White v. Hook

The Court said: “A creditors’ bill was filed by Fisher, Boyd and Hook against the appellants and Marion A. Frazier, stockholders in the Baltimore Extract and Wool Company of Baltimore City. It was alleged that Fisher, Boyd and Hook were severally creditors of the corporation, and that the defendants (now appellants) were stockholders in the corporation, and that they had received certain shares of stock without having paid for them, and that the corporation had become insolvent. It was also alleged that Fisher and Boyd had been induced to purchase stock in consequence of false and fraudulent representations made to them by Frazier. The Court decreed that the claims of Fisher, Boyd and Hook as creditors should be paid by the defendants, but disallowed all claim in behalf of Fisher and Boyd, as stockholders.

The Court referred the case to an auditor to state an account between the creditors whose claims had been established and the defendants. An auditor’s account was stated, in which certain amounts were allowed to the creditors who filed the bill. Exceptions were filed by the appellants to the claims of Fisher and Boyd, but not to the claim of Hook. The exceptions were overruled by the Court, and the auditor’s account finally ratified and confirmed.

An appeal was taken from the order overruling the exceptions and finally ratifying the account; but no appeal was taken from the decree of the Court. All of the defendants joined in the appeal except Frazier, who is insolvent. “There is no controversy about the legal questions in this case. But there is great conflict in the testimony. The learned Judge who decided this case below was satisfied ⁷³⁴ that Fisher and Boyd had established claims for salary due them as employees of the corporation, and that the appellants had each received one hundred shares of the stock without having paid anything for them, and that when they entered into the service of the corporation they had no knowledge of this fact.

The insolvency of the corporation is not questioned. Upon these facts it was decreed that the appellants should contribute to the payment of the creditors rateably out of the amounts due for their unpaid stock. The correctness of his Honor’s legal conclusion from the facts is unquestionable. Crawford v. Rohrer, 59 Md., and many other cases set the question