Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/559

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 523. fraud attaches to him. 1 Accordingly, when the receiver of an insolvent corporation sues to recover the amount unpaid on a subscription, it is then too late to plead that the subscription was induced by fraudulent misrepresentations. 2 And in Eng- 1 Oakes o. Turquand, L. R. 2 H. L. 325; Knox v. Hayuian, 07 L. T. Rep. 137; Scott v. Snyder, etc., Co., ib. 104; Cunningham v. Edgefield, etc., R. R. Co., 2 Head (Tenn.), 23; Grangers' Ins. Co. v. Turner, 61 Ga. 561; Davis v. Dumont, 37 Iowa, 47; Water Valley Mfg. Co. v. Seaman, 53 Miss. 655; Rivers v. Montgomery Plank Road Co., 30 Ala. 92; Montgomery South- ern Ry. Co. ». Matthews, 77 Ala. 357; City Bk. v. Bartlett, 71 Ga. 797; Henderson v. Railroad Co., 17 Tex. 560; Savage v. Bartlett, 78 Md. 561; Fear v. Bartlett, 81 Md. 435; Occi- dental Insurance Co. v. Ganzhorn, 2 Mo. App. 205; In re Etna Ins. Co., ex parte Shields, 7 Ir. R. Eq. 264. See Walker v. Mobile and OhioR. R. Co., 34 Miss. 245; Waldo v. Chicago, etc., R. R. Co., 1 Wis. 575; Bosher v. Land Co., 89 Va. 455; In re Madrid Bank, Wilkinson's Case, 36 L. J. Eq. 489; In re Russian Iron Works Co., Kincaid's Case, ib. 499; Anderson v. Scott, 70 N. H. 350; McClanahan v. Ivauhoe Land Co., 96 Va. 124; Ala- bama Foundry & Machine Works v. Dallas, 127 Ala. 513. Compare Rutz v. Esler, etc., M'f'g Co., 3 111. App. 83. It has been held that in a suit brought by a corporation against a shareholder on a note, the defendant may set off money paid by him on a stock subscription induced by fraud; unless the rights of creditors inter- vene. Hamilton r. Grangers' Life, etc., Ins. Co., 67 Ga. 145. To avoid a subscription on the ground of mis- representations of the agent obtain- ing it, the misrepresentations must be of a fact, and not an expression of opinion, and must not relate to mat- ters controlled by the charter, as to which the subscriber is affected with knowledge. Selma M. and M. R. R. Co. p. Anderson, 51 Miss. 829; Jack- son v. Stockbridge, 29 Tex. 394; Montgomery Southern Ry. Co. v. Mat- thews, 77 Ala. 357; Jefferson v. Hewitt, 95 Cal. 535; Wingetv. Build- ing Ass'n, 128 111. 67. Compare Haskell v. Worthington, 94 Mo. 561; Armstrong v. Karshner, 47 O. St. 276. In an action by a corporation on a subscription which after its execution had been raised without knowledge of the maker, when the execution of the contract as set out is denied, the corporation cannot recover the amount due on the original subscription without show- ing that the alteration was not fraud- ulently made by it. Bery v. Mariet- ta, P. & O. Ry. Co., 26 Ohio St. 673. 2 Upton v. Tribilcock, 91 U. S. 45 ; Ruggles v. Brock, 6 Hun, 164; Michener v. Payson, 13 Bankr. Reg. 49 ; Burgess*s Case, 15 Ch. D. 507; Upton v. Englehart, 3 Dill. 496; How- ard v. Glenn, 85 Ga. 238. Compare Farrar v. Walker, ib. 82. Subscriber must annul at once on discovery of fraud. Weisiger v. Ice Co., 90 Va. 795. Cf. Savage v. Bartlett, 78 Md. 561 Tierney v. Parker, 58 N. J. Eq. 117 Urner v. Sollenberger, 89 Md. 316 Wilson v. Handley, 96 Va. 96. But it is held that the mere insolvency of the corporation is no bar to an action to annul a subscription to shares, where the subscriber has not been guilty of laches and the rights of creditors are not before the court. Ramsey v. Thompson Mfg. Co., 116 Mo. 313. See, also, § 744. 539