corporation may no doubt be charged with knowledge of facts formally disclosed at a stockholders' meeting duly called.58 The knowledge of a few of the stockholders is not the knowledge of all, nor the knowledge of the corporation.59 When suit is brought by a minority stockholder suing on behalf of the corporation, the rights asserted are those of the corporation, and laches is a defense if the corporation was guilty of unreasonable delay, though the minority stockholder himself acted with all due diligence as soon as he personally discovered the facts. The minority stockholder's suit may likewise be defeated by showing that he was personally guilty of laches, though there are non-complaining stockholders who had no knowledge of the facts and who might successfully maintain the suit.61 60 It has been held that the commencement of an action by a minority stockholder suing on behalf of himself and all other stockholders similarly situated, saves all the stockholders on whose behalf the action is brought from a charge of delay in commencing suit.62 § 156. Defense of laches as depending upon the nature of the relief asked. The defense of laches may be pleaded to any action brought 58. See Erlanger v. New Sombrero Phosphate Co., L. R. 3 App. Cas. 1218, 1232, 1250, 1258, 1263, 1286, 6 Eng. Rul. Cas. 777, 39 L. T. N. S. 269, 27 W. R. 65. 59. Erlanger V. New Sombrero Phosphate Co., L. R. 3 App. Cas. 1218, 1232-1233, 1250, 1258, 1263, 1280, 6 Eng. Rul. Cas. 777, 39 L. T. N. S. 269, 27 W. R. 65. 60. Evans Appeal, 81 Pa. 278, 302, affirming, Evans v. Borie, 1 Weekly Notes of Cases, 127. 61. See Cook on Corporations, (7th Ed.), § 733, where it is said that a stockholder who has been guilty of laches cannot base his suit on the objections of other stockholders who were not guilty of laches. This statement is no doubt correct, but the case cited, (Beling v. American Tobacco Co., 72 N. J. Eq. 32, 65 Atl. 725), does not seem to support it. 62. Brinckerhoff v. Bostwick, 99 N. Y. 185, 1 N. E. 663; MacArdell v. Olcott, 62 N. Y. App. Div. 127, 130, 70 Supp. 930; Metropolitan Elevated R. R. Co. v. Manhattan Elevated R. R. Co., 11 Daly 373, 438, 14 Abb. N. C. 103. against the promoters in a court of equity, whether it be an action for rescission or for an accounting for profits,63 but the defense will be applied with greater strictness to an action in which a rescission is asked, than to one in which money damages only are sought. If the relief asked is the mere recovery of money damages or the surrender of shares unlawfully taken by the promoters, the defense of laches will not be readily sustained unless some change of position or prejudice to the defendants' rights has resulted from the delay.64 § 157. Delay as a defense to an action at law upon a rescission. If the corporation, instead of bringing suit in equity for a rescission of its purchase, gives notice of disaffirmance, tenders a reconveyance of the property sold to it by the promoters, and proceeds against them in an action at law for the recovery of the purchase price,65 the doctrine of laches does not apply, but the same result is in practical effect arrived at by the application of the rule that the corporation is deemed to have ratified its purchase unless it disaffirms promptly upon discovering the facts. It must, as soon as it learns of the fraud, determine whether or not it wishes to go on with the transaction. It cannot, after dis 63. Old Dominion Copper, etc., Co. v. Bigelow, 203 Mass. 159, 201, 89 N. E. 193, 40 L. R. A. N. S. 314; Peabody v. Flint, 88 Mass. 52, 57; Wills v. Nehalem Coal Co., 52 Or. 70, 89-90, 96 Pac. 528, 535; Bagnall v. Carlton, L. R. 6 Ch. Div. 371, 380. 64. See Halstead v. Grinnen, 152 U. S. 412, 416, 38 L. Ed. 495, 14 Sup. Ct. 641; Alsop v. Riker, 155 U. S. 448, 461, 39 L. Ed. 218, 15 Sup. Ct. 162; Montgomery Light & Power Co. v. Lahey, 121 Ala. 131, 25 So. 1006; Wills v. Nehalem Coal Co., 52 Or. 70, 96 Pac. 528; Nant-Y-Glo & Blaina Ironworks Co. v. Grave, L. R. 12 Ch. Div. 738, 748-749. 65. See post, §§ 169, 194, 241. 66. See Barr v. N. Y. L. E. & W. R. R. Co., 125 N. Y. 263, 275, 26 N. E. 145, 34 N. Y. St. Rep. 743; Getty v. Devlin, 54 N. Y. 403, 415, and cases cited; Stanley v. Luse, 36 Or. 25, 36, 58 Pac. 75, 78, citing 4 Thompson on Corporations, § 5298. See Lagunas Nitrate Co. v. Lagunas Syndicate, 1899, 2 Ch. Div. 392, 415416, 432-434; Omnium Electric Palaces, Ltd., v. Baines, 1914, 1 Ch. Div. 332, 82 L. J. Ch. N. S. 519, 109 L. T. N. S. 206. And see post, §§ 258 and 261. covering the fraud, await the result of its venture, and rescind its purchase if it proves disadvantageous. If, however, the enterprise becomes unprofitable before the fraud is discovered, the corporation may rescind upon discovering the fraud, and its action cannot be defeated by showing that it would not have rescinded its purchase had it learned of the fraud while the business was still profitable."7 § 158. Effect of judgment for, or against, co-promoter. As promoters guilty of a fraud upon the corporation are joint tort feasors, a judgment in favor of one promoter in an action brought against him by the corporation, is no bar to a subsequent action against the other promoters, though the complaint in both actions be upon the same facts, and for the same relief.68 A judgment recovered by the corporation against some of the promoters is, for the same reason, unless satisfied, no bar to a subsequent suit against other promoters.69 § 159. Defense of bankruptcy. It is held in England that the taking by a promoter of a secret commission from one selling property to the corporation, renders the promoter liable for "fraud" and for "breach of trust " and that he is, therefore, not released from liability by a discharge in bankruptcy.70 67. American Shipbuilding Co. v. Commonwealth S. S. Co., 215 Fed. Rep. 296, 302, 131 C. C. A. 596. 68. Old Dominion Copper, etc., Co. v. Bigelow, 203 Mass. 159, 203220, 89 N. E. 193, 40 L. R. A. N. S. 314; Bigelow v. Old Dominion Copper, etc., Co., 225 U. S. 111, 32 Sup. Ct. 641, 56 L. Ed. 1009, Am. & Eng. Ann. Cas. 1913, E. 875; Bigelow v. Old Dominion Copper, etc., Co., 74 N. J. Eq. 457, 516, et seq., 71 Atl. 153. 69. Old Dominion Copper, etc., Co. v. Bigelow, 203 Mass. 159, 219, 89 N. E. 193, 40 L. R. A. N. S. 314, affirmed, sub nom. Bigelow v. Old Dominion Copper, etc., Co., 225 U. S. 111, 32 Sup. Ct. 641, 56 L. Ed. 1009, Am. & Eng. Ann. Cas. 1913, E. 875. 70. Emma Silver Mining Co. v. Grant, L. R. 17 Ch. Div. 122, 50 L. J. Ch. 449, cited in Ramskill v. Edwards, L. R. 31 Ch. Div. 100, 108. 71 A discharge under the bankruptcy law of the United States releases a promoter from liability for any claims that are provable against him in bankruptcy. A claim is provable against the promoter in bankruptcy, if it may be founded upon a contract, express or implied.72 Claims resting solely in tort are not provable.78 71. Bankruptcy Act of 1898, § 17; Crawford v. Burke, 195 U. S. 176, 49 L. Ed. 147, 25 Sup. Ct. 9; Tindle v. Birkett, 205 U. S. 183, 51 L. Ed. 762, 27 Sup. Ct. 493; Collier on Bankruptcy, page 401, et seq.; Loveland on Bankruptcy, § 785; Remington on Bankruptcy, § 2783, et seq.; Black on Bankruptcy, § 743. Promoters do not act in a "fiduciary capacity" within the meaning of 17 of the Bankruptcy Act. Chapman v. Forsyth, 2 How. (U. S.) 202, 11 L. Ed. 236; Neal v. Clark, 95 U. S. 704, 708; Hennequin v. Clews, 111 U. S. 676, 679, 4 Sup. Ct. 576, 28 L. Ed. 565; Upshur v. Briscoe, 138 U. S. 365, 375, 34 L. Ed. 931, 11 Sup. Ct. 313. 72. Bankruptcy Act of 1898, § 63a; Crawford v. Burke, 195 U. S. 176, 49 L. Ed. 147, 25 Sup. Ct. 9; Tindle v. Birkett, 205 U. S. 183, 51 L. Ed. 762, 27 Sup. Ct. 493; Clarke v. Rogers, 228 U. S. 534, 57 L. Ed. 953, 33 Sup. Ct. 587; Collier on Bankruptcy, pages 386, 870; Loveland on Bankruptcy, § 325; Remington on Bankruptcy, § 2733; Black on Bankruptcy, § 514. 73. Collier on Bankruptcy, page 386; Loveland on Bankruptcy, §§ 325, 754; Remington on Bankruptcy, § 635; Black on Bankruptcy, §§ 514, 726. As to whether a tort liability reduced to judgment is provable, see Collier on Bankruptcy, page 871; Loveland on Bankruptcy, § 296; Remington on Bankruptcy, § 635; Black on Bankruptcy, § 497, covering the fraud, await the result of its venture, and rescind its purchase if it proves disadvantageous. If, however, the enterprise becomes unprofitable before the fraud is discovered, the corporation may rescind upon discovering the fraud, and its action cannot be defeated by showing that it would not have rescinded its purchase had it learned of the fraud while the business was still profitable."7 § 158. Effect of judgment for, or against, co-promoter. As promoters guilty of a fraud upon the corporation are joint tort feasors, a judgment in favor of one promoter in an action brought against him by the corporation, is no bar to a subsequent action against the other promoters, though the complaint in both actions be the upon same facts, and for the same relief.6 A judgment recovered by the corporation against some of the promoters is, for the same reason, unless satisfied, no bar to a subsequent suit against other promoters.69 § 159. Defense of bankruptcy. 68 It is held in England that the taking by a promoter of a secret commission from one selling property to the corporation, renders the promoter liable for "fraud" and for "breach of trust" and that he is, therefore, not released from liability by a discharge in bankruptcy.70 67. American Shipbuilding Co. v. Commonwealth S. S. Co., 215 Fed. Rep. 296, 302, 131 C. C. A. 596. 68. Old Dominion Copper, etc., Co. v. Bigelow, 203 Mass. 159, 203220, 89 N. E. 193, 40 L. R. A. N. S. 314; Bigelow v. Old Dominion Copper, etc., Co., 225 U. S. 111, 32 Sup. Ct. 641, 56 L. Ed. 1009, Am. & Eng. Ann. Cas. 1913, E. 875; Bigelow v. Old Dominion Copper, etc., Co., 74 N. J. Eq. 457, 516, et seq., 71 Atl. 153. 69. Old Dominion Copper, etc., Co. v. Bigelow, 203 Mass. 159, 219, 89 N. E. 193, 40 L. R. A. N. S. 314, affirmed, sub nom. Bigelow v. Old Dominion Copper, etc., Co., 225 U. S. 111, 32 Sup. Ct. 641, 56 L. Ed. 1009, Am. & Eng 913 E. 875. 70. Emma Grant, W |