Brenaman v. Whitehouse

Citations

• 85 Wash. 355
• 148 P. 24
• 1915 Wash. LEXIS 842

Syllabus

<p>Corporations — Capital Stock — Reduction—Dividends—Validity. A transaction whereby the stock of a corporation was sold and issued for cash, and the entire sum received was disbursed by the corporation as a dividend and paid to shareholders, is prohibited by Rem. & Bal. Code, § 3697, making it unlawful for the trustees to make any dividend except from the net profits, or to divide, withdraw, or pay to stockholders any part of the capital stock or to reduce the same, except in the manner required by the act.</p> <p>Same — Capital Stock — Trust Fund — Reduction—Solvency. The capital stock of a corporation being a trust fund for the payment of its debts, upon the faith of which the law presumes credit is given, a dividend reducing the amount of the capital stock is unlawful regardless of the solvency of the corporation at the time of the transaction.</p>