Smith v. Bowker Torrey Co.

Citations

• 207 F. 967
• 1913 U.S. Dist. LEXIS 1370

Syllabus

<p>1. Corporations (§ 565*)—Insolvency—Claims Provable.</p> <p>Where partners indebted to claimant on a note transferred a part of the partnership assets to a corporation which the partners controlled, in consideration of a specified amount of full-paid stock of the corporation equal to their valuation of the assets transferred, the corporation agreeing to pay the partnership debts and to save the partners harmless therefrom, there being no claim of novation, nor that claimant could not obtain payment by enforcing the liability of the partners, he was not entitled to prove his debt as a claim against the corporation’s assets in insolvency, on the ground that he was entitled to subrogation to the rights of the partners against the corporation.</p> <p>[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 2281, 2282; Dec. Dig. § 565.*]</p> <p>2. Corporations (5 30*)—Purchase of Partnership Assets—Assumption of Partnership Debts—Consideration.</p> <p>A partnership, owning a large amount of real and personal property, being desirous of withdrawing the real estate from the firm, organized a corporation, which they dominated, and, having determined that the value of the firm’s personalty was $249,700, as directors of the corporation voted to purchase the personal property of the firm from themselves, as members thereof, in consideration of a transfer to themselves, as members of the firm, of 2,497 shares of the capital stock of the corporation, full-paid and nonassessable. In carrying the transaction into effect, they also voted, as directors of the corporation, to assume and pay all indebtedness of the firm, and to hold it and its surviving partner or partners and the estate of a deceased partner and the trustee or. executor thereof harmless and fully indemnified from all liability in connection therewith. Held, that such assumption by the corporation of the debts of the firm was without consideration, and was not enforceable as against the corporation’s assets in i