Armstrong Cork Co. v. H.A. Meldrum Co.
| Decision Date | 04 December 1922 |
| Citation | 285 F. 58 |
| Parties | ARMSTRONG CORK CO. v. H. A. MELDRUM CO. |
| Court | U.S. District Court — Western District of New York |
Kenefick Cooke, Mitchell & Bass, of Buffalo, N.Y., for receivers.
John Lord O'Brian, of Buffalo, N.Y., for University of Buffalo.
George W. Wanamaker, of Buffalo, N.Y., for Canisius College.
On return of the show cause herein and request for instructions by the receivers, it was stated ore tenus that, since there was no objection from creditors or stockholders, the receivers were authorized to pay proportionately out of the funds in their custody the two subscriptions of the president and directors of the insolvent company, made by them in October, 1919, while the company was believed solvent, to the endowment fund of the University of Buffalo and to the endowment fund of Canisius College, and the views here submitted are supplementary.
It appears by affidavit that the subscriptions were made with the sanction and approval of three out of five directors of the company, after full discussion as to the possible benefits to be derived by the corporation from their action. The directors authorizing the subscriptions were the managers of the business, and they had been such for a long time. It was regarded by them as a proper incidental business expenditure, and no objection has ever been made by the nonattending directors or stockholders.
It appears, also, that at the time the subscriptions were made it was considered that no collegiate institute in Buffalo presented opportunity for education in the science of business, and as the company had many employees of various classes it would in all probability inure to the future advantage of the company to be able to secure employees trained and skilled in corporate business and industrial affairs, especially involving knowledge of financial accounting, management, and administration of the business in its various departments, bookkeeping, salesmanship advertising according to modern methods, etc. The donees contemplated and already have engaged competent teachers at large expense to instruct students in these branches of education, in reliance upon the payment of the donations of the defendant and other subscribers to the endowment funds. It was also considered, in making the subscriptions or donations, that the company would receive advertisement of substantial value, including the good will of many influential...
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