Hoeft v. Kock

Montgomeby, C. J. On a former appeal the judgment for plaintiff was reversed (119 Mich. 458, 78 N. W. 556), and the case remanded for a new trial. A second trial has been had, and at the conclusion of the trial a verdict was directed for the defendants. The declaration avers, among other things, that the defendants fraudulently represented that the authorized capital stock was $50,000; the theory of the declaration apparently being that, more than $25,-000 having been issued before that in question was issued to plaintiff, the issue to him was invalid, and that- he is entitled to recover the amount paid, as for a fraud com [172] mitted against him by defendants. The undisputed testimony shows that prior to the issue of the stock in question, upon a notice to all stockholders, and at. a meeting at which all were present, a resolution increasing the authorized capital stock to $50,000 was passed in due form, and money handed to the manager to cover the cost of recording certificates in the offices of the county clerk and secretary of state. It is evident that all parties understood that this amendment had been filed. The plaintiff himself became a director, and acted for some time. Two years and more after the purchase of the stock, after the company was in financial straits, he discovered the omission, and tendered back his certificate of stock, and now seeks to recover its value from the defendants on the ground that by issuing the certificate (the one as president, and the other as secretary) they represented that they had lawful authority to issue it, when in fact they had not. It is said that the failure to record the resolution increasing the capital stock rendered the attempt to increase inoperative. It is undoubtedly true that the State might proceed against the corporation, but it does not follow that stockholders are in a position to complain. The stockholders, who all participated in the increase, cannot be heard to say that it was unauthorized. There was an increase of the stock de facto. The plaintiff was in no way damaged because of the omission to file and record the resolution. 1 Cook, Stock, Stockh. & Corp. Law, § 288; Chubb v. Upton, 95 U. S. 665. The judgment is affirmed. The other Justices concurred.