Court Opinion

ID: 8863214
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:55:27.584497+00
Date Added: 2024-06-11T17:05:54.150559
License: Public Domain

SANBORN, Circuit Judge
(dissenting). There are two reasons why I am unable to assent to the views expressed and the conclusion reached by the majority of-the court in this case. They are that, in my opinion, the fraudulent representations which induced the plaintiff! in error to contract for the purchase of his stock entitle him to repudiate that purchase, and to rescind his. contract, and that the pretended increase of the capital of the bank was invalid, and he never 'became liable as a stockholder, because only two-thirds of the whole amount of the increase was ever paid in. Rev. St. § 5142. The case made by the pleadings is this: In 1890 the plaintiff in error was a stranger to the bank, free from all connection with or relation to it, and ignorant of its financial standing and character. The bank was insolvent, was earning no dividends, and had no surplus. To induce the plaintiff in error to purchase some shares of a proposed increase of its worthless stock, the bank falsely represented to him that it was solvent, and in a flourishing condition; that it was earning dividends on its stock; that it had a surplus of $50,000 above its capital stock and liabilities; and that its stock was worth a premium of $8 per share. By these misrepresenta"tions it induced him to subscribe for 50 of the 1,500 shares it proposed to issue, and to deposit with it $5,400 under an understanding that this money should be applied to the payment for this stock' when the whole amount of the increase of stock was subscribed for and paid in. The entire amount was subscribed for, but only two-thirds of this increase was ever paid in. The bank then appropriated the plaintiff’s $5,400 in payment for the 50 shares of stock, sent him a certificate of it, and induced him to play the role of a stockholder by the false representation that the entire increase had been paid in, and by the same false representation induced the comptroller of the currency to issue his certificate, and approve the increase. At-the same time it so falsified its books that the plaintiff in error could not, by the utmost diligence, learn the true condition of the bank. All this was done in October, 1890. But the bank continued to falsify its books, and to conceal the truth, so that the plaintiff in error had no suspicion of the fraud, and could not discover it by any reasonable diligence until after he had received two dividends on his supposed stock, and the bank had closed its doors in 1894. Here is a case where a bank, by the grossest false representations, has induced a stranger to pay $5,400, and to incur a liability for $5,400 more, for a certificate of worthless stock that furnished no consideration for the contract. It is difficult to conceive of a grosser fraud. Upon every principle of equity and justice this subscriber was entitled to repudiate this purchase, to rescind his contract, and to recover back his money, as soon as he discov*857cared the facts. Contracts for stock in a corporation which are induced. by fraud create no obligation, and the victim of the fraud has the right to their abrogation. Vreeland v. Stone Co., 29 N. J. Eq. 190; Thomp. Liab. Stockh. § 142. It is true that this contract was voidable, and not void, and that the duty to rescind it as soon as the facts were discovered, or as soon as they could be discovered with reasonable diligence, was imposed upon this subscriber. But he avers in his answer — and this allegation stands admitted in this record — that the bank systematically, skillfully, and cunningly falsified its books, concealed the facts, and continued its false representations until it closed, in May, 1894, so that he could not, with the utmost diligence, discover the fraud, and so that he had no suspicion of it. How can he be said to be guilty of such negligence or laches as will deprive him of relief in the face of these facts? The statutes of the state of Missouri, where this fraud was perpetrated, provide that an action for relief on the ground of fraud may he brought at any time within live years after the discovery by the aggrieved party, within ten years, of the facts constituting the fraud (Rev. St. Mo. 1889, § 6775); and it is a familiar maxim that no time runs against the i ietim of a fraud while its perpetrator fraudulently and successfully conceals it (Scheftel v. Hays, 58 Fed. 457, 460, 7 C. C. A. 308, 312, and 19 U. S. App. 220, 226; Kelley v. Boettcher, 29 C. C. A. 14, 85 Fed. 55, 63). I am unable to escape the conviction that under (his state of facts ihis subscriber was entitled to rescind the purchase of, and to repudiate the liability upon, his stock.
It is conceded in the opinion of the majority that, as against the bank, (he plain!iff in error would be entitled to this relief; but it is insisted that by his delay in seeking it, and by his receipt of two dividends, he is estopped from obtaining it as against the receiver, because the latter represents the creditors of the bank as well as the bank itself. In support: of this view, the cases of Chubb v. Upton, 95 U. S. 665; Veeder v. Mudgett, 95 N. Y. 295; Stutz v. Handley, 41 Fed. 531; Pauly v. Trust Co., 165 U. S. 606, 17 Sup. Ct. 465; and Keyser v. Hitz, 133 U. S. 138, 10 Sup. Ct. 290, — are cited. But there seems to me to be a radical difference between the standing of the subscriber in this case and that-of the subscribers in Chubb v. Upton, Keyser v. Hitz, Upton v. Tribilcock, 91 U. S. 45, Sanger v. Upton, Id. 56, 63, and oilier cases of that class. In this case the plaintiff in error was induced to purchase by a gross and continuing fraud, which kept him in ignorance of the facts, and rendered it impossible for him to discover them by the use of reasonable diligence. In those cases the subscriptions were not induced by fraudulent, continued, and successful misrepresentations and concealments of material facts which lulled suspicion, and hid the truth, but the defenses were the defective exercise of the power to issue stock, as in Chubb v. Upton; ihe defective transfer of stock, as in Keyser v. Hitz and Sanger v. Upton, 91 U. S. 63; a misrepresentation as to the legal effect of the stock cerüíicate, which purported to be nonassessable, which was held to be a misrepresentation of a matter of law, and unavailable, as in Upton v. Tribilcock, Id. 45, 50; the fact that an increase of stock was irregularly, hut not fraudulently, issued, and *858knowingly retained, as in Veeder v. Mudgett, 95 N. Y. 295, 310, and Stutz v. Handley, 41 Fed. 531; that subscribers or pledgees knowingly held tkemselyes out as owners of stock “in such way and under such circumstances as upon principles of fair dealing will estop them as against creditors from claiming that they were not in fact owners,” hs was said in speaking of supposed cases in Pauly v. Trust Co., 165 U. S. 606, 623, 17 Sup. Ct. 465; and that subscriptions were knowingly ratified and adopted after full knowledge of the falsity of the statements which induced them, as in Ogilvie v. Insurance Co., 22 How. 380, 390. In these cases the subscribers or holders were held to be estopped as against the creditors, because they continued to act as stockholders after they knew, or, by the exercise of reasonable diligence, might hare known, the facts. None of them were tricked into the place of stockholders and retained there by a continued fraud, which kept them in ignorance of, and rendered it impossible for them to learn, the truth by the exercise of reasonable diligence, as the plaintiff in error was in the case at bar. This is the radical distinction between the cases referred to and that in hand. It separates by as wide a difference the cases of Scovill v. Thayer, 105 U. S. 143; Sawyer v. Hoag, 17 Wall. 610; New Albany v. Burke, 11 Wall. 96; Burke v. Smith, 16 Wall. 390; Mumma v. Potomac Co., 8 Pet. 281; Delano v. Butler, 118 U. S. 634, 7 Sup. Ct. 39; Bank v. Case, 99 U. S. 628; Bowden v. Johnson, 107 U. S. 251, 2 Sup. Ct. 246; and Potts v. Wallace, 146 U. S. 689, 703, 13 Sup. Ct. 196, — cited in the opinion of the majority. It is held in those cases that those who knowingly permit themselves in various ways to appear to be stockholders, those who were stockholders, but presented the false appearance that they were not, and those who fraudulently transferred'their stock to irresponsible parties to escape liability, were estopped from defeating creditors of the corporation in their attempts to hold them as such. It is, indeed, repeatedly said in those cases that the property of an insolvent corporation and the liability of the stockholder are a trust fund pledged for the benefit of the creditors; and that is equally true of every insolvent person. But in none of these cases — in no case cited by the. court or the counsel— was the holder of the stock duped into his place and liability by undiscoverable fraud. In none of them did any court hold that money obtained from, or liability imposed upon, a stockholder by fraud which he could not discover,, was a trust fund held for the benefit of the creditors of the corporation which perpetrated the fraud. Can a debtor by fraud confer upon his creditors any greater right to the property or liability of his victim than he gets himself? In the opinion of the majority this question is propounded: “If A., being the owner of fifty shares of the capital stock in a bank, should induce B. to purchase the same through false representations with respect to the financial condition of the bank, the stock being transferred to B. on the books of the association, could B., if the bank subsequently failed, escape liability to the creditors on the ground that he had been induced to purchase the stock through the false representations made by A.?” In my opinion, in the absence of other proof of an estoppel in pais, the question should be answered in the *859affirmative, because fraud avoids every purchase, every sale, every contract, as against every one but an innocent purchaser or creditor who has taken his place in reliance upon it. That, however, is not the question in this case. The question here is: Could the assignee or receiver of B.’s property, in the case of the sale supposed, enforce a nonnegotiable obligation of A., which B. had induced him to make by the fraudulent representations? 'Regarding the answer to this question, it seems to me, there ought not to be two opinions.' If a debtor procures goods by false representations, the rights of the defrauded vendor to recover them are always superior to those of the creditors of the vendee or the receiver who represents them. A fortiori, if, by Uie fraudulent representations, by which he sells his goods, he procures an assumption of liability by the vendee, the light of the latter to a rescission of the sale and a cancellation of the obligation is superior to the rights of either the vendor’s creditors or Iris receiver to enforce it. Beach, Rec. § 704; Bank v. Peck, 29 Conn. 384, 386; Bussing v. Rice, 2 Cush. 48; Rohrbough v. Leopold, 68 Tex. 254, 258, 4 S. W. 460; Root v. French, 13 Wend. 570, 573; Barnard v. Campbell, 58 N. Y. 73; Slagle v. Goodnow, 45 Minn. 531, 48 N. W. 402; Starch Factory v. Lendrum, 57 Iowa, 573, 10 N. W. 900, and cases there cited; Atwood v. Dearborn, 1 Allen, 483; Devoe v. Brandt, 53 N. Y. 462, 465; Benj. Sales, § 433, note I. Wiry is not tire right of one who is induced by the fraudulent representations of a bank to buy its stock to a rescission of that sale and a release of the liability it imposes superior to the claims of its creditors or its receiver to enforce them? Fraud vitiates every contract based upon it. A contract of subscription for or purchase of stock is no exception to the rule, and. the relation and liability of a stockholder cannot exist without the existence, or an estoppel from denying the existence, of the contract of subscription or purchase. It is true, as is shown in Scovill v. Thayer, and other cases cited, that the stockholders’ liability' and the maintenance of the action upon it is not dependent upon the terms of the contract of subscription where those terms are in conflict with the law or the statute, as was the contract that the stock was nonassessable, but; the existence of a valid contract of subscription or arr estoppel from denying its existence is a sine qua non to the existence of the liability and the maintenance of the action. Without it there can be no stockholder, and hence no liability of a stockholder. Arrd, where the contract is induced by fraud, and is rescinded without negligence or delay as soon as the facts constituting it are discovered, it is as though it had not been, and there remains neither contract nor stockholder, nor liability of a stockholder. In all the cases that have been cited in which the liability was enforced a contract of subscription or purchase which had not been induced by fraud, or which had been ratified after its discovery, existed, and the stockholders in those cases were held because, as was well said in Pauly v. Trust Co., 165 U. S. 606, 623, 17 Sup. Ct. 465, they were the real owners of the stock, or held themselves out, or “allowed themselves to be held out, as owners in such way and under such circumstances as, upon principles of fair dealing, will estop them, as against creditors, from claiming that they were *860not, in fact, owners.’’ But one who is induced by a continuing fraud to subscribe for or to purchase and to retain stock is not estopped, as against creditors, on principles of fair dealing, from repudiating the contract and liability when he discovers the facts, because he‘has never knowingly or negligently deceived them to their injury. So are the American authorities that have treated of such fraudulent contracts (Bank v. Newbegin, 40 U. S. App. 1, 20 C. C. A. 339, and 74 Fed. 135; Improvement Co. v. Merrill, 2 U. S. App. 434, 2 C. C. A. 629, 52 Fed. 77, 80; Upton v. Tribilcock, 91 U. S. 54; Winters v. Armstrong, 37 Fed. 516, 517; Duffield v. Iron Works [Mich.] 31 N. W. 310, 316), and they clearly, mark and strongly emphasize the distinction between the cases relied upon in the opinion of the majority and that now before us. ' In all the cases cited by the majority either a valid contract of subscription or purchase existed, or the stockholders were estopped from rescinding a voidable contract because they had acted as such after they knew, or might have known, the facts upon which they relied to avoid it. In the case at bar the contract was induced by fraud, and it was concealed by fraud. In this case no estoppel against the plaintiff in error can be sustained, because he did not know and could not learn the facts, and no duty to speak or act rested upon him until he acquired that knowledge, or means of knowledge. It may be that upon a trial of this case evidence could be adduced which would estop him from repudiating the purchase of this stock; but upon the admitted allegations of his answer here there are several reasons why I think he is not barred as against this receiver and the creditors he represents from obtaining the relief he seeks.
An estoppel arises only when one knowingly or negligently represents to another, who is ignorant, and relies and acts upon the representation, to his injury, that a fact or condition exists which has no existence. An essential element of such an estoppel is a willful intent to deceive, or such gross negligence of the rights of others as is tantamount thereto. There must be some moral turpitude, or some breach of duty. Henshaw v. Bissell, 18 Wall. 255, 271; Bank v. Farwell, 58 Fed. 633, 636, 639, 7 C. C. A. 391, 394, 396, and 19 U. S. App. 256, 262, 265; Insurance Co. v. McMaster, 30 C. C. A. 532, 87 Fed. 63, 66. Mr. Justice Field, speaking of this estoppel, in Henshaw v. Bissell, says:
“For its application there must be some intended deception in the conduct or declarations of the party to be estopped, or such gross negligence on his part as to amount to constructive fraud. An estoppel in pais is sometimes said to be a moral question. Certain it is that to the enforcement of an estoppel of this character, such as will prevent a party from asserting his. legal rights to property, there must generally be some degree of turpitude in his conduct which has misled others to their injury. Conduct or declarations founded upon ignorance of one’s rights have no such ingredient, and seldom work any such result.”
As long as the plaintiff in error did not know, and could not learn by the use of reasonable diligence, the facts constituting the fraud upon him until after the bank had incurred its debts to all its creditors, he was not guilty of any breach .of duty to them, or of any negligence of their rights, or of any intent to deceive them, and they cannot sustain the plea of an estoppel against him.
*861Another requisite ingredient of an estoppel by conduct or declarations is that the party claiming its benefit has acted upon it in sucb a way that he will be injured if the natural inference from it is denied. The deceit of the victim of the representations and consequent damage from their denial are indispensable to the existence of the estoppel. Insurance Co. v. McMaster, 30 C. C. A. 532, 87 Fed. 63, 66; Bonsack Mach. Co. v. S. F. Hess & Co., 68 Fed. 119, 135, 15 C. C. A. 303, 318, and 25 U. S. App. 315, 341. There is nothing in this record to show that any creditor of this bank loaned Ms money to it or deposited his funds with it in reliance upon the fact that the plaintiff in error appeared to own 50 shares of stock in it, and I am aware of no presumption of law or of fact which makes it our duty to reach this conclusion in the absence of pleading and proof. Moreover, an estoppel does not operate in favor of everybody. Ho one can set it np, or derive any benefit from it, who has not been misled by the misrepresentaiion or conduct to his injury. Ketchum v. Duncan, 96 U. S. 659, 666; The Howard Carroll, 14 U. S. App. 506, 6 C. C. A. 320, and 57 Fed. 243; In re Harris, 57 Fed. 243, 246, 6 C. C. A. 320. If it were conceded that a creditor of the bank, who was induced to become such by his reliance upon the fact that the plaintiff in error appeared to have 50 shares of stock, could estop him from escaping from a liability thereon, that estoppel could not inure to the benefit of any creditor who was not induced to become such, in reliance upon that fact. If there were some creditors who were and some who were not induced to become such in reliance upon this fact, the receiver could not derive any benefit from it in this suit, because he can enforce only the common rights and claims of all the creditors, and he cannot plead or urge the personal claims of individual creditors which are not common to all. He cannot enforce an estoppel which may belong to one-third or one-tenth of the creditors, and distribute the proceeds' he derives from it among them all. The right of a creditor to enforce such an estoppel is a personal right, which no one but the creditor misled by the representation can urge; and the receiver cannot avail himself of it, unless all the creditors have been induced to loan their money to this bunk by the apparent ownership of its stock by the plaintiff in error. There is neither plea nor evidence of such a state of facts in this ease. Indeed, the pleadings show that when this stock was subscribed the bank owed more than the value of all its assets. A state; of Ihings once shown to exist is presumed to continue; and where, as in this case, it appears that a bank owed more than the value of all its property in 1890 and again in 1894, the presumption that it had paid all of its old creditors, and become indebted to new ones, during this four'years, would be contrary to the common experience; and observation of business men, violent, and unreasonable. The; strong probability is that most of the creditors of this bank loaned their money to it prior to 1890, and they surely cannot plead an estoppel. Whether they did or not, I am strongly of the opinion that the.plaintiff iu error is entitled to pleading and proof that some or all of these' creditors loaned their money in reliance upon his ownership of the? stock before an estoppel against Mm is found. “A creditor who has been defrauded by misrepresentation of the real capital of the com*862pany has his remedy in an action of tort against all who participated in the fraud. But the wrong done to him cannot entitle the entire body of creditors, who have not suffered from the alleged fraud, to recover of the entire body of stockholders, who have taken no part in it.” Scovill v. Thayer, 105 U. S. 143, 151.
Finally, even if the fact were established that a creditor loaned his - money since 1890 in reliance on the ownership of the stock of the plaintiff in error, I am unable to perceive any right or equity in his claim' superior to that of the plaintiff in error. In that case they were both deceived by the same fraud. They were both kept in ignorance of the actual facts by .the same falsifications and devices,.and I see no reason why one of the victims of such a wrong should be allowed to prey upon the other. The bank induced the plaintiff in error to play the part of a stockholder, and thereby to lose all the money he deposited with it, and to run the risk of liability to lose as much more by the same scheme of false representations of its solvency, of its flourishing condition, and of its increase of stock, which doubtless induced the creditor to take the bank’s promise of repayment for the money he deposited with it. In such a case, why should not the right of the purchaser of stock who suffers the greater wrong be equal to that of the creditor who suffers less? Neither of them was aware of the fraud. Neither of them did or could discover it until both were injured. Neither of them knowingly or negligently deceived the other, and, in my opinion, neither of them is entitled to estop the other from undoing the fraud from which they suffer. Bank v. Newbegin, 74 Fed. 135, 140, 20 C. C. A. 339, 344; Improvement Co. v. Merrill, 2 U. S. App. 434, 439, 440, 2 C. C. A. 629, 632, and 52 Fed. 77, 80; Upton v. Tribilcock, 91 U. S. 45, 54; Winters v. Armstrong, 37 Fed. 512, 516, 517; Duffield v. Iron Works (Mich.) 31 N. W. 310, 316.
The other question in this case is, does the subscriber for shares in the proposed increase of the capital stock of a national bank, under an understanding with the bank that his money on deposit there shall be used to pay his subscription only when the entire increased capital is paid in, become a stockholder of the bank, and liable as such, when all the increased capital is subscribed for, but only two-thirds of it is paid in, and the bank appropriates his money to its own use, sends him a certificate of stock, and falsely represents that the entire increased capital has been paid in? I cannot persuade myself that this question should be answered in the affirmative. The answer pleads that the plaintiff in error agreed to purchase his stock on the express condition that he should not take it, and his $5,400 on deposit with the bank should not be used to pay for it until the entire $150,000 of proposed increase of capital was paid in. The condition was never fulfilled, the increased capital was never paid in, and upon familiar principles the subscriber never became a stockholder. The fact that the bank falsely represented to him that the condition had been complied .with, and so falsified its books that its falsehood appeared to be the truth, and the subscriber believed it, cannot change the fact, or its legal effect. It was the fact of payment, and not the bank’s false statement regarding it, that conditioned'the contract of subscription; and, as that condition was never fulfilled, and as the subscriber never *863learned, and never could learn until after the failure of the hank, that it was not complied with, so that he did not waive it, he never became a stockholder by the express terms of his contract of purchase.
Moreover, I am unable to concur in the view that the proper construction of ¡he provision of section 5142 of the Revised Statutes that “no lacrease of capital shall be valid until tbe whole amount of such increase is paid in,” is that every increase of capital is valid any part of which is paid in, and I ain unable to see bow the judgment in this case can be sustained without adopting exactly that interpretation of this clause of the statute.
In Delano v. Butler, 118 U. S. 634. 649, 7 Sup. Ct. 39, 44, and in McFarlin v. Bank, 16 C. C. A. 46, 50, 68 Fed. 868, 872, it was held that:
“Three things must concur to constitute a valid increase of the capital stock of a national banking association: First, that the association, in the mode pointed out in its articles, and not in excess of the maximum prescribed by them, shall assent to a.n increased amount; second, that the whole amount of the proposed increase shall be paid in as part of the capital of such association: and, third, that the comptroller of the currency, by his certificate, specifying the amount of such increase of capital stock, shall approve thereof, and certify to the fact of its payment.”
I do not understand that the supreme court has modified or departed from this holding in the later cases of Aspinwall v. Butler, 133 U. S. 595, 10 Sup. Ct. 417; Bank v. Eaton, 141 U. S. 227, 11 Sup. Ct. 984; and Thayer v. Butler, 141 U. S. 234, 11 Sup. Ct. 987. In each of those cases the amount of increase originally proposed was $500,000, but only $461,300 was actually subscribed and paid in. When this had been done, the bank modified its proposal, limited the amount of its increase to $461,300, notified the comptroller that this amount had been subscribed and paid in, and he issued his certificate for and approved the increase, not of §500,000, but of §461,300. In this state of facts the court held the increase valid. The key to these decisions is found, however, in the holding of that court in Delano v. Butler that the three conditions of the act of congress had been exactly fulfilled. It said:
“In the present case the association did, in fact, finally assent to an increase of the capital stock, limited to §461,300. That amount was paid in as capital, a.nd llio comptroller of the currency, by his certificate, approved of the increase, and certified to> its payment; so that there seems little room to question the validity of the proceedings resulting in such increase. All the requisitions of the statute were complied wi.th. The circumstance that the original proposal was for an increase of §500,000, subsequently reduced to the amount actually paid in, does not seem to affect the question, for the amount of the increase within the maximum was always subject to the discretionary power of the association itself, exerted in accordance with its articles of association, and to the approval and confirmation of the comptroller of the currency.” 118 U. S. 649, 7 Sup. Ct. 44.
I agree that, if the Bank of Sedalia, after it had proposed the increase of §150,000, had obtained subscriptions and payment in full for §100,000 of increased stock, and had then limited its increase to that amount, reported that fact, aud that the §100,000 had been paid in, and had obtained from tbe comptroller his certificate and approval of an increase, not of $150,000, but of $100,000, the new stock would *864have been valid. But could that bank issue valid increased stock for $150,000 when only $100,000 was actually paid in, in the teeth of the plain declaration of the statute that no increase shall be valid until the whole amount of such increase is paid in? Could it issue valid new stock for $150,000 when only $1,000 or $100 was actually paid in? That is the real question in this case. The pleadings concede that the bank proposed an increase of $150,000, that this amount was subscribed for, that the comptroller was induced by the false representations of the bank to certify and approve an increase of _ that amount, and that only two-thirds of that amount was actually paid in. The.'evils against which that clause of the statute was directed were that, if the new stock was issued without payment of the entire amount of the increase, the stock would be watered; the bank would be doing business on an apparent capital, which it did not in fact possess; and the stockholder’s who paid for their stock would be wrongfully placed on an equality with those who held stock that was only partly paid for, or was not paid for at all. In the cases arising out of the failure of the Pacific National Bank these evils did not result, because the $461,300 actually paid in was the limit of the increase finally fixed by the bank, and certified and approved by the comptroller. But in the case at bar they have respited. The increase proposed by the bank and the increase certified was $150,000, while only $100,000 was paid in. The stock was watered. The apparent capital was $50,000 more than the real capital. Every stockholder who paid for his stock was put on an equality with those who had not paid at all, or who had paid in part only. The pretended increase of the capital of this bank falls clearly and literally within the plain provision of the act of congress, “no increase of capital shall be valid until the whole amount of such increase is paid in”; and in Aspinwall v. Butler, 133 U. S. 608, 10 Sup. Gt. 421, the supreme court decided it in that case when it said, “This clause would have been violated by an issue of $500,000 of new stock when only $461,300 was paid in, but not by an. issue of the exact amount that was paid in.” That is this case. New stock to the amount of $150,000 was issued, while only $100,000 was paid in; and because this pretended increase of capital has produced the very evils which the statute was enacted to prevent, because it violates the plain terms of the act of congress, and because the supreme court so held in Aspinwall v. Butler, I have been forced to the conclusion that the new stock issued by this bank was invalid, and that the plaintiff in error is not liable upon it as a stockholder. I concede, as was held in Aspinwall v. Butler and in Thayer v. Butler, 141 U. S. 234,11 Sup. Ct. 987, that a subscription to a proposed increase of stock contains no implied condition that the entire increase proposed shall be subscribed and paid for, because it is discretionary with the bank and the comptroller to reduce or change that amount at any time before it is certified and approved by the latter. But, in my opinion, every such subscription is made upon the express condition, clearly set' forth in the statute, that' it shall not be valid if the amount of the increase of capital finally reported to the comptroller and certified and approved by him exceeds the amount actually paid in for the new stock. Compliance with this condition is not discretionary with the bank or *865with the comptroller; and as, in the case at bar, it was never fulfilled, and that fact was fraudulently and successfully concealed from the plaintiff in error until the bank failed, so that he never waived the condition, be cannot, in my opinion, be justly held liable for any of the debts of this bank. I think the judgment below should be reversed.