Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/76

 § 83.] THE LAW OP PRIVATE CORPORATIONS. [CHAP. V. not act as promoter. Nevertheless, if at the time of making the sale to the corporation, he occupies towards the corporation, as promoter or otherwise, a position of trust and confidence, while he may sell without reference to the original cost of the property to him, yet it would seem, on general principles of law and equity applicable to persons holding positions of trust, that he should not be permitted to sell at an unfair or exorbitant price. 1 aff'd, 29 Cb. Div. 795; Warren Ehret ,v which affects them with any trust."i Co. v. Ice Co., 198 Pa. St. 412; Rich- The last, sentence seems to contain ai ardson v. Graham, 45 W. Va. l&i J non sequitur ; i. e., A. did not occupy! The corporation is the proper plain-- a position of trust towards B. when[ tiff in suit to set aside promoters' '.A. acquired the property, therefore, acts, etc. Ex-Mission Land Co. v.i A. does not hold such a position to- Flash, 97 Cal. 610. The corporation wards B. when A. sells the property may compel its promoters to account- to him. The original cost is imma- for secret profits, although at the^terial; the property may have been time when the promoters tiu-ned the ^given to the promoter; but it does property over to the corporation the 1 'not follow that he may sell to his as- promoters were the only stockhold- fsociates at an exorbitant price, ers, they being at the time under 1 Moreover, the sentence referred to is contract to sell their shares tosubse- fhardly consistent with the following quent purchasers, who were the real [Sfrom the same opinion. "Where persons defrauded. Pittsburgh Mg. /persons form such an association, or Co. v. Spooner, 74 Wis. 307. ftbegin or start the project of one, from "" w '"?ale tr'cs. Co. v. VvTTcox, 64 Conn." that tune they do stand in a confiden 101. See cases in last two notes. The last sentence in the text may not accord with the view of Shars- wood, C. J., in Densmore Oil Co. v. Densmore, 64 Pa. St. 43, 49. ". . . . Any man or number of men who are the owners of any kind of property may form a partnership or associa- j disclosure of the facts. They must account to the company for the profit, because it is legitimately theirs." The learned judge seems to think tial relation to each other, and to all others who may subsequently be- come members or subscribers; and it is not competent for any one of them to purchase property for the pur- poses of such a company, and then sell it at an advance, without a full | tion with others, and sell that prop- erty to the association at any price I which may be agreed on between them, no matter what it may have originally cost, provided there be no fraudulent misrepresentations made by the vendors to their associates. They are not bound to disclose the profit they may realize by the trans- that the property must have been ac- f quired during the existence of the i fiduciary relation, in order to charge the seller with any of those duties towards his vendee which persons standing in a confidential relation action. They were in no sense agents i owe each other; but this seems or trustees in the original purchase, ' not essential, for the maxim caveat <and it follows that there is no confi- j emptor, and the rules of law proceed- dential relation between the parties | ing from it, never apply between per- 56