The Mount Holly news. [volume] (Mount Holly, Burlington Co., N.J.) 1891-1942, 1916-07-25
AGAINST the Subscribers

Judge Carrow has filed his opinion il
! the suit of Robert z. Ceilings, trustee
against Abraham Saltzman and Walter
Allen. This suit was brought by Coll
ings, who is the trustee of the bankrupt
!; corporation, The Ottomobile Company
for unpaid stock subscriptions in pursu.
ance of assessments made by the FEEDER
al court. Judge Carrow recites the facts
as he finds them, to be that in Septem-
Der, 1911, each of the defendants SUBJ
soribed for the capital stock of contem-
plated automobile corporation. The
agreement under which the subscription
was made is published in full in the
opinion.
In his opinion Judge Carrow says:
Early in January, 1912, the Ottomobile
Company was incorporated. The de-
PENDANTS were properly notified of the in
corporation and were requested to pay
the first instalment of twenty-five per
cent. The company, relying upon the
good faith of the subscribers for stock,
entered upon the specific business called
| for by the subscriptions without any OBJ
| jections from the defendants or any other
subscribers. The defendants did not pay
the said instalment of twenty-five per
cent. or any other instalment, but other
subscribers did pay. The company,
while in the specific business for which
it was incorporated, incurred debts which
threw it into bankruptcy.
''The popularity about the case is that
the defendants, at no time before the de-
cree of insolvency, objected to anything
the company did, nor did they do any
thing to rescind the subscriptions. But
they now contend, as against the right
of creditors, that their subscriptions |
were merely unaccepted offers to take |
stock, because the full amount of the |
authorized capital was not subscribed |
and because the certificate of incorpora- |
ton set forth more extensive powers |
than the subscription papers specified. |
That contention is answered by the fact |
that the defendants acquiesced in all the /
company did, because they did not OBJ
iect to the company beginning business
with less than the full authorized capt.
tai, nor did they object to the superhu-
GUS objects set forth in the certificate of |
incorporation. And the company did
not engage in any outside business.
The subscriptions were not void be-
cause OF anything the company had
done, and / am not sure they are even
voidabie, but conceding they were then
it was at the option of the subscriber
that the subscriptions could be rescinded
and If the defendants intended to re-
scind they should have done SO within
reasonable time after the notice in 1912,
and before debts were contracted by the
company. The defendants allowed the
company to prosecute business and incur
debts, believing, as it had a right to,
that the defendants would answer calls
for instalments. Creditors had dealt
with the company on the same theory,
and the defendants, therefore, waived OBJ
lection which they here offer as a de
fence.
1.-THE truth, as gather it, is that the
defendants took chance on the success
of the enterprise and thereby assumed
risk OF failure, and since the rights of
have interviewed, they are in no
position to escape liability for the value
not only of the preferred stock, but of
the common stock as we'll.
THE subscriptions show that the de-
agreed to take the common
stock, and there would have been no
difficulty about their getting it if they
had kept their part of the contract.
Judgment must go against each de-
fendant for 5000 with interest to be COM
puted."