269 Mass. 401 | Mass. | 1929
This is a bill in equity in which the plaintiff seeks to charge the defendant Hay, and the defendant Blaney as executor of the will of John L. Loch-head, deceased, as constructive trustees, with the difference between what Hay and Lochhead paid the plaintiff for shares of stock in the Conveyancers Title Insurance Company, a Massachusetts corporation, and the price which they later received for the shares. Hay and Lochhead will be referred to as the defendants. The case was heard by a judge without a jury upon correspondence between the plaintiff and Hay, answers to interrogatories and oral evidence.
The plaintiff was the owner of forty-one shares of the capital stock of the company until February, 1927. Loch-head was then president of the corporation, and Hay a director and secretary. In January, 1926, the plaintiff, who lived in Pennsylvania, addressed a letter to the “Secretary, Conveyancers Title Ins. Co.” in Boston, stating that he would like to sell his shares of stock if he could secure a satisfactory price, and asking to be advised what the market on the stock then was. In reply to that letter the defendant Hay wrote that he could place all of the stock at $100 per share, “and if you will send your certificate to any bank in Boston properly endorsed with directions, I will take care of the matter.” The letter also informed the plaintiff of a coming meeting of the directors at which it was expected
The by-laws of the company provide in article 1 of chapter 7 that no shares of stock shall be sold by an owner until he has offered them in writing for sale to the corporation. Neither the plaintiff nor Hay offered the stock to the corporation. On February 24, 1927, Hay, following the usual practice, obtained the assent in writing to the transfer of the stock to himself and Lochhead, of a majority
During 1927 the plaintiff was not acquainted with the financial condition of the company or with the market, book or potential value of the stock except as he had been advised by Hay in the letters referred to, and from statements sent him from time to time by the company. The defendants during 1927 were familiar with the financial condition of the company and with the approximate market and book value of the stock, and knew that book values were affected by reason of the hazard of the company’s insurance business, its comparatively small capital and reserves, the restrictions on the sale of the stock, and the difficulty of liquidating the company. In the autumn of 1924 an inquiry had been made to ascertain if a controlling interest in the corporation could be purchased, and the board of directors declined to entertain such a proposition. In November or December, 1927, offers were made for the stock provided a controlling interest could be obtained, and at a meeting of the directors held on February 7, 1928, they voted to approve the transfer of all shares sold in accordance with an offer of $251.67 per share and to waive all rights» of the corporation under article 1 of chapter 7 of the by-laws; some time in February or March, 1928, more than a controlling interest in the stock of the corporation including that owned by the defendants was sold on the basis of this offer. The defendants knew of the inquiries made in 1924 concerning the sale of a controlling interest in the company, but they did not know and had no reason to anticipate that any such offer as that received in 1928 would be made. In buying the stock they felt that it was worth $100 per share and might at some time be worth
The relationship between the parties was established in the first instance by the correspondence, and we must look to that to ascertain what Hay’s undertaking was. The judge granted the defendants’ request that Hay, in the sale of the plaintiff’s shares, was not acting as his agent for the purpose of making a sale or sales thereof. No prejudicial error appears in this ruling; whether the right or authorization which enabled Hay to control the disposition of the stock be called an agency or by some other name is unimportant unless the relationship carried with it a fiduciary obligation. “Although the relation of principal and agent may partake of a fiduciary character, ordinarily it does not . ” Putnam v. Scahill, 266 Mass. 537, 539. Upon the facts in this case, the judge rightly ruled that at the time of sale and in the preceding negotiations neither Hay nor Lochhead stood in any fiduciary relation to the plaintiff. The fact that the defendants were directors created no fiduciary relation between them and the plaintiff in the matter of the sale of his stock. Smith v. Hurd, 12 Met. 371. Converse v. United Shoe Machinery Co. 185 Mass. 422. Lee v. Fisk, 222 Mass. 424, 426. Percival v. Wright, [1902] 2 Ch. 421. The cases of Elliott v. Baker, 194 Mass. 518, Hawkes v. Lackey, 207 Mass. 424, O’Brien v. O’Brien, 238 Mass. 403, and Reed v. A. E. Little Co. 256 Mass. 442, do not otherwise decide.
Until Hay paid the draft he was given no authority or right to dispose of the stock or to make any contract concerning it. The nlaintiff himself placed title to it in Hay,
The provisions in the by-laws as to the transfer of shares were inserted for the benefit of the corporation and could
The finding as to the plaintiff’s unfamiliarity with and lack of knowledge of the financial condition of the company made immaterial the exceptions to the exclusion of evidence on that subject. The rulings excluding testimony as to the plaintiff’s state of mind not communicated to Hay were right. Taft v. Dickinson, 6 Allen, 553. Central Trust Co. of New York v. Bridges, 57 Fed. Rep. 753, 764. The foundation was sufficiently laid for the introduction of the testimony of three owners of the stock as to its market value. They were shown to have sufficient familiarity with it and the affairs of the corporation to justify the judge in deciding that they were qualified to give such testimony. Lyman v. Boston, 164 Mass. 99, 105, 106. Shea v. Hudson, 165 Mass. 43, 45. Evidence as to the book values of the stock and of the circumstances connected with the business which might make those values higher than the market value, and of several sales of the stock within a five-year period before the sale of the plaintiff’s stock, was introduced. Stock may have a market value even if not listed or quoted on any exchange, and even if the sales which have been made were to other holders of the stock. Evidence of value shortly before the sale of the plaintiff’s stock was competent in the discretion of the judge, in the absence of testimony to show a change in value. The price which the stock had almost uniformly brought was some evidence of its market value. The judge was justified in considering all the testimony on the question of value, and we cannot say that his finding on that issue was wrong. He was not bound to find that the book value was its market value, nor that the price paid in 1928 to obtain a
All questions argued have been considered and we find no reversible error.
Decree affirmed with costs.