Eureka Mining, Smelting & Power Co. v. Lively

Citations

• 59 Wash. 550
• 110 P. 425
• 1910 Wash. LEXIS 1237

Syllabus

<p>Corporations — Fraud—Treasury Stock — Misapplication op Proceeds — Liability op Stockholders. Where the promoters of a mining corporation conveyed the mines and property to the corporation in consideration of the stock, subscribed for and issued to themselves, application of the proceeds of treasury stock to repay advances for the purchase price of the mines and the cost of securing patents' is a fraud upon the corporation and the purchasers of treasury stock, the proceeds of which should have been used for development; and judgment against such promoters is properly entered for the sums so diverted.</p> <p>Corporations — Stock—Than seers — Innocent Purchaser ■ — • Lien op Company. A wife of a stockholder, taking his stock on a pre-existing debt, with full knowledge of how he acquired it, is not an innocent purchaser, and takes subject to the debt of her husband to the corporation for fraudulent diversion of the proceeds of treasury stock, where the by-laws prohibited transfers until the stockholder’s debt to the company was first paid.</p> <p>Same — Presumption as to Ownership — Estoppel. Where stock was voted upon- a by-law prohibiting transfers until indebtedness to the company was first paid, as the stock of one of the original subscribers then indebted to the company, it must be presumed to have been his stock at the time.</p>