Court Opinion

ID: 4933300
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:11:01.088112+00
Date Added: 2024-06-11T08:14:34.115024
License: Public Domain

Libbey, J.
I concur in the result in this case on two grounds. I. On the ground stated by Judge Danforth in his note. II. The plaintiff, by his subscription to the stock of the association, became owner of an interest in the patent which was conveyed to the use of the subscribers. If he was induced to subscribe and pay his money by fraud, his subscription was not valid, but voidable only by him. He might elect to hold the benefits of his purchase or to rescind the contract. To rescind, he must tender back what he had received. The evidence does not show that it was of.no value. He can maintain an action for money had and received only by rescinding the contract.
But I cannot concur in the opinion to the extent to which I understand it to go. I think the evidence authorizes the conclusion that the defendant agreed with Shaw to subscribe for stock, *183and to authorize Shaw to hold him out to the public as a subscriber paying into the capital of the company his subscription, for the purpose of inducing others to subscribe, under a secret agreement that he should have his stock without payment therefor. I think such an arrangement, by which the defendant was to act as a decoy, was fraudulent as to parties induced to subscribe by it. He authorized the assertion of a matter as fact, which he knew to be false, to induce others to act.
The fact that he had subscribed in good faith was not immaterial to others subscribing after him. It was an assertion that if others subscribed and became members of the company, they would share the benefits of his subscription, as a part of the capital of the company. By having his stock without payment, the stock of other subscribers was made less valuable than they had a right to expect it to be.