Barnard Manufacturing Co. v. Ralston Milling Co.

Citations

• 71 Wash. 659
• 129 P. 389
• 1913 Wash. LEXIS 1384

Syllabus

<p>Corporations — Insolvency — Receivers — Grounds for Appointment — Misrepresentations by Stockholder — Complaint — Sufficiency. A complaint states a cause of action for the appointment of a receiver of an insolvent corporation and the collection of unpaid stock subscriptions, where it alleges that the defendant stockholders induced the plaintiff to extend credit to it by falsely representing that its capital stock of $25,000 was fully paid up, when not to exceed $13,200 thereof had been subscribed, that defendants diverted and appropriated the capital stock, and that the corporation was insolvent, and a return of nulla tona had been made in another suit.</p> <p>Corporations — Officers and Stockholders — Liability. Stockholders who induced the extension of credit to an insolvent corporation by false representations as to the amount of stock subscribed are liable for the loss to the extent that the represented stock exceeds the amount actually subscribed.</p> <p>Corporations — Capital Stock — Trust Fund — Appropriation. The assets of a corporation being a trust fund for creditors, its capital stock can be reduced only in the manner provided by statute; and persons appropriating the same are liable therefor.</p> <p>Corporations — Insolvency—Prima Facie Proof. The insolvency of a corporation is prima facie shown, under Rem. & Bal. Code, § 3715, by failure to pay its annual license fee for one year after due date.</p> <p>Same — Nulla Bona. The insolvency of a corporation is shown by judgment and return of nulla tona at the suit of a third party.</p> <p>Corporations — Insolvency—Liability oe Stockholders. A judgment creditor of an insolvent corporation may maintain an action against stockholders, where there is a prayer for a receiver and general relief.</p> <p>Corporations — Insolvency—Liability oe Stockholders — Fraud. Rem. 6 Bal. Code, §§ 3677 and 3698, measuring and limiting the liability of stockholders in a corporation, do not protect a stockholder from the conseq