Gates v. Gregory

Citations

• 91 Wash. 151
• 157 P. 470
• 1916 Wash. LEXIS 1025

Syllabus

<p>Corporations — Sale of Stock — Action fob Peice — Fraud—Evidence. In an action for the price of stock, it is a good defense that it was induced by the fraud of the president and principal stockholder, who represented that the corporation was in a prosperous condition and the book value of the stock was a certain amount when in fact it was not, and that a certain man of prominence was a member of the board of directors when in fact he was not.</p> <p>Same — Sale of Stock — Fraud of Officer — Notice to Corporation. A corporation is constructively charged with notice of fraud in the sale of stock, by its president and principal stockholder, who was in exclusive charge of its affairs, and acted alone, both for himself and the company, in making the sale of his stock, taking a note therefor secured by the stock as collateral, and transferring the note to the corporation before maturity, giving himself credit upon the books of the company.</p> <p>Estoppel — Elements—Knowledge—-Acquiescence. A director induced to purchase stock in a corporation through fraud is not charged with knowledge of the fraud or estopped to defend an action upon a note for the purchase price, from the fact that he was present at a board meeting at which a resolution was adopted authorizing the transfer of assets of the company as might seem consistent with the best interests of the company, under which resolution the note passed with other assets, he having no knowledge that his note had passed to the company and no specific assets being considered.</p> <p>Bausman, J., dissents.</p>