US SUPREME COURT DECISIONS

Respondent induced petitioner and others to join with him as subscribers to a syndicate agreement, under which the stock of a corporation was acquired, other property purchased and added to its capital, its stock increased, and the shares distributed to the subscribers in proportion to their subscriptions. By this agreement, respondent was constituted an agent for the other subscribers, with large powers, and became their fiduciary in respect of the acquisition chanrobles.com-red

Page 242 U. S. 132

and management of the subject matter. By misleading representations and suppression, he concealed the fact that the original shares were largely his when the agreement was made, and, carrying out a purpose entertained from the beginning, surreptitiously made use of those he owned in squaring off his subscription. Subsequently, petitioner and other subscribers, discovering this deception and fraud, promptly elected to rescind, gave due notice, offered to return all stock by them received, and demanded back their money.

Held that tender of the stock actually received, being all the subscribers could do toward restoring the original position, was an adequate preliminary to an action at law against the respondent to recover the amounts paid on their subscriptions. Heckscher v. Edenborn, 203 N.Y. 210, approved.

Although, on a question of commercial law or general jurisprudence, the federal courts exercise their own judgment, they nevertheless lean toward agreement with the state courts where the question is balanced with doubt.

206 F.2d 5 reversed.

The case is stated in the opinion.