Upton v. Tribilcock - 91 U.S. 45 (1875)
U.S. Supreme Court
Upton v. Tribilcock, 91 U.S. 45 (1875)
Upton v. Tribilcock
91 U.S. 45
1. The original holder of stock in a corporation is liable for unpaid installments of stock, without an express promise to pay them, and a contract between a corporation or its agents and him limiting his liability therefor is void both as to the creditors of the company and its assignee in bankruptcy.
2. Representations by the agent of a corporation as to the nonassessability of its stock beyond a certain percentage of its value, constitute no defense to an action against the holder of the stock to enforce payment of the entire amount subscribed where he has failed to use due diligence to ascertain the truth or falsity of such representations.
3. The word "nonassessable" upon the certificate of stock does not cancel or impair the obligation to pay the amount due upon the shares created by the acceptance and holding of such certificate. At most, its legal effect is a stipulation against liability from further assessment or taxation after the entire subscription of one hundred percent shall have been paid.
4. Assuming the representations of the agent of the company as to the nonassessment of the stock to be a fraud which would avoid the contract, the question arises whether the defendant discharged his duty in discovering the fraud and repudiating the contract on that account, and not on account of another fraud not in issue. Held that the plaintiff was entitled to the opinion of the jury on that precise question.
The facts are stated in the opinion of the Court.