Shannon v. Stevenson

34 A. 218, 173 Pa. 419, 1896 Pa. LEXIS 722

• Court: Supreme Court of Pennsylvania
• Decided: February 3, 1896
• Docket: Appeal, No. 395
• Status: Published

Opinion

Opinion by

Mr. Justice Mitchell,

The offer of evidence by defendant should have been admitted. The suit was for the unpaid balance of a cash subscription to stock, and the offer was to show that no subscription in cash was made by defendant, but on the contrary that paid-up stock was to be given him in compensation for services. There is no inherent incapacity of a corporation to purchase property or labor and pay for it by stock instead of money. If the corporation here had paid defendant $1,000 in cash to leave his former situation and undertake its presidency, on condition that he invest the money in its stock, there could be no question of the validity of the transaction, yet it would in substance have been exactly the same.

But in addition to its inherent powers to make such contract, the corporation has express statutory recognition of its authority in sec. 17 of the act of April 29, 1874, P. L. 81. The proviso that no stock shall be issued “ except for money, labor done, or money or property actually received ” does not prevent payment for labor or services bona fide to be thereafter rendered, any more than it prevents contracts to pay in advance for property to be furnished. 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.

Whether the defendant can prove the contract set up, and whether if he does so he is estopped from asserting it against creditors of the corporation, by his joining in the certificate of subscription, are questions not before us. The case has not yet reached that stage.

Judgment reversed and venire de novo awarded.