Appeal, No. 165, Oct. T., 1962, from order of Court of Common Pleas No. 3 of Philadelphia County, June T., 1957, No. 9767, in case of Old Penn Tavern, Inc. v. Edward J. Kubiak et al. Decree modified and record remanded.
Francis T. Anderson, with him John Patrick Walsh, for appellants.
Nicholas G. Petrella, for appellee.
Before Rhodes, P. J., Ervin, Wright, Woodside, Watkins, Montgomery, and Flood, JJ.
[ 199 Pa. Super. Page 230]
The principal issue raised by this appeal is whether a corporation which has elected to accept for itself the benefit of a purchase of shares of its stock by corporate officers with corporate assets, including funds borrowed by the corporation, may also recover from
[ 199 Pa. Super. Page 231]
the officers the interest and service charges incurred by it in connection with the transaction. The appeal also attacked the chancellor's finding that the defendant-officers intended to defraud the corporation and raises certain procedural objections.
1. The defendants, officers and stockholders of the plaintiff corporation, obligated it to pay interest and service charges totaling $4,725.42 in connection with a loan and used the proceeds, together with other corporate assets, to acquire in their own names the shares of stock of a former officer and his wife.
Paul H. Kratz, a minority stockholder, brought this action in equity in the name of the corporation seeking a decree directing the defendants to transfer the shares to the corporation and to repay to it the difference between the price paid for the shares and their par value, together with the interest and service charges incurred by the corporation in connection with the loan.
The defendants caused the stock to be transferred to the corporation as treasury stock before the hearing in the court below, and they offered evidence, rejected by the chancellor, that Kratz had expressly authorized them to acquire the shares for the corporation, that they never intended to acquire them for themselves, and that they had been assigned to them as individuals by mistake. There was no evidence that the price paid for the shares was excessive, and the chancellor expressly postponed a determination of the defendants' possible liability for any such excess pending the submission of further facts and figures. The chancellor also reserved jurisdiction to pass upon the request in the complaint that the defendant, Edward J. Kubiak, be removed as a director of the corporation. He ...