Page:Federal Reporter, 1st Series, Volume 7.djvu/422

 JilO FIDEIUL BEPOBTEK. �and these agreements, were in fact ooncealed from those per- sons' -who, by subscription to the stock, became members of the corporation. Proof of such want of an independant board of direetors, at the time of the transaction of sale, without the knowledge of the stockholders, would entitle the corporation fo a rescission, as a inatter of course, if applied for with that diligence which a court of equity requires for the institution of such a suit. Sombrero e Phosphate Co. v. Erlanger, 5 Ch. D, 108 ; S. C. 3 App. Cas. 1226. It is true that the payment of money or other valuable consideration to induce variou» persons to become direetors is alleged in the complaint in the former suit, and it may have been intended thereby to de- scribe the same transactions mentioned in the bill ; and it i» alleged in the complaint that such payments were made by the defendants Park and Baxter in pursuance of that fraudu- lent purpose and design on their part which is made the basia of the former action for deceit, and which is evidently als» relied on in the bill as one of the grounds for avoiding the sale for fraud. But it is evident that, so far as these allega- tions of facts are concerned, in order to make them a basis for a recovery in the former action, the jury must have been satisfied by a fair preponderance of the evidence that the acts 80 alleged to have been done by Park and Baxter were done with an actual intent to defraud the complainant company. No such intent need be proved in the present case to entitle the complainant to resoind. It will not do, as argued by defendants' counsel, in order to test the present question, to strike out of the bill all allegations of acts done with a fraud- ulent intent on the part of Park and Baxter. If that were done, there might, indeed, be nothing left of the bill. The proper test is what will remain of the material allegations of the bill if the alleged fraudulent intent of Park and Baxter were dis- proved. Judged by this test there remains enough of the bill to entitle the complainant to a rescission, as matter of law and equity, if no successful defence to such remaining allega- gations shall be interposed. It is, however, insisted on the part of the defendants that the bill cannot be properly con- strued as a bill to rescind, except upon the ground of fraud;. ��� �