Joseph Agate, Appellant, v. Samuel S. Sands, Survivor, etc., Respondent

Joseph Agate, Appellant, v. Samuel S. Sands, Survivor, etc., Respondent. It seems that a loan of money to a manufacturing corporation by one of its stockholders, in the absence of evidence to the contrary, justifies an inference that the money was applied to the payment of the obligations of the corporation in the usual course of business. In an action therefore, by a creditor of the corporation against a stockholder, to enforce the liability imposed by the general manufacturing act (§ 10, chap. 40, Laws of 1848) upon a stockholder who has not paid for his stock, evidence of a loan by defendant to the corporation to an amount equal to his stock constitutes a defense. The fact that security was. taken for the loan is immaterial. (Argued April 17, 1878; decided May 21, 1878.) This action was brought under the general manufacturing act originally against the members of a firm, of whom defendant Sands is survivor, to recover of them as stockholders n a manufacturing corporation, a debt of the corporation, because of their omission to pay in the amount of capital stock subscribed by them. Defendants set up as a defense, and proved that they had discounted a promissory note made by the corporation for more than the amount of1 the subscription for stock; had recovered a judgment thereon and execution had been returned unsatisfied. It appeared on the trial that one of the indorsers upon the note, after it became due, gave to defendants a new note, with another indorser and with certain stock as collateral, receiving a receipt stating that upon the payment of the note the col-laterals would be surrendered. It was claimed by plaintiff's counsel that an advance of money without proof that it was used for the payment of debts of the corporation would not exonerate defendants. The opinion states the rule as above but holds that as the point was not raised below it .was not necessary to determine it. Other questions as to the rejection of evidence were disposed of upon the ground that the exceptions were not sufficient to present them. C. Bainbridge Smith for appellant. Albert Matthews for respondent. [MAJORITY — Miller, J.,] Miller, J., reads for affirmance All concur. Judgment affirmed.