Humphrey v. Koogler

10 Ohio Law. Abs. 42, 1931 Ohio Misc. LEXIS 1434

Opinion

ALLREAD, J.

We think that counsel for plaintiffs in error have not proven a defense to the note. They would be required to show something more than the exchange of stock' for the note; they should show as well, some equitable consideration against the note in favor of the company. The rule is that the sale of stock‘to this company is prima facie valid and the burden is upon the company or their successors in title to prove the circumstances giving rise to the invalidity of the transaction. This view is expressed in the syllabus in the case of Seiders v The Gem City Concrete Company, 13 C. C. (N. S.) 481. The syllabus is as follows:

“Where a corporation purchases its own stock and gives a note therefor, such transaction, so far as the sale and purchase pf the stock is concerned, becomes an executed contract and the mere want of power to purchase said stock will not be a good defense, in an action against the corporation to collect such note.”

This authority is conclusive of the prima facie validity of the note and supports the judgment taken in the court below and the overruling of the motions to set the judgment aside.

(HORNBECK and KUNKLE, JJ, concur).