Odger's English Common Law

LIABILITY OF A PARTNER. 559
struck off the register of shareholders, and he will not be
liable to the creditors of the company—at all events not after
a year has elapsed. A company differs in this respect from
an ordinary partnership.
It is impossible, as a general rale, for a partner at any time to retire
from or repudiate the partnership without first satisfying, or remaining
bound to satisfy, the liabilities of the partnership. He may have been
induced by the fraud of his co-partners to enter into the partnership, and that
may be a ground of relief against them, but it is no ground for getting rid
of a liability to creditors. This is the case whether the partnership is a
going concern or whether it has stopped. payment or become insolvent. In
the case of a joint-stock company, however, the shares are in their nature
and creation transferable, and transferable without the consent of creditors,
and a shareholder, so long as the company is a going concern, can by
transferring his shares get rid of his liability to creditors either immediately
or after a certain interval. The assumption is that, while the company is
a going concern, no creditor has any specific right to retain the individual
liability of any particular shareholder. A shareholder therefore, so long as
no proceedings have been commenced for winding up the company, may
throw back upon the company shares which he has been induced to take by
fraud without reference to any claims of creditors. If, however, the company
has become insolvent and has stopped payment, serious injury might
be inflicted on its creditors, could shares be then repudiated on such
grounds ; hence a shareholder, though grievously wronged, cannot at this
stage rescind his original contract and retire from the concern. 1
On a sale of property the fraud is not as a rule practised
directly by the vendor on the purchaser; it often happens
that an agent for the purchaser has received a gratuity from
the vendor. 2 Again, a vendor may be guilty of unfair con-
cealment of facts which ought to be disclosed to a person
seeking to purchase ; such unfair concealment would amount
to fraud, 3 though there are cases in which, in the absence of
active fraud, silence as to some fact which it would be material
to the one party to know, but which the other is not legally
bound to communicate, may involve the purchaser in loss, for
which the law affords him no remedy.
"When the vendor of land or minerals, with a view to the
1 Tennent v. City of Glasgow Bank (1879), 4 App. Cas. 616 ; Bouldsworth v.
City of Glasgow Bank (1880), 5 App. Cas. 317.
2 See Harrington v. Victoria Graving Dock Co. (1878), 3 Q. B. D. 549 ; Grant
v. Gold Exploration, $c, Ltd., [1900] 1 Q. B. 233.
3 See the substance of Lord Hatherley's remarks in Erlanger v. New Sombrero
Phosphate Co. (1878), 3 App. Cas. at pp. 1243, 1244.