Russell v. Rock Run Fuel Gas Co.

Citations

• 184 Pa. 102
• 41 W.N.C. 364
• 39 A. 21
• 1898 Pa. LEXIS 867

Syllabus

<p>Corporations—Sale of properly by stockholder to corporation—Equity— Promoter.</p> <p>A stockholder in a corporation who is not an officer or agent of it has a. right to deal with the company at arms’ length as a stranger might. If he sells property to it more than a year after it has been organized and operated by a board of directors, the fact that he had been a promoter of the company at its organization is immaterial to affect the validity of the sale'.</p> <p>• Where a large stockholder in a corporation, who by his position and experience wields large powers, makes a sale to the company at a high price and at a big profit to himself, he must show that the transaction was fair, and that he made no wrongful use of the legitimate influence of his experience in the business.</p> <p>A stockholder’s bill against a corporation and another stockholder to compel the latter to give up stock and cash which ho had received for property alleged to have been fraudulently sold to the corporation is properly dismissed, where it appears that the stockholder defendant, although a promoter of the company at its inception, had not sold the property in question for more than a year after the company’s organization ; that he had used no fraud or solicitation in inducing the directors to make the purchase ; that the purchase seemed at the time advantageous to the company, and that plaintiff knew of the proposed purchase at the time he bought Iris stock.</p>