Merrick v. Peru Coal Co.

Citations

• 61 Ill. 472

Syllabus

<p>1. Corporation—may contract with its members. There is no rule of law which prohibits a shareholder from dealing with the company of which he is a member, or from suing or being sued by it. The president of a private corporation has the right, with his own funds, to purchase notes and drafts of the corporation, and when lie does so, lié will succeed to all the rights of the prior holders; or he will have the right, when he takes up such indebtedness with his own means, to maintain au action against the corporation for money paid, laid out and expended for its use.</p> <p>2. Same—advances -and loans to, by officer. And if the president of a private corporation advances it money to enable it to carry on its business or make purchases, he can sue it and recover for money loaned.</p> <p>3. A shareholder or officer of a private corporation has the right to deal with the company in the same manner as strangers, and when he does so, such party acquires the same rights and incurs the same liability as in the case of a contract with a stranger.</p> <p>4. Same—advances by member—presumption. Where two brothers, contemplating the formation of a private corporation, purchased certain coal lands and mining rights, and agreed when the purchase was made that they were to have an equal interest in the stock of the company, and to make equal payments on account of the purchase and for carrying on the business; and after the incorporation, one of them advanced various sums of money in payment of drafts of the company and in taking up its indebtedness, for which he was credited upon the books of the company: Held, in a suit against the company to recover for such advances, that the agreement was intended only to bind each brother to advance equal amounts as loans, and not as donations; and even if this were not so, that the company could not set up such agreement in defense, as it was no party to it. The court could only look to the legal liabilities of the company.</p> <p>5. If by