_ 16 xranmm. nmronrmn.
unwilling to do. Now it is true that they might have arranged that
matter in a different way. They might have said: "We will give you
500 shares of additional stock for your land; then you will stand one-
J third to two-thirds—then you will have half as much stock as we."
But that was probably not satisfactory to him. They entered into
the agreement; they had conversed about it; they had talked it over;
and he wanted a larger nominal amount, and they said: “If you have
a larger nominal amount it must be balanced by more stock. " That
is evidently the nature of the transaction. I do not see any evidence
of any intent to defraud anybody in such a transaction as that. c
But there is the public. Have they not some rights if you make
such a transaction as that? Certainly. Andafter that stock was
` increased to 6,000 shares, and 4;,000 shares had been assigned to the
associates in lieu of their 1,000 shares, there is no doubt that all the
creditors becoming such after that time, and fairly to be presumed
as calculating upon the amount of capital which the company was
announced ashaving, must be held entitled to enforce the doctrine of
the courts with regard to trusts. They did not advance any money
for the additional 3,000 shares received. and they would probably be
held bound as to such creditors to pay the amount of their stock. _
But even then, if it could be shown that this property was really worth
6,000 shares of stock, which was issued for it, there would be a ques-
tion, there being no fraud and the stock representing only its value in
property, whether they could be held liable. Still the evidence that
it was not of that value, arising from the fact that Howes took 2,000
shares for the property acquired, would probably be conclusive that it
was not, but that the arrangement was merely one of adjustment.
But does that rule, with regard to holding the stockholders liable for
· the amount of these new shares, hold with regard to all the creditors
of the company? Does it hold with regard to a party who is cog·
nizant of the whole arrangement; who knows all about it, and who
knows that the stock is issued as a dividend? Does it hold with
regard to such a party, who receives a novation of his debt-—of an old
debt-and receives the same security for it that he had before? It
seems to us that this would be unjust; that it would be a fraud on I
the stockholders, and not on the creditor.
We have looked at the evidence to see whether Mr. Coit, tl1e plain-
till, was cognizant of the transaction and of its character, and we are
brought tothe-conclusion that he was; that he knew all about it. He
had his son there as an agent on the ground all the time, and had
hissuperintendent there, who knew all about it, and we find that the