McMullin v. Westinghouse Estate

Citations

• 259 Pa. 281
• 103 A. 57
• 1918 Pa. LEXIS 406

Syllabus

<p>Corporations — Management by creditors — Sale of assets — Purchase by sole stockholder and president — Alleged fraud — Trusts and trustees — Bill in equity — Dismissal.</p> <p>A bill in equity brought by certain creditors of a corporation sought to impose liability on a decedent’s estate on the ground that the decedent’s acquisition of the assets of the corporation was a breach of the relationship of trust and confidence in which he stood to complainants, and fraudulent. It appears that deceased had been president of the corporation and owner of all its stock. The corporation was placed in the hands of a receiver and thereafter the creditors perfected a plan, in which complainants joined, under which the receiver was discharged and the creditors controlled the company, naming six of its nine directors, and managed its affairs by an executive committee composed of three of the six directors they had appointed. The company was unable to meet its obligations and its securities were sold at public auction, and were purchased by deceased as the highest bidder. The court found on amply sufficient evidence that after the creditors assumed control deceased took no part in the affairs of the company and had no control over them, and that deceased did not procure the sale to be made and possessed no means to prevent its taking place. Held, (1) the mere fact that deceased was the sole stockholder did not render the transaction a fraud, (2) no relationship of trust and confidence existed between deceased and complainants at the time of the sale, and (3) the bill was properly dismissed.</p>