Robinson v. Wangemann
| Decision Date | 27 March 1935 |
| Docket Number | No. 7532.,7532. |
| Parties | ROBINSON v. WANGEMANN. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Coleman Gay, of Austin, Tex., for appellant.
Allen V. Davis, of Corpus Christi, Tex., for appellee.
Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.
This is an appeal from a judgment affirming an order of the referee allowing a claim against the estate of Reichardt-Abbott Company, Inc., bankrupt, based on a note given by the corporation in payment for shares of its own stock purchased by it.
The facts are not in dispute. In October, 1922, Arthur Wangemann, who was its president and a large stockholder in Wangemann-Reichardt Company, Inc., sold 500 shares of its own stock owned by him to the corporation at $110 per share, a total of $55,000, to be paid for on or before January 1, 1923. The purchase was authorized by a meeting of stockholders and the company's note, due January 1, 1923, bearing 7 per cent. interest from October 1, 1922, was delivered to him in payment. At that time the corporation was solvent and its surplus in cash, over and above its liabilities, was more than $55,000. The note, due January 1, 1923, was not paid. From time to time, renewal notes were issued and the debt was reduced to $35,000. The name of the corporation was changed to Reichardt-Abbott Company, Inc., and under that name it was adjudicated bankrupt. Its assets are not sufficient to pay creditors in full. The claim of appellee is based on one of the renewal notes for $30,000, due January 1, 1933, and four notes each for $500, given in payment of interest on said note, together with interest on all the said notes. Appellee holds said notes as executrix under his will and sole legatee of Arthur Wangemann.
The referee held that the corporation had the right to purchase its own stock, relying upon the cases of San Antonio Hardware Co. v. Sanger (Tex. Civ. App.) 151 S. W. 1104; Medical Arts Bldg. Co. v. Southern Finance & Development Co. (C. C. A.) 29 F.(2d) 969, that the transaction was in good faith, and, as the corporation had sufficient surplus out of which the stock could have been paid for at the time it was purchased, without prejudice to creditors, appellee was entitled to prove her claim and participate equally with the other creditors in the distribution of the assets.
It may be conceded that if Arthur Wangemann had received cash for his stock at the time he relinquished it the transaction would have been valid, but that is not the case here presented.
We will not attempt to review all the authorities cited by the parties. In the two cases relied upon by the referee the controversies were between the corporations and the noteholders and no creditors were complaining. They are not in point as...
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