid, to pay all of its debts, and its entire outstanding capital stock. See in this connection Barrett v. W. A. Webster Lumber Co. (1931) 275 Mass. 302, 175 N. E. 765.