130 Ky. 146 | Ky. Ct. App. | 1908
Opinion of the Court by
Affirming.
On January 16, 1907, R. F. WrigM conveyed to H. O. Neale a tobacco bam and tbe lot on-which it stood, worth $2,000, for 20 shares of the common stock of
The May Pants Company was incorporated in the year 1890, with a capital stock of $35,000, paid in. It was managed by seven directors, a president and vice-president, general manager, secretary, and treasurer. The affairs of the company were in fact managed by the general manager, C. A. McDonald. McDonald made reports to the directors, which showed that during the first three years of its business the corporation had accumulated a surplus amounting to $35,000, and it then doubled its capital stock and issued to its stockholders stock amounting to $35,000, in lieu of the accumulated surplus standing to their credit. After this, things went on as before, McDonald’s statements showing that.the company was making large profits. In November, 1906, by his report, he showed that the company had a net capital at that time which made the stock worth book value $161 to the share. They then issued to each .stockholder as much stock as he had, or doubled the stock of the
There is little or no conflict in the evidence as to the material facts of the case. The company, instead of having a surplus in November, had lost money, and the company’s common stock was worth nothing. Neale and Wright were both directors in the company, and neither knew its real condition, although Neale did know that McDonald’s statement was padded to the extent of 10 per cent. This he did not disclose to Wright, supposing, as he says, that the company would soon make that up. The. directors in a oomnany are its managing agents. It is their duty to publish true statements of the affairs of the corporation.
What, then, are the rights of the parties? In Bell
Judgment affirmed.