Huston v. Clark

Citations

• 127 Pa. 620
• 18 A. 419
• 1889 Pa. LEXIS 1153

Syllabus

<p>(a) Huston, Clark and Sellers were the owners of nearly all the stock of a manufacturing corporation which in 1873 was practically insolvent. Huston had guaranteed a large part of the corporate indebtedness, and all had made advances to the company, each to an amount over $100,000:</p> <p>(&) On May 13, 1873, a written agreement was entered into, wherein it was provided that Huston, in consideration of being indemnified by Clark and Sellers against all his liability for the debts of the company, should assign to Clark and Sellers all his stock and the bonds and a note of the company held by him:</p> <p>(c) Clark and Sellers agreed to contribute each a like amount with Huston of the bonds and notes of the company, the fund thus created to be called the guarantee fund; the surplus that should remain after payment of the corporate indebtedness, other than that in the guarantee fund, was to be divided among the parties who had contributed to the fund:</p> <p>(d) Although Huston assigned his stock, bonds and note, as agreed upon, Clark and Sellers did not pay into the guarantee fund the amounts provided by the agreement, but merely credited themselves with advances previously made by them to the amount due by them to the fund, and divided between themselves the bonds assigned by Huston:</p> <p>(e) Clark and Sellers then took charge of the works of the company and made fresh advances to the amount of $270,000. Finding, as alleged, that the business was unsuccessful, they permitted the works to be sold under legal process of which Huston had notice, bought the property in, and organized a new corporation.</p> <p>1. In such case, the advances made by Clark and Sellers prior to the agreement were debts to be paid by the guarantee fund, and their taking credit for such advances did Huston no harm. Clark and Sellers were not the agents of Huston in the subsequent conduct of the business, and they were not bound to include him in the purchase and reorganization. Huston, howe