South Side Trust Co. v. Washington Tin Plate Co.

Citations

• 252 Pa. 237
• 97 A. 450
• 1916 Pa. LEXIS 600

Syllabus

<p>Corporations — Sale of property to another corporation — Interlocking directorates — Account stated — Court and jury — Case for jury.</p> <p>1. Even though the hoards of directors of two corporations are the same and one buys the property of the other, the transaction is not void and will not be set aside at the instance of a stockholder unless he shows damage. A contract between two corporations will not be declared invalid merely because the corporations have common directors where its fairness is manifest. The fairness of such a contract is always open to investigation and subject to careful scrutiny.</p> <p>2. The gist of an action on an account stated consists in an agreement to, or acquiescence in, the correctness of the account, and in proving the account stated it is not necessary to show the nature of the original transaction or indebtedness, or to set forth the items entering into the account.</p> <p>3. A corporation transferred its property to three of its stockholders, who in turn conveyed the property to a newly organized corporation of which they were directors. For nearly four years entries were made on the hooks of both companies showing the indebtedness owing by the new corporation to the original corporation. In an action brought by the trustee in bankruptcy of the original corporation against the new corporation to recover the amount of such indebtedness, there was 130 allegation or proof of fraud on the part of the stockholders to whom the property of the original corporation had been conveyed; defendant contended that the transaction was void because the directors of defendant had been stockholders of the original corporation and also that at the time of the organization of the new corporation one of the directors individually agreed to assume the debt due the original corporation upon the understanding that the debtor company was to be released. The evidence as to whether the defendant had been released from liability as contended, was confl