White v. Lorimer's City Dye Works

It is alleged that the defendants, E.K. Lorimer and Lorimer's City Dye Works, a corporation, issued certain shares of stock in the corporation to plaintiff and certain others, his assignors, on an agreement that the purchasers could return the stock and receive back the price paid, together with interest, at any time they became dissatisfied with the stock. Plaintiff and his assignors, according to the complaint, became dissatisfied, offered to return the stock to the corporation and demanded the amount agreed to be repaid. The defendants refused to accept the stock or to pay the agreed sum. Appellant also alleged the insolvency of the corporation and demanded the appointment of a receiver. A separate general demurrer by the corporation was sustained by the court and, plaintiff refusing to plead further, judgment was entered dismissing the action as to that defendant. Plaintiff has appealed.

The allegation that the corporation is insolvent makes it unnecessary to determine the sufficiency of the complaint in other respects. A contract by a corporation to repurchase its capital stock is not enforceable against the corporation while insolvent. (7 Rawle C. L. 236, sec. 210; 14a C. J. 280, sec. 2126, notes, 1, 2, 3; McIntyre v. Bement, 146 Mich. 74, 10 Ann. Cas. 143 and note, 109 N.W. 45; Schulte v. Boulevard Gardens LandCo., 164 Cal. 464, Ann. Cas. 1914B, 1013, 129 P. 582, 44 L.R.A., N.S., 156; Porter v. Plymouth Gold Mining Co., 29 Mont. 347, 101 Am. St. 569, 74 P. 938; Olmstead v. Vance JonesCo., 196 Ill. 236, 63 N.E. 634; In re Fechheimer Fishel Co., 212 Fed. 357. See, also, Brown v. Reed, 31 Idaho 529,174 P. 136.)

It is unnecessary to pass on the other questions presented. Judgment affirmed. Costs to respondent.

Givens, Taylor and T. Bailey Lee, JJ., concur.

Budge, J., disqualified.