Summary
In Yonkers Gazette Co. v. Jones (30 App. Div. 316) the defendant sought to absolve himself from liability upon a subscription for capital stock of a corporation to be formed, because he had received from a so-called promoter of the proposed corporation a paper signed by him, certifying that the defendant's liability was to be "left to his time and when he feels so disposed in paying his part.
Summary of this case from Thompson v. KnightOpinion
May Term, 1898.
Allen Taylor, for the appellant.
John H. Ferguson, for the respondent.
This case is in many respects similar to that of The Yonkers Gazette Co. v. Taylor, decided by this court at the present term ( post, p. 334), and the points considered in the opinion of Mr. Justice HATCH in that case require no further discussion here. There is one difference, however, in regard to which something should be said.
At the time when the defendant signed the paper upon which it is sought to charge him as a subscriber to the stock of the plaintiff he received from a so-called promoter of the proposed corporation a paper signed by that gentleman and certifying that "Mr. H.B. Jones has decided to take one share into the Yonkers Daily Gazette; providing the sum prescribed [subscribed] or the number of shares taken will be left to his time and when he feels so disposed in paying his part." This document, says the appellant, must be read with his stock subscription as constituting one contract, and as it contained a provision which left him at liberty not to pay, he insists that he cannot be held upon the subscription.
The paper, however, was properly regarded by the County Court as ineffectual to modify or nullify the subscription agreement. A secret collateral contract between a corporation and a subscriber to its stock, which provides that he shall not be bound by his subscription, or which substantially varies its ostensible terms, is void and leaves the subscription unaffected. ( White Mts. R.R. Co. v. Eastman, 34 N.H. 124; approved in Meyer v. Blair, 109 N.Y. 600; Armstrong v. Danahy, 75 Hun, 405.) By secrecy in the agreement is meant that it is kept from the knowledge of the body of subscribers, the reason of the rule which invalidates such collateral contracts being that "the action of each in his subscription may be supposed to be influenced by that of the others, and every subscription to be based upon the ground that the others are what upon their face they purport to be." ( White Mts. R.R. Co. v. Eastman, supra.) The appellant is not helped by the fact that two officers of the corporation saw the collateral agreement and approved of it before it was delivered to him by the promoter; for the agreement would have been bad even if made with the Yonkers Gazette Company itself in its corporate capacity.
For these reasons, and those stated by Mr. Justice HATCH in the companion litigation, the judgment should be affirmed.
All concurred, except HATCH, J., absent.
Judgment and order affirmed, with costs.