Eastern Tube Co. v. Harrison

Citations

• 140 F. 519
• 1905 U.S. App. LEXIS 4811

Syllabus

<p>1. Contracts — Bond Subscriptions — Underwriting Agreement.</p> <p>Tbe fact that tbe owner of a large amount of stock of a corporation obligated itself, in a syndicate agreement for tbe underwriting of an issue of the company’s bonds, to deliver to purchasers of such bonds a proportionate amount of the company’s stock as an inducement to facilitate their sale, did not disqualify such owner from itself becoming a subscriber to the underwriting agreement; and hence its subscription did not invalidate such agreement, nor relieve the other subscribers for liability.</p> <p>2. Same — Liability oe Subscriber to Assignee.</p> <p>Defendant, as one of a syndicate, signed an underwriting agreement by which the subscribers agreed to take and pay for an issue of bonds of a corporation to provide it with additional working capital, and for the purpose of obtaining the money, at once, while giving the syndicate time to sell the bonds to the public before being required to pay for them, it was provided that the subscribers should not be required to take the bonds for more than a year, but that the company might assign their subscription as security for money borrowed, and that the assignee should be subrogated to all of its rights thereunder. The subscription was pledged as security for a loan, as contemplated by such provision. Held, that the right of the assignee to enforce the contract against a subscriber was not affected by the fact that the compány became insolvent before the subscription was payable.</p> <p>3. Same — Right of Set-off.</p> <p>Where a syndicate agreement for the underwriting of an issue of bonds of a corporation was assigned by the company as collateral security for a loan, as was intended and expressly permitted by its terms, a subscriber, when sued thereon by the assignee, cannot set off equities existing between him and the company, and arising after the contract was executed and assigned.</p>