I dissent. I think that the finding that Knapp was the agent of the defendants in purchasing the capital stock is sufficiently sustained by the evidence and the inferences properly deducible therefrom. In view of the fact, however, that the finding is a general one and that it is fairly apparent from the record that neither court nor counsel had in mind the difference between the liability of the subscribers and transferee for the unpaid subscription resulting from the overvaluation of the property received in exchange therefor, I am satisfied that a new trial, where that distinction is observed is desirable. I concur in the main opinion as to the law with reference to the nonliability of transferees of stock, where the stock certificates indicate upon their face that it is fully paid, as the certificates do in this case, by reason of the present requirements of section 323 of the Civil Code hereinafter quoted. As stated in the main opinion, this court has never before passed upon the rights of transferees under similar conditions. The cases of O'Dea v. Hollywood CemeteryAssn., 154 Cal. 53, [97 Pac, 1], Perkins v. Cowles, supra, andGeary Street R. R. Co. v. Bradbury Estate Co., supra, all dealt with stock certificates issued before the 1907 amendment to section 323 of the Civil Code, which provides as follows: "Certificates of stock, how and when issued. All corporations for profit must issue certificates for stock when fully paid up, signed by the president and secretary, and may provide, in their by-laws, for issuing certificates prior to full *Page 385 payment, under such restrictions and for such purposes as their by-laws may provide, but any certificate issued prior to full payment must show on its face what amount has been paid thereon."
I concur in the main opinion that where a certificate of stock is issued under this law, a bona fide purchaser, without notice, may rely upon this representation by the corporation, and in such case is not liable for the deficiency in payment for the stock resulting from the constructive fraud in its issuance as fully paid up in exchange for overvalued property. It is true, as stated in Herron v. Shaw, 165 Cal., page 674, [Ann. Cas. 1915A, 1265, 133 P. 490]: "On principle, we perceive no essential difference between an exchange of full paid stock for property at a known overvaluation and a sale of such stock for money at less than par value, such as was considered in Vermont M. Co. v. Declez." In either case, as I understand the main opinion, the transferee, if he purchases the stock in reliance upon the representations upon the face of the certificate that it is fully paid up, and without actual or constructive notice to the contrary, is not thereby obligated to make up the deficiency to the creditors of the corporation.
On the other hand, as to stock issued previous to the amendment to section 323 of the Civil Code, the purchaser, without notice that the subscription price was partly unpaid, would nevertheless be liable for the unpaid amount of the subscription therefor, unless there was some affirmative representation by the corporation that the stock was fully paid; and, under the doctrine of Geary Street R. R. Co. v.Bradbury Estate, supra, in the absence of an express representation by the corporation that the stock is fully paid, the purchaser is bound to make inquiry of the officers of the corporation to ascertain whether the stock is fully paid, and unless so informed, is charged with knowledge of the entries in the capital stock account of the corporation with reference to the issuance of the stock. If I have thus correctly interpreted the effect of the main opinion, I concur fully therein. This conclusion is in harmony with our previous decisions and in accord with the general trend of decision throughout the United States.
Rehearing denied.
*Page 386All the Justices concurred.