In re United Educational Co.

Citations

• 153 F. 169
• 82 C.C.A. 343
• 1907 U.S. App. LEXIS 4396

Syllabus

<p>Sales — Distinguished from Pledge — Corporate Stock.</p> <p>B„ being desirous of reorganizing the business of K. & Co., who were indebted to claimant, organized the E. Company, of the preferred stock of which claimant agreed to accept $5,000 of K. & Co.’s indebtedness, with a bonus of 20 per cent, common stock, and agreed not to press 1he new corporation for the remaining indebtedness so long as claimant felt assured of its ultimate success, it being also agreed that B., through the new corporation, should si'll to others the full preferred capital slock issue of the company and redeem within 18 months the preferred stock and bonus which claimant agreed to accept as a temporary arrangement to further a reorganization, but before this could be accomplished the new corporation became a bankrupt. 11eld,' that claimant’s arrangement constituted a pledge of the new corporation’s stock as security for the debt of K. & Co., and not a sale of such stock.</p> <p>[Ed. Note. — Rights and liabilities of pledgees of corporate stock, see note to Prater v. Old Nat. Bank of Providence, R. I., et al., 42 C. C. A. 135.|</p>