Wrightsville Hardware Co. v. McElroy

Citations

• 254 Pa. 422
• 98 A. 1052
• 1916 Pa. LEXIS 745

Syllabus

<p>Corporations — Purchase of bonds of another corporation — Validity — Constitution of Pennsylvania, Article XVI, Section 7 — Act of July 2, 1901, P. L. 60S — Equity—Fraud—Cancellation—Bill in equity.</p> <p>1. Neither an individual nor a corporation can retain the profits of a transaction, or anything of value received from the other party, and set up ultra vires as a defense to the enforcement of the contract. He who seeks equity must do equity.</p> <p>2. ' Where a corporation organized for profit purchases the shares of capital stock, bonds, securities, or evidence of indebtedness, of any other corporation of this or another state, under authority of the Act of July 2,1901, P. L. 603, and gives its own notes therefor, subsequently issuing its own bonds to take up such notes, Such transaction amounts merely to a change in the form of its obligations to pay and is not a fictitious increase of its indebtedness, in violation of Article XYI, Section 7, of the Constitution of Pennsylvania.</p> <p>3. A bill in equity by minority stockholders of a Pennsylvania corporation to have certain bonds issued by said corporation to the defendants cancelled on the ground that the defendants were not holders in good faith, was properly dismissed where it appeared that the defendants, who were originally the owners of a majority of the stock of such corporation had sold all'their shares in the same to a New Jersey coiporation, receiving therefor in part payment certain mortgage bonds of the latter; that the Pennsylvania company subsequently bought such bonds from the defendants, giving its own notes therefor, and then surrendered the bonds to the New Jersey company for preferred stock of a New York company. A minority of the stockholders of the Pennsylvania company then filed a bill in equity against the present defendants and others, in which fraud was averred in the issuance of the notes to the defendants, and said suit was- settled by the taking up of the notes and the issuing o