Appeal, No. 109, March T., 1954, from decree of Court of Common Pleas of Allegheny County, July T., 1952, No. 142, in case of Theodore H. Schmidt v. Ralph W. Paul and Blanche S. Paul. Decree reversed; reargument refused June 4, 1954.
Sherman T. Rock, with him Theodore M. Burns, Jr. and Paul, Lawrence & Rock, for appellants.
Harry R. Levy, for appellee.
Before Stern, C.j., Stearne, Jones, Bell, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE ALLEN M. STEARNE
The liquidating receiver of an insolvent corporation commenced this suit by a complaint in equity to recover the purchase price due on defendants' subscriptions to corporate shares of stock. The learned court below accurately pointed out that the question
"whether the burden of proof is upon the plaintiff or upon the defendants is all-important." It ruled that, since the subscribers had failed to show the transfer of the consideration to the corporation was fair and that the property turned over to the corporation was valued in good faith, they had not met the required burden of proof. The subscribers have appealed from the decree ordering them to pay an alleged unpaid balance on their stock subscriptions to the liquidating receiver, the plaintiff-appellee.
The court below found the following as the facts: The appellants, Ralph W. Paul and Blanche S. Paul, husband and wife, had been operating a partnership involving a lumber and building supply business. Herman D. Snyder and his son, H. Lawton Snyder, were likewise conducting a partnership involving the same type of business. On April 11, 1950, these partnerships were combined into a single corporation, the Mon Valley Lumber and Supply Company. The sole incorporators, directors, and stockholders of this corporation were Herman D. Snyder and his wife, Sara E. Snyder, and the two appellants. Each of the appellants subscribed for fifty-seven shares, $100 par value, of the corporation's capital stock. The stock certificates purported on their face to be fully paid and non-assessable.
Prior to the incorporation of the company the appellants had entered into an oral agreement with the Snyders providing for the payment of their subscriptions in undefined amounts of money and inventory. The minute book of the company contained the following notation concerning the first meeting of the directors held on May 10, 1950: "'The amounts paid in by the subscribers for stock were as follows and the value of the property delivered by the subscribers in
part payment of their several subscriptions was set by the ...