CORPORATIONS-STOCKHOLDERS' LIABILITY-EFFECT OF FRAUD IN THE SUBSCRIPTION CONTRACT

Authors

Abstract

The Minnesota constitution with certain exceptions provides for double liability of stockholders. In a suit brought by the receiver of U. S. I. Realty Co., referred to by the court as No. 2 Corporation, to collect an assessment on the stock of that corporation under such liability imposed by the constitution, defendant contended that he was not liable for the reason that when he made his investment in the stock of that company and received his stock certificates he thought that he was investing in the stock of U. S. Installment Realty Co., referred to by the court as No. 1 Corporation, which was under the same management as that of No. 2 Corporation, but which had been organized and doing business many years before the organization of No. 2. The court found that there had been a misrepresentation to the defendant of the facts regarding the identity of these two corporations and that the falsity of such representations was not discovered by the defendant until the assessment action was brought. Held, that the defendant was not a stockholder in Company No. 2 and was therefore not liable on the assessment. Johnson v. Freid (Minn. 1930) 232 N.W. 519.

Recommended Citation

CORPORATIONS-STOCKHOLDERS' LIABILITY-EFFECT OF FRAUD IN THE SUBSCRIPTION CONTRACT, 29 Mich. L. Rev. 369 (1931).
Available at: https://repository.law.umich.edu/mlr/vol29/iss3/16