Volume 120 — South Carolina Reports

Before MclvER, J., Richland, March, 1920. Action by the Prudential Investment Company against Julia R. Connor, M. Smoak, Jr., and others, for the foreclosure of-a mortgage.

<p>1. Corporations—Stock Subscription not Delivered is an Executory Contract.—A stock subscription, unexecuted by payment and by delivery of the certificate, is an executory contract, and governed by the law applicable to such contracts.</p> <p>2. Corporations—Misrepresentation of Material Fact by Authorized Agent Avoids Stock Subscription.—A false representation of a material fact made by an authorized agent of the corporation to induce a subscription to the corporate stock avoids such subscription.</p> <p>3. Corporations—False Statements as to Prospects and Capabilities op Corporation Matters op Opinion Avoiding Stock Subscription.—False statements relative to the prospects and capabilities of the corporate enterprise are matters of opinion, which do not authorize annulling a subscription for corporate stock thereby obtained.</p> <p>4. Evidence—Stock Subscription Contract Subject to Parole Evidence Rule.—A stock subscription contract in writing, containing promises as to the policy of the corporation, and assuring the subscriber certain benefits, is subject to the parole evidence rule like other contracts.</p> <p>6. Corporations—Statements Representing Promises as to Policy op Corporation and Benefits to a Subscriber Must be Made a Condition and Included in Written Subscription Contract to be Enforceable.—Statements representing promises as to the policy of a corporation and agreements, assuring a stock subscriber of certain future benefits, must be made a condition and incorporated in the written subscription for capital stock of the corporation to entitle a subscriber to enforce them.</p> <p>6. Corporations—False Statements That All Stock Was Issued por Value and Corporation Was Manufacturing Product Are Material Misrepresentations op Fact.—False statements by an authorized agent of a corporation in producing a subscription for capital stock that all the stock theretofore issued and that which would be issued in the future would be paid for at par by money or services, as required by Civ. Code 1912, § 2799, and that the corporation was at that time engaged in manufacturing its product, are material misrepresentations of facts which entitle subscriber to rescind his subscription.</p> <p>.7. Corporations—False Statements That Stockholders Would be Allowed to Purchase Product at Factory Cost and Would Receive Stated ’Dividend Held not Misrepresentations of Fact Which Could be Relied on.-—False statements by an agent of a corporation in procuring a stock subscription contract that the stockholders would be permitted to purchase their fertilizer from the corporation at factory cost, and that the company would pay 9 per cent, dividends, are not misrepresentations of fact which can be relied on by the subscriber in defense to an action upon his note given for the stock.</p> <p>8. Corporations—Failure to Deliver Stock Certificate Does Not Entitle Subscriber to Cancel Subscription.—The failure of a corporation to deliver the certificate for stock does not entitle the subscriber to cancel his subscription or defeat his note for the price of the stock on the ground of failure of consideration; his remedy being to enforce the obligation of the corporation to deliver the certificate.</p> <p>9. Corporations—Receiver Accotires Greater Rights Against Stockholder Defaulting in Subscription Only Through Latter’s Laches.—A receiver of a corporation is the successor in title to the corporation, and also a trustee for its stockholders and creditors, and in the latter relation he may enforce against a stockholder a note given for the purchase price of the stock, notwithstanding the stockholder’s defense against the corporation of fraudulent misrepresentations, provided the subscriber has not acted with due diligence in' discovering the fraud and repudiating the subscription, and a considerable amount of indebtedness was contracted after the subscription was made.</p> <p>10. Corporations—-Facts Entitling Receiver to Avoid Defense of Corporation’s Fraud in Procuring Subscription Note Stated__ Before a receiver of a corporation can enforce against a stockholder a note for the purchase price of the stock procured from the stockholder by the corporation’s fraud, he must show that the corporation was insolvent, that the subscriber was estopped by his conduct or laches from raising the question against the receiver as trustee of the creditors, and that a considerable amount of indebtedness has been contracted since the subscription was made.</p>

Before MemminGRr, J., Florence, May,-1921. Action by J. B. Steele as Receiver of Planters Fertilizer & Oil Co. against L,. B. Coleman: Judgment for plaintiff after the answer was stricken out on demurrer, and defendant appeals. cite: Demurrer admits allegations: 97 S. C., 413; 98 S. C., 162; 108 S. C., 364. Right to rescind contract and what amounts to rescission: 2 Rich. E, 40; 1 Strob. L, 396; 26 S. C„ 275; 62 S. C, 42; 79 S. C, 205; 86 S. C, 170; 2 Brev, 304; 1 S. C, 273.

Petition in the original jurisdiction by E. W. Robertson, Columbia Railway, Gas & Electric Co. and C. M. Tew for injunction against Thomas H. Peeples, as Attorney-General, et al., constituting the Canal Commission. Injunction refused and complaint dismissed. cite: Act of 1918 beyond constitutional authority of the Legislature: Art. 3, Sec. 13; Art. 1, Sec. 29; 87 S. C., 292.

Before Memminger, J., Greenville, October, 1921.' J. C. Marlowe convicted of manslaughter for the killing of Thomas McCarroll, and appeals. cite: What is fair and impartial trial: 91 S. C., 35; 19 Pa. Ct. 376; 240 Fed. 911; 213 S. W. 636; 232 S. W., 300; 28 S. C., 572. No proof of corpus delicti: 36 S. C., 531. Comments of Judge made him participant in decision of the case: 81 S. C., 379; 73 S. C., 383.

Before Memminger, J., Greenville. Action by Gallivan Building Co. against S. H. Kress & Co. Judgment for plaintiff for a reduced amount and both parties appeal.