Taylor v. Walker

Citations

• 117 F. 737
• 1902 U.S. App. LEXIS 5131

Syllabus

<p>1. Corporations—Liability op Stockholders—Exchange op Property por Stock.</p> <p>To render the organizers of a corporation, who caused its stock to be issued to themselves in exchange for property which they conveyed to the corporation, liable to its creditors for the difference between the value of the property and the nominal value of the stock, it must be shown that such property was taken in payment for the stock at a large overvaluation, fraudulently, with intent to cheat and defraud those who might become creditors of the corporation, and also that the creditors became such on the faith that its stock was paid up.</p> <p>2. Same—Presumption op Fraud—Gross Overvaluation.</p> <p>Gross overvaluation of property conveyed to a corporation in payment for its stock is presumptive evidence of fraud, which places the burden of proof upon the stockholder to show the good faith of the transaction.</p> <p>3. Same—Evidence Considered.</p> <p>Evidence considered, and held.1 sufficient to show that the members of a mercantile partnership who organized a corporation to which they transferred the assets of the firm at a gross overvaluation in exchange for its stock acted in good faith and without intent to defraud those who should become creditors of the corporation; being misled as to the actual value of the firm’s assets above its liabilities by a statement made from the books, owing to the system of bookkeeping used, of which they had no personal knowledge.</p>