Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/557

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 522c payment of the debt, and that the creditor thus becoming a stock- holder, would not be liable on the insolvency of the corpora- tion to make up the difference between the par value of the stock and the price at which he received it. 1 § 522<?. Questions similar to those discussed in the previous paragraphs sometimes arise with regard to shares Igsue o{ issued for property. In payment for its shares a cor- stock for i i m. • ■• i o • property. poration, unless prohibited by statute,' 1 may receive any property which it is authorized to purchase, and if prop- erty (or services) so received is fairly equivalent to the par value of the shares for which it is taken, the shares will have the status of full-paid stock. 3 Such, transactions may be 1 Clark v. Bever, 139 U. S. 96. But it seems that a railroad company cannot issue its stock to contractors except for some reasonable equiva- lent — which depends on the actual value of the stock at the time. Fogg v. Blair, 139 U. S. 118. For a further consideration of these questions with reference to the rights of creditors, see §§ 701 et seq. 2 See Baile v. Educational Society, 47 Md. 117. 3 Coffin v. Ransdell, 110 Ind. 417; Searight v. Payne, 6 Lea (Tenn. ), 283 ; Boynton v. Hatch, 47 N. Y. 225; Peck v. Coalfield C'l Co., 11 111. App. 88; Chouteau v. Dean, 7 Mo. App. 210; Drummond's Case, L. R. 4 Ch. 772; Arapahoe Cattle Co. v. Stevens, 13 Col. 534; Kelly v. Fletcher, 94 Tenn. 1; Bristol, etc., Tr. Co. v. Jonesboro, etc., Tr. Co., 101 Tenn. 545; John R. Proctor Sons Co. v. Cooke, 103 Ky. 96; Richardson v. Graham, 45 W. Va. 134. Payment of stock subscriptions " may be in whatever, considering the situation of the corporation, repre- sents to that corporation a fair, just, lawful, and needed equivalent for the money subscribed." Liebke v. Knapp, 79 Mo. 22. A subscriber may pay for stock of a corporation organized to build a bridge across the Mississippi River by publishing its articles and favoring the project in his newspaper. Liebke v. Knapp, supra. Subsequent facts demonstrating the small value of property received for shares do not throw the burden of proof on members to show that the property was worth what it was taken at. Iron Co. v. Hays, 165 Pa. St. 489. Van Cott v. Van Brunt. 82 N. Y. 535, appears to hold that if a person pays in services or otherwise an amount equal to the actual value of the shares received by him in re- turn, they will be treated as fully paid up, without regard to whether the actual value was equal to their par value or not. Now by statute in New York "in the absence of fraud in the transaction the judgment of the directors as to the value of the prop- erty purchased shall be conclusive." Section 42 of chapter 354 of the laws of 1901, amending chapter 688 of the laws of 1892. Without special stat- utory authority no assessment can be imposed on the fully paid up stock. Atlantic De Laine Co. v. Mason, 5 R. I. 463; ace. Enterprise Ditch Co. v. Moffett, 58 Neb. 642. See § 541, notes. A contract by a corporation to sell its stock below par has been held 537