1. EVIDENCE — Parol Evidence — Admissibility. Parol evidence is not admissible to vary the terms of a subscription to the capital stock of a corporation.
2. CORPORATIONS — Subscriptions to Stock — Secret Agreement. A secret oral agreement between the defendant and the promoter, whereby the promoter was to resell defendant's subscription, and the defendant was thereby to be discharged from liability under said subscription, was, as to the plaintiff and other subscribers, a fraudulent agreement and does not constitute a defense to an action for such subscription.
3. SAME — Action on Subscription — Defenses. A subscriber to the capital stock of a corporation cannot defeat his liability on such subscription by showing that the corporation was not, at the time of the trial, actively engaged in the business for which it was organized.
(Syllabus by Rittenhouse, C.)
Opinion by RITTENHOUSE, C. (after stating the facts as above).
The defendant admits in his answer the execution of the subscription contract, and that he had not paid the amount of his subscription, for the reason that he had an oral contract with the promoter whereby the promoter would resell his subscription for the amount for which he had subscribed, and that his liability would thereby cease. In Chicago Bldg. Mfg. Co. v. Lyon, 10 Okla. 704, 64 P. 6, the court says:
"And it is said in Beach on Private Corporations, sec. 531, that 'parol evidence is not admissible to vary the terms of a subscription to the capital stock of a corporation, or to show a discharge therefrom in any manner other than that required by the terms of subscription, charter, and by-laws,' and that all separate agreements inconsistent with the written contract are void, whether verbal or in writing."
There are instances in which an agreement of this character between the promoter and the subscriber could be enforced by a suit against the promoter, but this would not affect the subscriber's liability upon his subscription.
In this case the subscription was assigned to the plaintiff, and, as between the defendant and this plaintiff and the other subscribers to said stock, a secret oral agreement allowing the defendant to have his subscription contract conceled at his option was a fraud upon the plaintiff and the other subscribers. 1 Purdy's Beach on Private Corporations, sec. 238; Haskell v. Sells, 14 Mo. App. 91; Robinson v. Pittsburg Connellsville R. Co., 32 Pa. 334, 72 Am. Dec. 792; Gast v. King, 27 Okla. 554, 112 P. 997.
The next contention is that the court erred in not permitting the witness Thompson, who was president of the corporation, to testify that the corporation had ceased to do business; that it had no outstanding debts, had voluntarily dissolved; and that the corporation doing business had been wound up, and there were no creditors. This testimony was not offered for the purpose of showing that the corporation had been dissolved under section 1307, Comp. Laws 1909 (Rev. Laws 1910, secs. 1269, 1270), or that it had never organized and commenced the transaction of business, or the construction of its works, within one year from the date of its incorporation as provided by section 1308, Comp. Laws 1909 (Rev. Laws 1910, sec. 1278), but was offered for the purpose of showing that his liability on the subscription contract had been released by a voluntary dissolution of the corporation. We think that the honorable trial court properly excluded this class of evidence. A subscriber to the capital stock cannot defeat his liability on such subscription by showing that the corporation was not at the time of trial actively engaged in the business for which it was organized. 1 Thompson on Corporations, sec. 792; Gibson v. Columbia New Richmond T. B. Co., 18 Ohio St. 396; Jewell v. Rock River Paper Co. et al., 101 Ill. 57; Hammett v. Little Rock Napoleon R. Co., 20 Ark. 204; M. O. R. Co. v. Cross, 20 Ark. 443; McMillan v. Maysville Lexington R. Co., 15 B. Mon. (Ky.) 218, 61 Am. Dec. 181.
After a thorough examination of the evidence and the pleadings, we are of the opinion that the trial court properly instructed a verdict for the plaintiff.
The judgment should therefore be affirmed.
By the Court: It is so ordered.