The Toy Corporation issued 200 shares of stock with no par value. The articles of incorporation provided that the board of directors had the right to fix the value of the stock. Through subscription agreements between the directors and two subscribers,
101 shares were issued to Maria Perez for $5,000, and 99 shares were issued to Ken Pilar for $15,000. Toy is now insolvent and is unable to pay the $6,000 it owes to Pine, its major supplier. Pine has brought suit against Perez, claiming that the subscription agreement was invalid. How will the case be decided?
Judgment will be for Perez. The subscription agreement was not invalid as to the creditors of the corporation. As provided in the articles of incorporation, the directors had the right to fix the consideration for the sale of the no-par stock. If the shares had been par-value shares for which Perez had not fully paid, she might have been liable for the unpaid balance.
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