235 Mass. 79 | Mass. | 1920
Four of these actions are in contract to recover instalments alleged to be due upon two promissory notes payable to the order of Beaman, signed by Gerrish as maker and Burke as indorser, these two being defendants in each of these actions. The fifth action, as it finally went to the jury upon count one alone of the declaration, is in tort by Burke against Beaman alleging the purchase from him by Burke of fifty shares of stock in a corporation, induced by Beaman’s deceit in misrepresenting the assets and liabilities of the corporation and other facts material to the value of the stock.
1. No question now is made respecting the signatures or protest of the notes. It is contended that three of the actions on the notes are prematurely brought. That contention rests on the form of the notes. One note, typical of the others, is of the tenor following, as far as concerns this point, “Four years after date
2. The controversy centres about the purchase by Burke in 1914 of fifty shares of the preferred stock of the Parsons Manufacturing Company organized under Massachusetts laws in 1898. The entire capital stock par value $10,000 was paid in originally by a brother of Beaman, and was in 1900 purchased by him of his brother’s executors. Within a short time thereafter, Gerrish purchased $1,000 of par value of the common stock. For a time a bookkeeper, Crosby, owned $2,000 par value of the stock, which later was acquired by Gerrish. One share was held by William S. Beaman, another brother of Nathaniel P. Beaman. From 1902 to 1914 the directors of the corporations were the two Beamans and Gerrish. The testimony of Nathaniel P. Beaman, which was not contradicted and upon which Burke relies as showing that the stock purchased by him was not validly issued, was as follows: “that at the end of each financial year of the corporation the net profits made by the company were ascertained in the usual way by agreement of Nathaniel P. Beaman, Gerrish and Crosby, and the proportion that Beaman and Gerrish should receive was agreed
The preferred stock issued to Nathaniel P. Beaman under these circumstances was validly issued. If the proportion of the profits credited to Nathaniel P. Beaman on the books of the corporation be treated as dividends not collected but left with the company, the one who chiefly was harmed by this was Beaman, because he owned all the stock of the corporation not owned by Gerrish except the single share held in the name of his brother, and a larger amount was credited to Gerrish than he would have been entitled to as dividends upon his stock and a correspondingly less amount to Nathaniel P. Beaman. If it be treated as payment of salary, no salary or payment in way of compensation for services rendered by Nathaniel P. Beaman having been made although he was at all times the manager of the business, that also was a matter about which he and Gerrish were mainly concerned. The entire business of the corporation for a long series of years was conducted by Nathaniel P. Beaman and Gerrish. That was the usual course of conduct of the affairs of the corporation. They constituted a majority of the board of directors and during most of the period held all the stock with the exception of a single share, the beneficial
3. An effort is made to hold Nathaniel P. Beaman responsible for alleged false representations contained in the annual certificates of condition signed by him as one of the directors of the corporation and filed with the commissioner of corporations under St. 1903, c. 437, §§ 45, 46. Even it be assumed that there was evidence tending to show such false statements, there is nothing to indicate that they were signed by Beaman with any fraudulent purpose. There is in the record no foundation for the inference that the statements if false were signed by Beaman with knowledge of their falsity, or without belief in their truth, or in reckless carelessness whether true or false. He had no relations with Burke and the latter testified that, although he had seen Beaman, they had no conversation. Manifestly no representations were made to Burke in the ordinary sense, and Beaman had no purpose or intention that Burke should rely upon the statements in the returns. Therefore, he cannot be held personally
There is strong intimation if not a precise declaration to the effect that an action of deceit in favor of one of the general public does not lie against an officer of a domestic corporation for false statements contained in such certificates as those here in evidence, in the absence of express statutory provision to that end, in Hunnewell v. Duxbury, 154 Mass. 286, 288. See Cheney v. Dickinson, 96 C. C. A. 314; 172 Fed. Rep. 109. Compare Ver Wys v. Vander Mey, 206 Mich. 499.
It is a quite different matter to hold the corporation itself bound or affected by such returns, Steel v. Webster, 188 Mass. 478, 480, Brackett v. Commonwealth, 223 Mass. 119, 127, or to hold directors to a liability specifically imposed by statute based on falsify in the return, Felker v. Standard Yarn Co. 148 Mass. 226, or when representations are made to a commercial agency or otherwise for the express purpose of securing credit, Davis v. Louisville Trust Co. 104 C. C. A. 24; 181 Fed. Rep. 10, Eaton, Cole & Burnham Co. v. Avery, 83 N. Y. 31, 34, or to hold promoters for false representations in a prospectus, Peek v. Gurney, L. R. 6 H. L. 377.
It is not necessary to consider what liability there may be, if any, where the connection between the representation and the person relying upon it is closer than here disclosed, or where the purpose of the person making the statement is fraudulent. The decisions of courts of other States, upon which reliance is placed by Burke, are founded upon different statutes or upon other principles not prevailing here and need not be reviewed one by one.
4. The inquiry of the expert witness, as to the reasonable minimum compensation for the executive officers of the Parsons Manufacturing Company during the period which he examined, rightly was excluded. It does not appear that he was qualified to testify to the point or that his examination of the books covered
It follows from what has been said that all the requests for rulings, which need not be recited in detail, rightly were denied.
Exceptions overruled.