Miller v. Hellam Distilling Co.

Citations

• 57 Pa. Super. 183
• 1914 Pa. Super. LEXIS 175

Syllabus

<p>Corporations — Issue of bonds — Pledge of bonds — Conflict between different classes of bondholders — Bonds issued below par — Constitution of Pennsylvania, art. 16, sec. 7.</p> <p>1. Under art. 16, sec. 7 of the constitution of Pennsylvania which provides that “no corporation shall issue stock or bonds except for labor done or money or property actually received, and all fictitious increase stock or indebtedness shall be void,” and under the similar provision in sec. 17 of the General Corporation Act of April 29, 1874,'P. L. 73, corporations may pledge their bonds for less than their face value, provided the corporate officers act in good faith and secure the best price obtainable for such bonds; and persons holding the bonds as pledge or collateral security have the right to participate in the distribution of money arising from the sale of the property covered by the mortgage which secured the bonds, on the face of the bonds plus the interest, to the amount of the money borrowed or debt incurred plus the interest; and this is the case although other portions of the same issue of bonds have been sold for cash at par.</p> <p>2. Bonds pledged by a corporation to secure a debt are “bonds issued.”</p>