Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/99

 '/^^f^^-Q^tJ^^>f^^i^ / (P^nry^^ yj^l^^P^fT^t CHAP. VI.] AGREEMENTS TO TAKE STOCK. [§ 105. in procuring the deposits would change the situation and entitle the depositors to recover back the whole amount, at least as between them and the fraudulent promoters. 1 If, however, the deposits were made merely in order to com- ply with some resolution or statutory requirement, and without any intention on the part of the subscribers, or right on the part of the promoters, to apply the money in furthering the organi- zation of the company, then the subscribers would be entitled to have their entire deposits returned. 2 Under such circum- stances, whether the promoters would be accountable for de- posits received by others of their number must be decided ac- cording to principles already often referred to ; 3 generally they would not be. 4 § 105. It goes without saving that whoever agrees to take shares in the stock of a future corporation merely in „ i i • -i -, n Fraudulent order that others may be induced to agree as well, subscrip- having a secret understanding with the promoters of the scheme that no liabilities shall attach themselves to him by reason of his contract, will be bound to fulfill his agreement, at least in so far as the non-fuliillment thereof would injure inno- cent persons who have acted on the faith of it. 5 And, more- over, in so far as the promoters carry out this fraudulent secret 1 See Colt v. Woolaston, 2 P. Wins. 153; Twycross ». Grant, 2 C. P. Div. 469. But see St. Johns Mfg. Co. v. Hunger, 106 Mich. 90. A subscriber, whose subscription has been obtained through the fraudulent representa- tions of a promoter, cannot maintain an action for money had and received against other subscribers who are not implicated in the fraud. Perry v. Hale, 143 Mass. 540. 2 Nockels v. Crosby, 3 Barn. & Cr. 814; Ashpitel v. Sercombe, 5 Ex. 147. So if directors (promoters) under- take to return deposits without de- duction in case the scheme proves abortive, as, for instance, through failure to obtain an act of parlia- ment, they will be liable personally. Ward v. Londesborough, 12 C. B. 252. 3 See Walstab v. Spotteswood, 15 H. & W. 501. 4 See Burnside v. Dayrell, 3 Ex. 224, commented on in Thompson on the " Liabilities of Agents of Corpo- rations,' 1 p. 215. . 5 White Mountains R. R. Co. v. Eastman, 34 N. H. 134; Custar v. Titusville Gas Co., 63 Pa. St. 381; Minneapolis Threshing M. Co. v. Da- vis, 40 Minn. 110. See Litchfield Bank v. Church, 29 Conn. 137; Wil- son v. Handley, 96 Va. 96; Hardy v. Swigant, 25 Col. 136, and § 521. But an agreement between a subscriber and another subscriber who was ac- tive in procuring the subscription, that the former shall have the priv- ilege of selling his shares to the lat- ter at any time within a year at the price originally paid, is not void or 79