
    No. 233
    UMBSTAETTER v. PECK et
    Ohio Appeals, 8th Dist., Cuyahoga Co.
    No. 5373.
    Dec. 8, 1924.
    559. FRAUDULENT REPRESENTATIONS —Made in a contract of subscription to corporate stock make subscriber therefor immune from liability.
    645. INSOLVENCY—Defense good as against corporation is likewise available as against its receivers.
    Published only in Ohio Law Abstract
    Attorneys—Stearns, Chamberlain & Royon for Umbstaetter; Ulmer & Berne for Peck, et. All of Cleveland.
   LEVINE, J.

Epitomized Opinion.

E. 0. Peck and W. B. Daley were receivers of the Parish Poole Co, and as such brought suit against Edward Umbstaetter on a note executed to the Parish Poole Co. for the purchase of stock in that company. In the Cuyahoga Common Pleas, Umbstaetter declared that the agent who solicited and received the subscription contract and note from him fraudulently misrepresented facts by stating the Company had contracted with three large concerns for scrap metal, while in fact no contracts existed, and he, depending upon what representations had been made, bought stock and executed his note. He further averred that upon learning of the fraud, he attempted to rescind the contract and demanded the return of his note.

Peck claimed that this was no defense as against the receivers of the Parish Poole Co. although it may have obtained against the company before it became insolvent. He made a motion for the court to direct a verdict, which motion was granted and judgment rendered in favor of receivers.

On prosecution of error Umbstaetter contends that the court erred in granting the motion and directing a verdict in favor of the receivers. The Court of Appeals held:

1. A receiver can occupy no better position than those for whom he acts and is appointed, so that the rights of third persons are not increased, diminished or varied by his appointment.

2. The question of whether or not Umb-staetter acted with promptness and diligence is a question of fact not only upon the lapse of time and delay, but also upon the time when the fraud was discovered by him.

3. When trial court ordered Umbstaetter’s testimony of fraud and misrepresentations stricken from the record and excluded, the function of the jury to try issues of fact was usurped; 11379 GC.

Judgment of the Common Pleas reversed and the case remanded.  