185 Iowa 1123 | Iowa | 1919
Hobart W..McNeill died testate, January 27, 1900, at the city oí San Jose, California, leaving surviving Elizabeth McNeill, his widow, and an only child, Annie McNeill Birks. His will, dated November 3, 189b, bequeathing all stock in the corporation known as “McNeill Brothers, Inc.,” owned by himself, to W. A. McNeill, was admitted to probate, March 13, 1900. He was owner of 2,000 of the 5,000 shares of stock in this company, and owned no other property. W. A. McNeill, who was nominated executor in the will, was appointed, and qualified as such. On the same day that the will was made, decedent had addressed to W. A. McNeill the following letter:
“Oskaloosa, Iowa, November 3, 1896.
“Wilbur A. McNeill :
“I attach this letter to my last will bearing date November 3, 1896, as instructing you what to do with the proceeds, whether dividends of cash or property or final results arising from sale of my ‘McNeill Bros, stock.’ One half shall
“Affectionately,
“H. W. McNeill."
About three years later, another letter was transmitted to the same person:
“San Jose, Oak, 12-18-1899.
“Dear Wilbur:
“Having reference to my letter of instructions in yourself to govern you in the final disposition of my McNeill Bros, stock I would like to add to it this:
“Set aside five thousand dollars of McNeill Bros, stock for the use and benefit of each of the following named parties :
“Hobart M. Birks, Montreal.
“Hobart Phillips, Oskaloosa.
“Hobart Little, son of O. F. Little, Oskaloosa.
“Hobart Morris, Ganmore.
“Hobart Hill, son of F. A. Hill, Seattle.
“Hobart Rice, son of Fred Rice, South Bend, Wash.
“Wilbur M. Little, Anthracite.
“Walter McNeill, Fairfax.
“The remaining amount of the two hundred thousand to be divided into two parts, ohe half going to my wife, Lizzie McNeill, and the other to my niece E. L. Little.
“Affectionately,
“H. W. McNeill.”
The’ day after the issuance of the certificate of stock to Lizzie McNeill, one of the plaintiffs herein, she appointed W. T. Phillips, of Oskalóosa, Iowa, proxy to vote her shares in McNeill Bros., Inc. On the back of the certificate, there was a blank assignment, without date, signed by Lizzie McNeill, witnessed by her son-in-law. Shortly before March 30, 1901, W. T. Phillips made W. A. McNeill the following proposition:
“As attorney for Mrs. Lizzie McNeill I will sell you eight hundred shares of the capital stock of McNeill Bros., being certificate 14, issued February 15, 1900, for the sum of eighty thousand ($80,000.00) dollars cash, and for myself and associates, I will buy the American Coal Co., including all of its outstanding capital stock, and the American Supply Co., paying therefor the sum of seventy-five thousand ($75,000.00) dollars, as follows: I will give you 580 shares of the capital stock of McNeill Bros, and $17,000.00 cash, with the understanding that the said American Coal Go1. and the American Supply Co., operating stores for supplies to coal miners, be turned over to me as of date May 1, A. 1). 1901, with a clean balance sheet of that date.'
“Yours truly,
“W. T. Phillips.”
Subsequently, and on March 31, 1901, an option was executed in words following:
“In consideration of the sum of one dollar, in hand paid, the receipt of which is hereby acknowledged, I hereby give W. A. McNeill the exclusive option until May 1, A. D. 1901, to purchase the eight hundred (800) shares of McNeill Bros.’’ stock, as represented by Certificate No. Fourteen (14), issued February 15, A. D. 1900, and which stands in the name of Lizzie McNeill, whose attorney in fact I am, and the four hundred and nine and three quarters (409%) shares of Mc-Neill Bros.’ stock as represented by Certificate No. One (1)
“The said W. A. McNeill shall, on or before May 1, A. D. 190-1, tender me the entire amount of the outstanding stock of the corporation known as the American Coal Company, together with a clean balance sheet of said American Coal Company to that date, and the sum of sixty-three thousand dollars ($03,000.00) in cash, and in the event of his so doing, I hereby bind myself, for myself, and as the attorney of the said lizzie IlcNeill, to surrender to the said W. A. McNeill Hie said thirteen hundred and eighty (1,380) shares of Mc-Neill Bros, stock, and failure on the part of the said W. A. McNeill to make the said tender by the 1st day of May, A. I). 1901, shall work a forfeiture of this option after said date.
“Signed this 30th day of March, A. 1). 1901.
“Witness:
“P. S. It is understood and agreed that the stock of goods at Evans, la., known as the American Supply Company, belongs to the American Coal Company, and is to be treated as a part of the assets of the said corporation. W. T. Phillips.”
W. A. McNeill exercised his option on May 1, 1901, and took over the stock described in the foregoing instrument, and transferred the property of the American Coal Company and the American Supply Company, with the $63,000, to Phillips, who paid the plaintiff Lizzie McNeill the sum of $80,000.
Many issues are raised in the petition filed September 8, 1914. Only one appears to remain, and that concerns the transfer of the 800 shares of stock to W. A. McNeill, at about one fifth of its value, as is alleged. Plaintiffs say that a fiduciary relation existed between W. A. McNeill, as presi
Without setting out the needlessly voluminous pleadings, we are of opinion that this issue, as well as that said McNeill occupied such relation because of being executor under the will of her husband, was raised.
It appears that there were three brothers, a sister, and a half-sister in the McNeill family. The youngest, Hobart W.. McNeill, was a man of large business capacity, possessing a genius for promotion, especially in mining enterprises His brothers, W. A. and James F. McNeill, were men of ordinary ability, and it is likely that they acquired riches through the sagacity and foresight of Hobart. The sister married one Little, one of whose children was E. L. Little. Hobart was married to the plaintiff Lizzie McNeill in 1869. He appears to have undertaken to practice law for several years, then developed into a telegraph operator, and later became owner and manager of' coal mined in Mahaska County. After serving as assistant manager of the Chicago, Milwaukee & St. Paul Railroad Company for a time, and thereafter residing in Austin, Texas, and Long Beach, New Jersey, he returned to Oskaloosa in 1883, where he erected a dwelling, and resided until 1886. . Two children were born to them, one dying in infancy, and the other, one of the plaintiffs in this suit, Annie McNeill B'irks, was born in 1873.. In 1884 or 1885, E. L. Little, his niece, became the stenographer or secretary of H. W. McNeill. He had previously paid her expenses for two years at a boarding school, and for a course at a business college. She accompanied him to Chicago and Newark, New Jersey, where he was engaged in some business enterprises, and in 1886, to Seattle, Washington, where, save for a short time at Anthracite, Canada, he resided until his death, and she continued as his secretary.
Mrs. McNeill, with her' daughter, had continued to reside at Oskaloosa until the marriage of the latter to John Henry Birks, in 1894, and thereafter resided with the daughter at Montreal. She seems to have been with her husband about three months, altogether, in Seattle. The home, known as Park Place, at Oskaloosa, was in her name, and of the value of $10,000. Some time in 1898 or 1899, decedent invited his daughter, with her son, to visit him; but, when about to go, she received a telegram, stating that the house had been closed. Both Mrs. McNeill and her daughter testified that the relations between H. W. McNeill and his wife, and also between him and his daughter, were agreeable at
“If I had remained at home I would have been married and would have had a home of my own, which was true, and that he felt that he should do that for me because T had been with him a good many years.”
He had also given her his diamond ring, shortly before his death. The circumstance that his daughter had married into a family of great wealth probably was accorded some consideration in disposing of his estate. Such are the facts, and we may now dispose of the issues.
The trouble with this contention is that Mrs. McNeill acted through W. T. Phillips as her agent, as appears to be conceded in argument, and, of course, his knowledge with respect to the transaction would be imputed to her. He had been a director of McNeill Bros., Inc., from the date of its organization, and then held 580 shares of its stock. On February 27, 1900, he was elected secretary and manager, and continued such until he resigned because of the transfer or cancellation of such stock in acquiring the American Coal Company in May, 1901. He testified that he “left the employ of McNeill Bros., January 24, 1900.” James F. Mc-Neill fixed the date as April 30, 1901. Phillips probably referred to work in the office of McNeill' Bros., Inc., as he became manager of the American Coal Company at about the date mentioned by him. He had been associated with the brothers in one capacity or another for nearly 30 years. He was aware that McNeill Bros., Inc., was merely a holding company, .and knew of all the companies the stock in which was held by McNeill Bros., Inc., and testified that he knew the value of the properties owned by the respective corporations. The books were open to his inspection
“In actions for relief on the ground of fraud or mistake, and those for trespass to property, the cause of action shall not be deemed to have accrued until the fraud, mistake or trespass complained of shall have been discovered by the party aggrieved.”
The fraud contemplated in this section has uniformly been held to be that “heretofore solely cognizable in a court of chancery.” Phoenix Ins. Co. v. Dankwardt, 47 Iowa 432. If the action is at law, or the remedy is concurrent, the section has no application. McGinnis v. Hunt, 47 Iowa 668; Carrier v. Chicago, R. I. & P. R. Co., 79 Iowa 80 ; McKay v. McCarthy, 146 Iowa 546. If, however, the party against whom the cause of action exists, by fraud or fraudulent concealment prevents such other from obtaining knowledge thereof, the statute will commence to run from the time the right of action is discovered, or might, in the exercise of reasonable diligence, be discovered. District Twp. of Boomer v. French, 40 Iowa 601; Faust v. Hosford, 119 Iowa 97; Caffee v. Berkley, 141 Iowa 344. The shares of stock were transferred to W. A. McNeill or to the company, and canceled prior to May 8, 1901. Phillips, as agent of Mrs. Mc-Neill, and probably she, as well, was aware that McNeill Bros., Inc., was a holding corporation, — merely holding the stock of other corporations, — and that it was engaged in
In the cases last above cited, the agent had committed a fraud on his principal, and, of course, his silence as to what