Excerpt from A Treatise on the Liability of Stockholders in Corporations
Our courts discharge and avoid all collateral agreements not to pay, and all devices to avoid payment.1 But in England, if a man agrees to receive only paid-up shares, although the transaction exhibits the very essence of fraud, he can not be made to pay for them. His agreement stands or falls as an entirety. If it is valid, he cannot be made to pay, because it was agreed that he should not pay; if it is void, he cannot be made to pay, because he is not a share holder.2 In the view of our courts, a conveyance of shares in a failing company to an insolvent person is deemed a fraud upon the rights of creditors, and void.3 But in England such a conveyance is valid if out and out, and not a mere sham.4 In other words, if it actually passed title as between the transferor and the transferee, so that the latter does not continue to hold merely as a trustee for the former, and subject to his orders, it is a good transfer, no matter with what intent made.
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