93 N.Y.S. 134 | N.Y. App. Div. | 1905
The plaintiff brings this action as a stockholder of the defendant corporation to enforce a claim of that corporation against the individual defendants. The complaint alleges that the defendant corporation was organized under the laws of the State of West Virginia ; that the defendant Gould is its president and the defendant
Although the allegation as to the value of these patents at the time they were assigned to the defendant corporation and the stock issued therefor is subject to criticism in that the complaint does not directly allege that the value" of those patents did not exceed the sum of $10,000, the allegation being that it did not to the knowledge of Gould and Hanson exceed that sum; and a further allegation that Gould and Hanson caused to be assigned to the wire company the patents aforesaid, they knowing the same to be worth not exceeding $10,000, is only an allegation as to' Gould and Hanson’s knowledge, and not of the fact, still in disposing of this case. we may assume that the pleader intended to allege that the patents, were worth a sum not to exceed $10,000, and that the defendants Gould and Hanson had knowledge of such value.
The complaint alleges that the corporation has received a transfer of the patents, and that for the patents the corporation has issued its stock in an amount that was agreed upon, as between the owners of the patents and the corporation, as the consideration for the transfer. I suppose that there is no species of property the value of which is more uncertain than letters patent which secure to the patentee the exclusive right to manufacture the patented article. From the nature of the property, the real value of patents can only be determined after the invention is introduced and in use. Owning property of this description, the individual defendants and the directors of the company made an agreement as to its value, and for that value the patents were transferred to the company and the individual defendants received the agreed compensation. Considering the relations that existed between this company and the defendantr, such gross overvaluation would undoubtedly give to the corporation a right to disaffirm that contract, and would also give to any stockholder, if any were in existence before the stock was issued, a right to apply to a court of equity to prevent the consummation of such a transaction. The complaint, however, alleges that all of the stock- of the corporation was issued to the individual defendants for the patents. This transaction did not
The plaintiff had purchased from the company a portion of this stock thus transferred by the individual defendants to the company, and for that stock it has. paid to the company fifty per cent of its par value. When it purchased this stock it must have understood that it was stock that had been acquired by the company, and not an original subscription for the stock. For the corporation to issue its stock for fifty per cent of its par value would have been as illegal as the transaction of which the plaintiff complains. As before stated, the company has' power to rescind the transactions, and upon a tender of a transfer of the patents the individual defendants could be compelled to retransfer their stock to the defendant corporation or to account to the corporation for the stock that they were unable to so transfer, if there were fraud in the transaction; but this, neither the plaintiff as stockholder, nor the corporation, proposed to do. They proposed to hold on to the property that they had acquired from the individual defendants, but to compel the individual defendants to return to the corporation a part of the consideration that the corporation had paid for the patents. The effect of this would be to compel the individual defendants to sell to the corporation the patents for a sum which the court should find the patents were worth at the time of the transfer. The individual defendants were the
It is alleged that these defendants were at the time of the transaction directors of the company, and that the other directors made the agreement between the individual defendants and the company by which the patents were transferred to the company and the stock was issued. It is not alleged that there was any fraud in this transaction, except that it may be implied from the relations of the purchasers to the corporation and the overvaluation. No false representations are alleged ; nor is it alleged that these individual defendants acted in relation to the transaction except as persons having property which the corporation desired, and which they were willing to sell at a price agreed to between them and the corporation as the value of the property. Does the fact that these defendants
In Hutchinson v. Simpson (92 App. Div. 382) there is a very full discussion of the relation between a corporation and those from whom it receives a transfer of property upon its organization by an issue of stock; and while the facts are somewhat different from the •facts disclosed by the complaint in this action, the general principle upon which that case was decided prevents the corporation from obtaining the relief asked for in this action. Mr. Justice Hatch, in his dissenting opinion, thus speaks of the relation that exists between a purchaser of property from a corporation and the corporation, where the property purchased is paid for by the issue of all the stock of the corporation : “ In Parsons v. Hayes (14 Abb. N. C. 419) the transfer was of property to the corporation. The stock was issued by it for the property which it obtained at a gross overvaluation, but the only persons interested therein at that time were the persons who owned the property, who transferred it to the corporation, and who received all of its stock. While occupying that relation, neither the company nor any one connected with it could by any possibility be damaged or deceived. The transaction enabled the owners of the property to place such value upon it as they chose and represent it to be of that value in stock, which was issued. The company by this arrangement could not be damaged, nor could
It seems to me, therefore, that the ¡ilaintiff, a minority stockholder, could not maintain an action to compel the owners of property that had been conveyed to the corporation to pay back to the corporation any portion of , the consideration that had been paid for such property, without a rescission of the sale and a retransfer to the vendors of the property which had been transferred to the corporation and for which the vendors had received the consideration agreed upon.
It follows that the judgment appealed from must be affirmed, with costs.
Yah Brunt, P. J., Patterson, McLaughlin and Laughlin, JJ., concurred.
Judgment affirmed, with costs.