Appeal of the Hite Natural Gas Co.

Citations

• 118 Pa. 436
• 12 A. 267
• 1888 Pa. LEXIS 408

Syllabus

<p>A natural gas company, organized as a limited partnership under the act of June 2, 1874, P. L. 271, in its certificate filed stated falsely that Hite, a subscriber for 850 shares, had paid in full by rights of way and other privileges for the company’s line. Hite contracted with the company to furnish the right of way, the pipe for the line and to lay the latter, for a certain amount in cash and 850 shares of stock, and on the same day he contracted with a pipe company for the supply of the pipe to him to be paid by instalments alternately in cash and his notes, the latter to be secured by deposit of an equal amount in the stock of the gas company and of 200 additional shares when the contract was filled, and drew an order on the gas company to pay the pipe company in accordance with his contract with the latter, which order was accepted by the gas company subject to the terms of its own contract with Hite. When the pipe company had furnished the pipe according to its contract, it held Hite’s notes for a large amount secured by a like amount of the stock. On application, the gas company refused to deliver the 200 additional shares, ón the ground that Hite had failed in his contract with the latter and had received cash payments under said contract in excess of the amount he was entitled to. Hite was insolvent and the gas company was about to transfer its assets to another company composed of substantially the same persons. On a bill in equity filed by the pipe company against the gas company: Held,</p> <p>1. That the plaintiff was entitled to a decree for an amount equal to the value of the stock withheld, as of the time when it should have been delivered, with interest thereon.</p> <p>2. The stockholders of the gas company, having filed a statement which was false as to the subscriptions to its capital stock, were not entitled to the protection of a limited liability under the act of 1874, but were liable as general partners.</p> <p>3. That the court properly ex