1. It is the settled law of this state that a corporation has implied power to purchase its own capital stock, provided no illegitimate design appear.
2. At a time when the dissolved company was prosperous and had a large surplus, defendants, who were officers, stockholders and directors of that company, consented to the making of the contract by which they bought complainant's stock. After partially performing that contract, the defendants dissolved the company and subsequently formed the new company, defendant here, under the identical name of the dissolved company, turned over all the assets of the old corporation to the new corporation and issued to themselves the same number of shares of stock as each theretofore held in the dissolved corporation. Complainant brings his bill, praying decree for the unpaid balance due on his contract. After sale of his shares, complainant was recognized as a creditor of the old company, which carried his account on its books until dissolved. Held, at the dissolution of the old corporation, the directors, by virtue of section 54 of the Corporation act, became trustees at the moment of dissolution, and the assets became a trust fund for the equal benefit of all creditors, as the rights of such creditors existed at the time of dissolution, and thereafter for the benefit of stockholders — the debts to be paid ratably.
3. Defendants' contention that complainant waived the statutory duties and requirements of the defendants as trustees in dissolution, by reason of the fact that he accepted several checks after the date the new company was formed, cannot prevail. It appears from the evidence that the complainant was not informed of the formation of the company and at no time subsequent to that occurrence gave his assent to the arrangement. Nothing connected with the checks gave him notice of the new corporation being formed, since they were identical with the checks of the old company.
4. Counter-claim admitting complainant's contract and the balance due thereon, together with the fact that defendants are trustees in liquidation, and praying that if counter-claimant be held liable to complainant, that it be decreed that the new company be held primarily liable and the counter-claimant exonerated for such sum of money as may be required to pay the complainant, and that a lien be impressed therefor on the property of defendant company, dismissed. Complainant held entitled to a decree against all the defendants, individual and corporate. The new company took the assets of the old company cum onere and is primarily liable; the individual defendants are jointly and severally secondarily liable.
PER CURIAM.
For the reasons expressed in the foregoing opinion of Vice-Chancellor Stein, the decree appealed from will be affirmed, with the following modification, to wit: the defendants should be held liable to the complainant in the sum of $9,600 with simple interest only, to be computed from May 24th, 1933, to the date of payment rather than with interest thereon from said date to be computed by annual rests, as provided in said decree.
For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, CASE, BODINE, HEHER, PERSKIE, HETFIELD, DEAR, WELLS, WOLFSKEIL, RAFFERTY, COLE, JJ. 13.
For reversal — None.