Court Opinion

ID: 6250814
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:14:21.977609+00
Date Added: 2024-06-11T08:59:24.902424
License: Public Domain

Opinion by
Mr. Justice Potter,
The appellant here alleges that the court below erred in discharging a rule for judgment for want of a sufficient affidavit of defense. The action was assumpsit to recover the amount of a subscription to capital stock. In his affidavit of defense, the defendant alleged that his subscription was conditional, and was made under a collateral agreement, by which he was allowed three months time in which to decide whether he would take the stock or not. Neither the statement of claim nor the affidavit of defense makes it clear whether the company had been incorporated at the time the subscription was taken. While our cases seem to make a distinction between conditional subscriptions to the capital stock of a corporation made before incorporation, and those made after-wards, yet the rights of cosubscribers are not to be injuriously affected by any secret agreement. Where other subscriptions are made upon the faith of a signature, it would be unjust to permit a secret arrangement to prevail. See Miller v. Hanover Junction R. R. Co., 87 Pa. 95. This case was cited in Moore v. R. R. Co., 94 Pa. 324, where it was said (p. 328): “the defendant Miller, set up a secret parol condition in order to defeat his subscription, but it was held that he could not be permitted so to do, on the ground that it would be unjust and a fraud upon his cosubscribers to permit him, on such grounds, to escape responsibility and thus throw upon them an additional burden.” See also Phila. & Del. County R. R. Co. v. Conway, 177 Pa. 364; Marles Carved Moulding Co. v. Stulb, 215 Pa. 91. In Real Estate Trust Co. v. Manufacturing Co., 223 Pa. 350, it was held that a subscriber to the stock of a corporation could set up a secret parol agreement in defense to an action by the assignee of the company, to recover the amount of the subscription, only because (p. 356) under the terms of the subscription agreement, if he should be re*453lieved of liability, all the other subscribers would also be released.
Under these and other general authorities which might be cited, the right of the defendant to successfully set up a collateral agreement seems doubtful. But in his affidavit of defense he goes further and avers that after he had declined to take the stock, and while the company was still a solvent, going concern, it canceled his subscription. The general rule is that “A corporation may release a subscriber so far as to estop it and its assignee in insolvency from suing thereon:” 4 Thompson on Corporations (2d ed., 1909), sec. 3869. “A subscription contract, like any other contract, may be waived, canceled or dissolved by the mutual consent of all the parties interested. The interested parties are the subscriber him- ■ self, the other stockholders, and the corporate creditors, existing at the time of the cancellation:” 1 Cook on Corporations (6th ed., 1908), sec. 168. “Such cancellations are good when permitted by the governing statute, where there are no creditors and provided all the stockholders assent:” 10 Cyc. 452.
The affidavit is not as specific as it might be, in setting out the facts as to the alleged cancellation, and does not set out the manner in which it was done; but it does aver on information and belief, that the corporation “by its constituted authorities” canceled the subscription. An order discharging a rule for judgment for want of a sufficient affidavit of defense will not be reversed, except where a pure question of law is raised and clear error has been committed: Wilson v. Trust Co., 225 Pa. 143, and cases there cited.
The present case is by no means so clear as to warrant, us in reversing the order of the court below. The specification of error is overruled, and the judgment is affirmed.