Opinion by
Mr. Justice Schaffer,
These two cases were tried together in the court below ; they resulted in verdicts for plaintiff; subsequently the court entered judgments for defendants non obstante veredicto from which plaintiff has appealed.
The actions were in assumpsit, by a receiver in equity, to recover alleged unpaid stock subscriptions, due to the corporation which the court had placed in his charge. The facts giving rise to the controversy to be determined are substantially undisputed.
By articles of association, dated February 9, 1914, defendants and one other, associated themselves together and applied to the Governor of Pennsylvania for letters patent for a corporation to be called The Motor Transit Company, Incorporated, the corporation to be formed “for the purpose of establishing, maintaining and operating automobile bus or stage lines” between certain places named. The paper recited that S. S. Oberrender had subscribed for 25 shares of the capital stock, J. C. Oberrender 24 shares and the third person one share. The capital stock was fixed at $5,000. It was certified that ten per centum of the capital stock had been paid to the treasurer in cash. It is admitted that it was so paid. Application was made to the Public Service Commission for approval of the incorporation, its assent was obtained April 8, 1914, and letters patent creating the corporation were issued April 16, 1914.
In order to carry on its business and accomplish the purpose for which it was formed, the company was required to have motor vehicles, and on May 11, 1914, it purchased from defendants, at a price admitted to be fair, certain automobiles and motor trucks belonging to them, and, in payment therefor, issued to them shares of the company’s capital stock — to S. S. Oberrender 24 shares and to J. C. Oberrender 23 shares — and in addition it executed and delivered to them judgment notes for the difference between the par value of the shares and the price of the cars. The transaction was evidenced by [157]*157bills of sale duly executed by defendants to tbe company; tbe cars were delivered to it and used by it in its business for a considerable period of time.
Tbe company having become insolvent, banded back to defendants by action of its board of directors, tbe cars wbicb they bad sold to it, and they turned over to tbe company tbe certificates of stock and tbe judgment notes given to them in payment. When tbe plaintiff was appointed receiver of tbe company, subsequent to this last transaction, instead of beginning appropriate proceedings to have tbe motor cars returned to tbe company, be instituted these suits, to recover what be alleges to be tbe amount unpaid on tbe defendants’ stock subscriptions, claiming tbe sales and delivery of tbe cars to tbe company in tbe first instance, and tbe payment of part of tbe admittedly fair price for them in stock of tbe company, did not discharge defendants’ liability to pay their stock subscriptions in cash. His proposition, as be puts it in bis statement of tbe question involved, is, “Must an original, unqualified subscription to tbe capital stock of a corporation be paid in cash, or may it be paid in personal property, there being nothing in tbe certificate of incorporation to indicate that it is to be paid otherwise than in cash?” Tbe answer to tbe question thus put is to be found in our cases as well as in textbook authorities.
In passing, it may clarify tbe proposition to observe, as did tbe learned court below in its opinion entering judgments for defendants, that there is no fraud, for defendants paid for their stock in property, at a just valuation. Appellant bases bis contention on tbe Act of April 17,1876, P. L. 30, amending tbe 17th section of tbe General Corporation Act of April 29, 1874, P. L. 73, 1 Stewart’s Purdon, Pennsylvania Statutes, page 803, section 5649, wbicb provides that corporations “may take such real and personal estate, mineral rights, patent rights, and other property, as is necessary for tbe purposes of its organization and business and issue stock to the amount of tbe value thereof, in payment thereof, and [158]*158the stock so issued shall be declared and taken to be full paid stock, and not liable to any further calls or assessments ; and in the charter and certificates and statements to be made by the subscribers and officers of the corporation, such stock shall not be stated or certified as having been issued for cash paid into the company, but shall be stated or certified in this respect according to the fact......No such corporation shall issue either bonds or stock, except for money, labor done or money or property actually received......” In construing this act in Big Spring Electric Co. v. Kitzmiller, 268 Pa. 34, 38, we said: “The constitutional and statutory provisions referred to were designed to prevent unscrupulous persons from fraudulently issuing and placing on the market bonds or stock not fairly representing money or property received by the corporation......In purchasing property for corporate purposes the transaction must be bona fide and not a mere device to evade the law.” The contention of appellant is, that, because in the certificate of incorporation, signed by the appellees, it was not stated that the stock was to be paid for in property, and because no statement was filed showing payment of the subscription had been so made, it had to be paid in cash, in order to discharge defendants’ liability, and not having been so paid, defendants still owe and are liable for the amount of their subscriptions above the 10% admittedly paid in cash. This loses sight of the fact that the certificate of incorporation was signed on February 9,1914, and the transaction of the sale of the automobiles did not take place until May 11, 1914. For anything that appears, at the time the certificate was signed and filed, it was not known that the motor cars necessary to carry on the company’s business would be paid for in stock. The usual and ordinary method of obtaining letters patent for a corporation is, as was here done, by making application after 10% of the capital stock subscribed has been paid to the treasurer in cash, and where a transaction of the payment of the balance of subscrip[159]*159tion in property has not been consummated when the articles of association are signed, it is difficult to see how a certificate could be filed that the balance of the subscription has been paid in property. Where property is taken for payment in stock at a valuation made in good faith at the time of the transaction, such valuation is binding on the creditors of the corporation: Coit v. North Carolina Gold Amal. Co., 15 Phila. 496; affirmed in Coit v. North Carolina Gold Amal. Co., 119 U. S. 343. “An issue of stock for property is one which finds support, not only in the decisions, but in the daily transactions of corporations, and the law does not compel the corporation and the subscriber to go through the useless form of a payment by a corporation to the subscriber of the value of the property and immediate repayment of the same money by the subscriber to the corporation on his subscription”: Cooke v. Marshall, 191 Pa. 315, 319; Cook on Stock and Stockholders, section 18.
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Opinion by
Mr. Justice Schaffer,
These two cases were tried together in the court below ; they resulted in verdicts for plaintiff; subsequently the court entered judgments for defendants non obstante veredicto from which plaintiff has appealed.
The actions were in assumpsit, by a receiver in equity, to recover alleged unpaid stock subscriptions, due to the corporation which the court had placed in his charge. The facts giving rise to the controversy to be determined are substantially undisputed.
By articles of association, dated February 9, 1914, defendants and one other, associated themselves together and applied to the Governor of Pennsylvania for letters patent for a corporation to be called The Motor Transit Company, Incorporated, the corporation to be formed “for the purpose of establishing, maintaining and operating automobile bus or stage lines” between certain places named. The paper recited that S. S. Oberrender had subscribed for 25 shares of the capital stock, J. C. Oberrender 24 shares and the third person one share. The capital stock was fixed at $5,000. It was certified that ten per centum of the capital stock had been paid to the treasurer in cash. It is admitted that it was so paid. Application was made to the Public Service Commission for approval of the incorporation, its assent was obtained April 8, 1914, and letters patent creating the corporation were issued April 16, 1914.
In order to carry on its business and accomplish the purpose for which it was formed, the company was required to have motor vehicles, and on May 11, 1914, it purchased from defendants, at a price admitted to be fair, certain automobiles and motor trucks belonging to them, and, in payment therefor, issued to them shares of the company’s capital stock — to S. S. Oberrender 24 shares and to J. C. Oberrender 23 shares — and in addition it executed and delivered to them judgment notes for the difference between the par value of the shares and the price of the cars. The transaction was evidenced by [157]*157bills of sale duly executed by defendants to tbe company; tbe cars were delivered to it and used by it in its business for a considerable period of time.
Tbe company having become insolvent, banded back to defendants by action of its board of directors, tbe cars wbicb they bad sold to it, and they turned over to tbe company tbe certificates of stock and tbe judgment notes given to them in payment. When tbe plaintiff was appointed receiver of tbe company, subsequent to this last transaction, instead of beginning appropriate proceedings to have tbe motor cars returned to tbe company, be instituted these suits, to recover what be alleges to be tbe amount unpaid on tbe defendants’ stock subscriptions, claiming tbe sales and delivery of tbe cars to tbe company in tbe first instance, and tbe payment of part of tbe admittedly fair price for them in stock of tbe company, did not discharge defendants’ liability to pay their stock subscriptions in cash. His proposition, as be puts it in bis statement of tbe question involved, is, “Must an original, unqualified subscription to tbe capital stock of a corporation be paid in cash, or may it be paid in personal property, there being nothing in tbe certificate of incorporation to indicate that it is to be paid otherwise than in cash?” Tbe answer to tbe question thus put is to be found in our cases as well as in textbook authorities.
In passing, it may clarify tbe proposition to observe, as did tbe learned court below in its opinion entering judgments for defendants, that there is no fraud, for defendants paid for their stock in property, at a just valuation. Appellant bases bis contention on tbe Act of April 17,1876, P. L. 30, amending tbe 17th section of tbe General Corporation Act of April 29, 1874, P. L. 73, 1 Stewart’s Purdon, Pennsylvania Statutes, page 803, section 5649, wbicb provides that corporations “may take such real and personal estate, mineral rights, patent rights, and other property, as is necessary for tbe purposes of its organization and business and issue stock to the amount of tbe value thereof, in payment thereof, and [158]*158the stock so issued shall be declared and taken to be full paid stock, and not liable to any further calls or assessments ; and in the charter and certificates and statements to be made by the subscribers and officers of the corporation, such stock shall not be stated or certified as having been issued for cash paid into the company, but shall be stated or certified in this respect according to the fact......No such corporation shall issue either bonds or stock, except for money, labor done or money or property actually received......” In construing this act in Big Spring Electric Co. v. Kitzmiller, 268 Pa. 34, 38, we said: “The constitutional and statutory provisions referred to were designed to prevent unscrupulous persons from fraudulently issuing and placing on the market bonds or stock not fairly representing money or property received by the corporation......In purchasing property for corporate purposes the transaction must be bona fide and not a mere device to evade the law.” The contention of appellant is, that, because in the certificate of incorporation, signed by the appellees, it was not stated that the stock was to be paid for in property, and because no statement was filed showing payment of the subscription had been so made, it had to be paid in cash, in order to discharge defendants’ liability, and not having been so paid, defendants still owe and are liable for the amount of their subscriptions above the 10% admittedly paid in cash. This loses sight of the fact that the certificate of incorporation was signed on February 9,1914, and the transaction of the sale of the automobiles did not take place until May 11, 1914. For anything that appears, at the time the certificate was signed and filed, it was not known that the motor cars necessary to carry on the company’s business would be paid for in stock. The usual and ordinary method of obtaining letters patent for a corporation is, as was here done, by making application after 10% of the capital stock subscribed has been paid to the treasurer in cash, and where a transaction of the payment of the balance of subscrip[159]*159tion in property has not been consummated when the articles of association are signed, it is difficult to see how a certificate could be filed that the balance of the subscription has been paid in property. Where property is taken for payment in stock at a valuation made in good faith at the time of the transaction, such valuation is binding on the creditors of the corporation: Coit v. North Carolina Gold Amal. Co., 15 Phila. 496; affirmed in Coit v. North Carolina Gold Amal. Co., 119 U. S. 343. “An issue of stock for property is one which finds support, not only in the decisions, but in the daily transactions of corporations, and the law does not compel the corporation and the subscriber to go through the useless form of a payment by a corporation to the subscriber of the value of the property and immediate repayment of the same money by the subscriber to the corporation on his subscription”: Cooke v. Marshall, 191 Pa. 315, 319; Cook on Stock and Stockholders, section 18. “There is no inherent incapacity of a corporation to purchase property and pay for it by stock instead of money......In addition to its inherent powers to make such contract, the corporation had express statutory recognition of its authority;......a corporation in process of formation and not yet in actual operation may have no other mode of getting the necessary equipment to commence business” : Shannon v. Stevenson, 173 Pa. 419.
In Bole v. Murray, 233 Pa. 589, which was a suit by a receiver against a subscriber to stock of a corporation prior to its incorporation and where the defense was that the stock had been paid for in property, it appeared that the issuing of the certificate to the defendant, was not pursuant to any corporate action, and there was no evidence that the directors of the corporation ever passed judgment on the value of the property defendant claimed to have turned over in payment or what the actual value of the property was; in the case in hand, all these elements appear. The stock was issued in pursuance of corporate action, the directors passed judgment on the [160]*160value of the property, and it is admitted that the corporation, in acquiring it, received full value for the shares which it issued; moreover, in the last cited case, the trial court found the property acquired was of little utility to the company; here, the property was essential to the carrying on of the corporation’s business. In that case, we said: “In all such cases where an original subscriber to stock claims to have paid a subscription in something else than money, the burden is on him to show a contract with the corporation permitting it, and the further burden is on him of showing that the transaction was fair and that the property turned over in payment had been valued by those representing the corporation in good faith.” Defendants’ proofs in the case at bar met all the requirements here laid down to show payment. In the Bole Case, it was further said: “We may concede that a corporation, once it has been formed and is actually being operated, may accept in payment of an original and unconditioned stock certificate its fair equivalent value in property.” 14 Corpus Juris, page 432, thus states the general rule: “In most jurisdictions, either by express statutory authority or by reason of the absence of a provision to the contrary, real or personal property may be received by a corporation in payment for its capital stock, so as to make it full paid stock, even as against creditors, whether the stock is issued to subscribers therefor or sold, provided the property is such as the corporation may lawfully acquire and hold for carrying out the objects and purposes for which it was organized.”
Appellant’s further contention, that the giving of the notes in part payment for the automobiles constituted an increase of the indebtedness in violation of the terms of the. act of assembly, is without merit, and even if it could be sustained would be of no avail to appellant in this proceeding, which is a suit to recover on the alleged unpaid stock subscriptions.
The assignments of error are all overruled' and the judgments are affirmed.