Court Opinion

ID: 6248503
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:07:09.271222+00
Date Added: 2024-06-11T08:59:21.613201
License: Public Domain

Opinion by
Mr. Justice Brown,
The appellant subscribed for five hundred shares of the preferred capital stock of the Maries Carved Moulding Company. There were certain conditions annexed to his subscription, all of which have been complied with by the company. One of these was that he was to receive from the Real Estate Trust Company of Philadelphia, for each share of stock subscribed for by him, three shares of full paid common stock of the company. Of this condition he now complains and asks us to say that the agreement of the company that he should receive this bonus is such a fraud in the eye of the law as invalidates all subscriptions made under it. It is a sufficient answer to this to say that the bonus stock was not to be issued by the company, but by the Real Estate Trust Company for A. O. Granger, to whom it was to be issued by the appellee in part payment of patent rights to be acquired from him by the company. The issue of this stock to him for such a purpose was valid under the constitution and the act of April 29, 1874, and, after he received it, he could do as he pleased with it in inducing others to subscribe to’the capital stock of the company. We have discussed this more fully in an opinion this day filed: Finletter, Receiver, *95v. The Acetylene Light, Heat and Power Company et al., ante p. 86.
By the first, second, third and fourth assignments of error the appellant complains that he was not allowed to prove that when his signature was obtained the agent of the company represented to him that he never would be called upon to pay one cent of the subscription price, and that he subscribed under this condition. If he had been allowed to prove this, it would simply have been proof of a fraud that he, in connection with the representative of the company, undertook to perpetrate upon the other subscribers to the capital stock, for his undertaking was not only with the corporation but with them as well. In Miller v. Hanover Junction, etc., Railroad Company, 87 Pa. 95, the action was to recover the amount of subscription to the stock of the company, and the defendant offered to prove on the trial that he had been induced to subscribe by reason of certain parol representations made to him by officers of the company that the railroad should be built, not as stated in the subscription book, but along his house, and upon the east side of a river, and that he would not be obliged to pay until the road was so built. In holding that this evidence was properly rejected, what we said of the defendant there applies to the one here : “ Had he expressed in writing, on the subscription book, the condition proposed to be proved, it would have been fair notice, to his fellow-subscribers, that his subscription amounted to nothing; was, in fact, a mere sham, since the condition, opposed, as it was, not only to the expressed action of the company but to the condition involved in every other subscription, could not possibly be enforced. Now, as we have already shown, this subscription was specially designed to carry out a common adventure, in which the company was but a means rrsed for its accomplishment, and the interests of which were but secondary; hence it follows, that if Miller succeeded in avoiding his obligation, he does so at the expense of his co-subscribers and in fraud of their rights. Every one who signed after him did so on the faith of his signature, as he did upon the faith of the signatures of those who preceded him, and to permit him now to set up a secret parol arrangement, by which he may be released whilst his fellows continue to be bound, would be anything but just. As was said in the *96ease of Graff v. The Railroad Co., 7 Casey, 489 (per Woodward, J.), a subscription to a joint stock is not only an undertaking to the company, but with all other subscribers. Such contracts are trilateral, and even if fraudulent as between two of the parties, they are to be enforced for the benefit of the third.’ This quotation expresses a principle applicable to the case in hand, and aptly illustrates the reason why the defendant should be estopped from setting up the secret parol agreement between himself and the agents of the company.” The assignments are all overruled and the judgment is affirmed.