This was an action brought by Joseph
E. Briggs against Albert C. Foster and John B. Carmichael to recover the sum of $3,600 damages, together with interest thereon, which the plaintiff alleges he suffered by reason of certain false
It is alleged in the petition that in the month оf November, 1899, the defendants, Foster and Carmichael, held options for the purchase and lease of certain mining property located near the cit3* of Joplin, in the state of Missouri, known as “The Blue Wing,” “The Mayne,” and “The Free Coinage”; that defendants had contracted to purchase the fee respecting a portion of the properties, and outstanding leases upon thе balance thereof for the sum of $163,688.88; that these mining properties at that date, as defendants well knew, were worth less than $40,000; that, having acquired this option, the defendants, Foster and Carmichael, conceived the idea of organizing a corporation to take over and acquire the mining properties above described, and by means of the sale of the stock of such corporation “secure for themselves a large sum of money on account and for the said operations,” and to accomplish this purpose, on the 20th of November, 1899, entered into an agreement with one A. C. Hartwell, by the terms of which it was provided that Hartwell should organize a company under, the laws of West Virginia to be known as the “Colonial Zinc Compan3r, Ltd.,” the name being subsequently changed to “International Zinc Company, Ltd.,” which should have a capital stock of $1,000,000, divided into 1,000,000 shares of the par value of $1 each, and should have a board of directors consisting of five persons, three of whom should be selected by the defendants, Foster and Carmichael, and two should be selected by Hartwell; and that it was further agreed that the defendants should sell and convey the mining properties above referred to to the corporation, the deeds and releases for the same to be placed in escrow in the Joplin National Bank of Joplin, Mo., to be held until payments provided therein should have been made. It is then alleged that it was further agreed that upon the organization of the corporation the defendants and Hartwell should meet,, and secure the selection of a board of directors and the officers of the company, and should issue and deliver all of the stock of the corporation to the defendants, Foster and Carmichael; that after the issuance of the stock to the defendants they should deposit the same with the Knickerbocker Trust Company of New York; .that it was further agreed that Hartwell should pay the defendants the sum of $10,000, and should reсeive in lieu thereof 33,333 shares of the capital stock of the corporation; that it was further agreed prospectuses should be issued by the corporation at the expense of Hartwell, and the stock should be sold to persons who might be induced to purchase the same; that the corporation was formed as provided in the contract; that the defendants, Foster and Carmichael, D. K. Wenrich, Charles P. Bennett, and Ira B. Cushing were'selected as directors; that the defendant Foster was made president' and the defendant Carmichael secretary and treasurer of the corporation; that the only persons who were members of the board of directors present at the meeting were Foster, Car
■ “The parties of the first part furthеr agree that they will give to the party of the second part an option to purchase all of the remaining shares of the capital stock of the said company at the price of thirty cents per share to them, net; in the manner following:
“Sixty-seven thousand, six hundred and sixty-seven (67,667) shares at the net price of thirty cents per share to the parties of the first part to be paid for by the party of the second part on or before thirty days from the date of transferring the property unto the Colonial Zinc Co., Limited.
“One hundred thousand (i 00,000) shares at the net price of thirty cents per share to the parties of the first part to be paid for by the party of the second part on of before sixty days from the date of transferring the properties herein mentioned to the Colonial Zinc Co., Limited.
“One hundred thousand (100,000) shares at the net price of thirty cents per share to the parties of the first part to be paid for by the party of the second part on or before ninety days from the date of transferring the properties herein mentioned to the Colonial Zinc Co., Limited.
■ “One hundred and fifty thousand (150,000) shares at the net price of thirty cents per share to the parties of the first part to be рaid for by the party of the .second part on or before four months from the date of transferring the properties herein mentioned to the Colonial Zinc Co., Limited.
“One hundred and fifty thousand (150,000) shares at the net price of thirty cents per share to the parties of the first part to be paid for by the party of the second part on or before five months from the date of transferring the propеrties herein mentioned to the Colonial Zinc Co., Limited.
“Two hundred thousand (200,000) shares at the net price of thirty cents per share to the parties of the first part to be paid for by the party of the second part on or before six months from the date of transferring the property herein mentioned to the Colonial Zinc Co., Limited.
“Two hundred thousand (200,000) shares at the net price of thirty cents per share tо the parties of the first part to be paid for by the party of the second part on or before seven months from the date of transferring the property herein mentioned to the Colonial Zinc Co., Limited.
“In the event of the party of the second part failing to purchase or sell the amount of stock mentioned within the time hereinbefore set forth, then this contract may at the option оf the parties of the first part be terminated and the stock withdrawn from sale; aud the party of the first part shall not be held liable for any of the conditions named in this written contract. * * *
“It is agreed by the parties of the first part that they will donate ten thousand (10,000) shares Colonial Zinc Co., Limited, as consideration for the two directors, to serve in that capacity, said directors to be nominated and satisfactory to the party of the second part. This stock, however, with the exception of one hundred (100) shares for each director, to be pooled with the balance of the stock and to be sold for their benefit pro rata with the other stock, if the directors desire it, otherwise they may retain the same and sell when desired, but no stock is to be sold except through the party of the second part.
“It is further agreed by the parties of the first part that the nine hundred and ninety-nine thousand, five hundred (900,500) shares received as full payment for the property, they will donate to the treasury of the company one hundred thousand (100,000) shares, the proceeds from the sale of this treasury stock to be devoted to acquiring new properties and the erection of new mills and developing the mines.
“All the stock of this company is to be deposited with the Knickerbocker Trust Company of New York, with instructions to deliver the same to the party of the second part upon the payment of thirty cents per share, and for every ten (10) shares sold, one share (1) to be a share of treasury stock and the proceeds to go to the benefit of the treasury.”
The defendants filed an answer, admitted the сitizenship of the parties as set forth in the petition, and denied each and every other
At the close of the evidence the court was requested to instruct the jury to return a verdict for the plaintiff, submitting to the jury only the question of the amount of damages. This request was denied, and the ruling of the court thereon duly excepted to, and is now assigned for error.
While there is a conflict of evidence in relation to some of the transactions of the parties, we think it is clearly established by the evidence: That the defendants desired to exploit these mines, form a corporation, and place its stock upon the market. That this is true is shown by the contraсt itself, which commenced with the recital, “Whereas, it is deemed advisable to exploit said property by organizing a company to take over such property.” That to effect this purpose, they entered into a contract with Hartwell, who was acting for Joshua Brown & Co., and to whom he afterwards assigned the contract. That the corporation was formed and the stock issued as рrovided in the contract. That Joshua Brown & Co. prepared circulars or prospectuses, and furnished copies thereof to the plaintiff, and that the statements contained in these circulars or prospectuses were materially false. That dividends were declared and paid, as alleged in the petition, when none were earned. That, instead of paying these dividends out of the earnings, they were paid out of money realized from the sale of stock. That the plaintiff relied upon the representations contained in the prospectuses, and was thereby induced to purchase stock. That the stock was utterly worthless. That the shares of stock were issued in blank, and delivered to the Knickerbocker Trust Company under the contract with Joshua Brown & Co. That Joshua Brown & Co. sold a large рortion of them, and for every share which they sold they paid to the defendants not 30 cents, but 27 cents per share,under the pooling clause of the contract, or as Mr. Foster, in his testimony, puts it: "All of the stock that was sold was sold to Joshua Brown & Company or Hartwell at twenty-seven cents a share net to us. It was sold at thirty cents, but twenty-seven cents went to us.” That the' provision of the contract, requiring deeds in fee simple and leases with full covenants of warranty and bills of sale conveying the property free from all debts and liens to be deposited by the defendants with the Joplin National Bank, and then gave to Joshua Brown & Co. an option to purchase 67,667 shares within 30 days, 100,000 shares within ’60 days, 100,000 shares within 90 days, 150,000 shares within 4 months, 150,000 shares within 5 months, 200,000 shares within 6 months, and 200,000 shares within 7 months after the deeds were deposited, was never performed. That the defendants never made the de'eds, so that the time never arrived when Joshua Brown & Co. was required to exercise the option. That Joshua Brown & Co. never purchased the amount of stock specified in the contract, but, on the contrary, it sold all of the stock it ever disposed of under the pooling clause of the contract, whereby 3 cents out of the proceeds of every 30 cents was the
The foregoing facts being, as we think, fully established by the evidence, we are of the opinion that the defendants were liable for the representations of Joshua Brown & Co., without reference to the question of their own moral guilt or innocence. This contract must be read and interpreted by a consideration of all of its provisions, and its’ obvious design is not to be controlled by the precise force of single words. Union Stockyards & Transit Co. et al. v. Western Land & Cattle Co.,
■ The second option required the stock of thе defendants and the stock of the company to be pooled, sold together, and the proceeds divided pro rata. Joshua Brown & Co. had no option to purchase the stock of the company, but sold the stock of the company and of the defendants, without separation, together, pooled the proceeds, and paid the defendants their pro rata, 27 cents, and paid to the International Zinc Company, Limited, its pro rata, 3 cents, upon every share sold.
But, as already indicated, we think the contract before us is a contract of agency. A contract which empowers an agent to sell personal property at any price he may see fit, and to pay the owners a fixed price when sold, and to retain the balance as his commission, is, under facts and circumstances, such as are disclosed by this record, an agency contract, and not a sale conditional or otherwise. ■ The' money to be paid by Joshua Brown & Co. was not to be paid upon a sale of the stpck to that company, but upon -a sale of the stock' by that company. In other words,''it was to account
In the contract under consideration Joshua Brown & Co. had.the power to sell, but the property and prоceeds of it, to the extent of the fixed price, was the. property of the International Zinc Company, Limited, and the defendants, for which Joshua Brown & Co. would have been liable for embezzlement if they had not accounted. Williams Mower & Reaper Co. v. Raynor,
Upon the facts established by the evidence in this case, our- conclusion is that the plaintiff was entitled to recover, and the jury should have been so instructed.
The judgment of .the Circuit Court must be reversed, and cause remanded, with directions to grant a new trial.