Basalt Rock Co., Inc. v. MacMillan

FINCH, P. J.

This is an original application for a writ of review.

September 26, 1924, the Commissioner of Corporations duly issued a permit, authorizing the petitioner herein to issue and sell a certain number of shares of its capital stock upon conditions specified in the permit. The. corporation thereafter sold a large number of such shares of stock in conformity with the terms of the permit and other shares in violation of such terms. Por part of the stock illegally sold the corporation received $17,375 in cash, the full par value thereof. The particulars in which the sale of such stock was made in violation of the permit are immaterial to any issue in this proceeding. One of the conditions of the permit was that the stock should be sold at par for cash. The petition alleges that the corporation issued

500

shares of preferred stock to persons named in the petition and that such persons “did not pay or give said corporation any consideration for the issuance of the five hundred shares of preferred stock, . . . either in cash or in property; that the question as to whether they gave any valid or legal eon

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sideration for the purported issuance of said purported shares was and is a disputed question of fact; that the petitioner alleges and maintains that said persons gave or paid no consideration to said corporation for the issuance of said purported shares to them, unless it was a usurer’s bonus or premium upon a loan which was made to the corporation at the time said purported shares were issued to said persons, and which loan has since been wholly paid and discharged.” The corporation thereafter ordered the cancellation of the stock so issued without consideration, but the holders thereof refuse to surrender their certificates of stock for cancellation.

In a petition for an amended permit, filed with the Commissioner in 1926, and in a petition for a rehearing, the foregoing facts are set forth, and it is therein alleged that such illegal sales of stock were made by the directors of the corporation “in ignorance of the law”; that the purchasers of stock illegally issued who paid cash therefor in the total sum of $17,375 have surrendered the certificates issued to them and that the corporation is indebted to them in the sum of $17,375, the purchase price paid by them for the stock; that “petitioner is informed and believes and therefore alleges that all of said persons are willing to buy said stock and pay for the same at par if this commission will permit it to be issued and sold.” The final request of the corporation was for a permit authorizing it to issue stock to the persons last named for the respective amounts paid by them for stock illegally issued, “without waiting for the surrender of the void certificates.”