Alexander v. First National Bank

The plaintiffs conceived the idea of forming a company to fabricate steel pipe at Fort Collins and were instrumental in organizing (1961) and promoting for this purpose Timberline Tube, Inc., a Colorado corporation. Each plaintiff had identical interests in Timberline, which interests were the result of their efforts and a small cash investment. Bosworth, Sullivan & Company, an investment banking firm, a defendant in the trial court, but not a party here, actually put Timberline together financially. Besides investing a substantial amount of its own funds and inducing others to participate with equity capital, it arranged for a $500,000 line of credit with the Colorado National Bank. After a short period of operation the stockholders, other than plaintiffs, in order to provide additional operating capital, loaned Timberline $800,000 as evidenced by "subordinated notes." By their terms these notes were subordinated to claims of general creditors and also to amounts advanced by Colorado National Bank.