135 Ky. 667 | Ky. Ct. App. | 1909
Opinion op the Court by
Affirming.
This case is in all respects similar to the case of E. O. Stone and Others v. Monticello Construction Company (this day decided) 117 S. W., 369, except that one question is made here which did not arise in those cases. McConnaghy subscribed for 20 shares of stock. When the persons who were getting up the subscriptions had obtained subscriptions amounting to $80,000, they called a meeting of the subscribers. McConnaghy was present at that meeting and presided. At that meeting the question was discussed whether the necessary subscriptions had been raised. The paper was footed up, and thereupon the meeting concluded to organize the company. About three-fourths of the subscribers were present, and they signed the articles of incorporation, McCdnnaghy among the rest. Thereupon a board of directors was elected, which included McConnaghy. He accepted the position c-f director and attended several meetings of the board A committee was appointed to make the necessary arrangements with the railroad company and with the contractors. McConnaghy participated in these matters. The committee reported, their report was accepted, and the contracts were closed; McConnaghy being present when the contracts were discussed. He remained a director for something over a month, and then resigned; but at no time during the month did he make any objection that any of the subscriptions had not been made in good faith or were insufficient.
AYe do not decide that McConnaghy would be estopped by acquiescing in the organization of the company that night, if he did not in fact know as- much about the subscribers then as he learned afterwards; but he was a managing agent of the corporation. He knew that the subscribers were proceeding upon the idea that the necessary subscriptions had been obtained. His acquiescence in the organizing of the company, and his subsequent action as a director in proceeding with the business of the company, was a consent on his part that the necessary subscribers had been obtained. In any view of the case, it was incumbent on him, when he knew the company was organized and was going on with its business upon the idea that the necessary subscribers had been obtained, promptly to look into the matter and to make known his objections before his associates proceeded further in a matter, where he knew they were assuming that he was consenting to the acceptance of the subscriptions as made in good faith. The company was preparing to assume considerable liabilities, and, while he does show by his own testimony that he objected to the contracts being made, he does not show that he at any time objected on the ground that the necessary subscribers had not been obtained in good faith. His conduct was such as would necessarily induce his associates to understand that he consented to the subscription as satisfying the terms of the written contract. He was in a position where he was bound to speak and act promptly, and where silence necessarily misled his associates, and therefore was equivalent to con
Judgment affirmed.