
    Gasquet v. Crescent City Brewing Co.
    
      (Circuit Court, E. D. Louisiana.
    
    February 5, 1892.)
    Corporations — Stock Pledsed by Directors — Estoppel.
    Where stock is issued on the vote of directors, and used by them as a pledge to obtain a loan, the corporation is estopped from setting up that the issue of stock not paid up is prohibited by the constitution, and the holder will be entitled to the same to the extent of the loan.
    In Equity. On exceptions to master’s report.
    
      W. S. Benedict and Richard De Gray, for petitioners.
    
      E. Howard McCaleb, for respondent.
   Billings, District Judge.

In this matter there seems to be no question as to the facts. Mrs. Graham claims 400 shares of stock in the defendant corporation under a pledge to repay a debt of $14,000. The stock was never paid-up stock; and the charter of the corporation prohibited the issuance of stock not paid up. But the directors voted to issue the stock, and it was, with their sanction, used as a pledge to obtain these loans for the corporation from Mrs. Graham, which aggregated $14,000. In the hands of Mr. Ames the result would have been different, but upon the grounds stated so clearly by the master, and upon the authorities cited-by him, I think his conclusion is correct, to-wit, that the corporation is estopped from setting up the want of power to issue the stock; and Mrs. Ames, who has inherited the equities of Mrs. Graham, is entitled to have the pledge maintained or held as valid to the extent of the dividends upon the shares not to exceed the amount loaned." The exceptions are overruled, and the report confirmed.  