larations may be found in a number of decisions as to the purpose of requiring the filing of articles of association and of annual reports of corporations in the county clerk's office, which declarations, though found for the most part in chancery cases, purport to be general announcements of the purpose of the requirement of the law and of the right of the public to rely upon the statements contained in the documents so filed. Thus, in McBryan v. Elevator Co., 130 Mich. 122, 123, it was said:

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"The wrong was done by the original incorporators in making a false statement as to the amount of stock actually paid in. The public, and creditors dealing with the corporation, had the right to rely upon this statement as true. *It would be a disgrace to the law if creditors dealing with the corporation in reliance upon these statements, which they examine in the public offices where they are on file, had no remedy. Justice and good morals require that they who make such false statements, whether they make them intentionally or, as in this case, recklessly, should respond in damages therefor."

It is true the portion of the opinion in which this language occurs was not necessary to the decision of the case and was not concurred in, though not dissented from, by the rest of the court. But the same rule seems to have been announced in the earlier case of Moore v. Elevator Co., 122 Mich. 48, in which the following statements were made:

"The organization of this corporation was a fraud in law, if not in fact. As to the Schoonmakers and Hultgren it was a fraud in fact. The amount of property which they conveyed to the company, for which they received paid up stock to the amount of over $63,000, was not worth any such sum. It was a gross and fraudulent overvaluation, and known by them at the time to be such.

"The bonus subscribers had no knowledge or notice of the fraudulent character of the organization. They

relied upon Moore's connection with the corporation as a bona fide one. One of them, before subscribing, caused the articles of association, as filed in the county clerk's office, to be examined.

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"Moore, by his act in subscribing for the stock, in being a director and president, held himself out to the public and to creditors as a bona fide stockholder, and as liable for the amount of stock subscribed by him."

That the above were chancery cases does not indicate either that the effect of filing articles of association with the county clerk as presenting to the public certain information and representations upon which they have a right to rely, is not the same in an action at law as in a chancery case, or that there is no remedy at law for a fraud of the kind here involved. Both happened to be chancery cases because of the nature of the relief sought. The first was a bill by a receiver to force the stockholders to pay the unpaid balance of their subscriptions. It was auxiliary to a judgment creditor's bill filed by a creditor of the elevator company. There is nothing to indicate that the creditor, when he found he had been misled by the false statements in the articles of association and had suffered damage thereby, might not have sued those who signed the articles in an action on the case for fraud and deceit. The creditor simply elected to take a different course, took a judgment in assumpsit for the debt and filed a judgment creditor's bill to reach the assets, which included these unpaid subscriptions. In the second case, one of the signers of the false and fraudulent articles of association was himself the complainant, having filed a bill to have his lien declared prior to the liens of the bonus subscribers, and the question of his liability on his subscription because of his false representation was presented, as a matter of defense, by the bonus subscribers. They very clearly might have brought an action on the case

against him for fraud and deceit. The right of the public to rely upon statements contained in annual reports of corporations on file in the county clerks' offices, is analogous, and this right has been clearly announced and upheld by this court in a number of decisions. In Silberman v. Munroe, 104 Mich. 352 (an action of trover), it was said:

"The report (to the secretary of State) was very clearly intended as a means of furnishing information to those dealing with the corporation; and when parties deal with the corporation upon the strength of such report, acquired through the usual channels, they have the right to rely upon the fairness and honesty of the statement."

And in Dime Savings Bank v. Fletcher, 158 Mich. 162 (35 L. R. A. [N. S.] 858), a bill to cancel a loan for fraud, it was said:

"Such information is demanded by the law from corporate officers for the very purpose of affording the general public, or that portion of it about to enter into contractual relations with such corporation, with accurate and honest information respecting its financial standing."

See, also, First Nat. Bank of Ovid v. Steel, 146 Mich. 308, where an action for fraud and deceit was based on false statements in the annual report of a corporation.

It is clear that the right of the public to rely upon these documents on file in a public office is not affected by the fact that the question arises in an action at law rather than in a proceeding in chancery. Mr. Justice CAMPBELL, in his opinion in Holcomb v. Noble, 69 Mich. 396, said:

"It is admitted that in equity an actual design to mislead is not necessary if a party is actually misled by another in a bargain. There was abundant evidence in this case to authorize the jury to find that defendant, whether honestly or dishonestly, expected

plaintiff to act on his representations of the reliableness of the reports which he produced, and that plaintiff did rely on them. There is no reason for a difference in action in such cases between courts of law and courts of equity. Where an equitable cause of grievance exists, it in no way differs from a legal one unless a different remedy is needed. A court of law cannot cancel a contract, and for such a purpose the equitable remedy must be sought. But where the relief desired is compensation for the wrong, the equitable remedy is much less appropriate, and an action in equity for mere damages will generally be denied, but denied only because the legal remedy is better. If there could be no legal remedy, there can be no doubt that equity would act. If the fraud is such that it creates a right of action anywhere, an action must lie on the case where a money judgment is needed."

The following were actions on the case for fraud and deceit, based on false representations as to credit and financial ability, resulting in loss to the plaintiffs: Bush v. Sprague, 51 Mich. 41; Jones v. Kemp, 49 Mich. 9; Kryger v. Andrews, 65 Mich. 405; French v. Fitch, 67 Mich. 492; Hess v. Culver, 77 Mich. 598 (6 L. R. A. 498, 18 Am. St. Rep. 421); Hinchman v. Weeks, 85 Mich. 535; Hubbard v. Long, 105 Mich. 442; Banner v. Schlessinger, 109 Mich. 262; Third Nat. Bank of New York v. Steel, 129 Mich. 434 (64 L. R. A. 119); McDonald v. Smith, 139 Mich. 211; Getchell v. Dusenbury, 145 Mich. 197; Massey v. Luce, 158 Mich. 128; Steele v. Kellogg, 163 Mich. 132; Hubbard v. Oliver, 173 Mich. 337; Krolik v. Lang, 187 Mich. 286; Andrews v. Osius, 203 Mich. 195. See, also, St. Johns Nat. Bank v. Steel, 135 Mich. 165; First Nat. Bank of Ovid v. Steel, 146 Mich. 308.

There is no ground for the claim that an affirmance of the judgment in this case would establish a new rule enlarging the liability of stockholders in corporations. It has nothing whatever to do with the liability of stockholders. It is the ordinary liability that

rests upon every person, whether stockholder or not, who makes a false statement as to a fact which he knows is likely to be relied upon by another in the way of extending credit, provided such other person actually does extend credit and suffers damage thereby. The liability is neither greater nor less because of the fact that the false statement happened to be contained in articles of association-that is a mere accidental circumstance so far as the ground of the action is concerned. It is not because the defendant made himself a stockholder by signing the articles that he is held responsible, but because he made false statements, over his signature, in those articles as to the amount of money paid in and the value of the property taken in payment for part of the capital stock. A false statement which causes loss to another relying upon it is not exempt from an action for fraud merely because it happened to be made in articles of association. Rather, one making a false statement there ought to be held the more strictly to account, for this court has constantly tried to impress upon those forming corporations that the public have a right to rely upon the statements they make in the documents relative thereto required to be filed and recorded in public offices for the information and guidance of those dealing with the corporation. The more solemn and formal the document, the more confidence will naturally be placed in its statements. If a person who becomes a stockholder by signing articles of association desires to avoid all chance of such a liability as this, let him see to it that the statements he signs in the corporate documents are true.

I am therefore of the opinion that the action was properly brought and that there is no merit in the first contention of appellant's counsel.

2. I am also of the opinion that there was sufficient

206-Mich.-33.