*1
Irving-Pitt Mfg.
BROWNv.
Irving-Pitt Manufacturing
Walter Brown,
Appellant,
Com-
pany,
Pitt
J. B.
and William P. Pitt.
in five party after fraud, aggrieved allows to the ten in which to constituting discover the facts the fraud; but that, diligence he must use due fraud, to discover the means that he is deemed to know the facts known, which he should have and also the facts he could have ordinary known the exercise care commensurate with the circumstances. Pleading: 2. -:-:--: against Presumption Facts to Relieve Knowledge. damages In an action for misrepresen- based on fraudulent aggrieved tations and concealment at the party time the entered into the defrauded, contract which he relating discovery, the rule so as to limitations, relieve the action ficient requires from the bar allege him to suf- presumption knowledge facts to overcome the obtaining at the time the charge ignorance was consummated. A mere at one subsequent knowledge another, time not sufficient to toll the the silence, and of as well as mere statute; presumption knowledge, but to delete the aggrieved party allege should facts sufficient to show the exercise of on, due of to discover the fraudulent facts relied or that the means beyond acquiring knowledge power, or that an trick artifice or used, fiduciary to conceal or that relation existed. Fiduciary -: -: -: -: Cor 3. Relation:- President of poration: parties Sale of Stock. arm’s Where dealt with each other at fiduciary length, there was no relation. In the sale of the stock a cor poration to its stockholders its executive officers do stand in a confidential ground In an relief relation to such stockholders. action for of a less based on issuance to amount entitled, than the amount to which he claims he of a stock allegations defendant defendants were the executive officers of the that the individual being corporation, plaintiff, entitled to one-third of and that the president stock, entered into an and the defendant proportionate share of the than his receive more was to $12,500 money were to take the individual defendants plaintiff and the relation between do show common endeavoring adjust mutual their president, rights. show that but Actions, J., Section Juris-Cyc. 37 C. Corpus Limitations References: 945, 311, p. Sec- 309, 9.39, n. p. 133, 792, n. Section p. 317, n. Section 61, 751, p. n. 62. p. Section n. tion Court. Appeal from Jackson Circuit
Affirmed. Supreme You. Missouri, Haff, appellant; M. Johnson James Michaels and C.
William
& Newkirk of counsel.
Michales, Blackmar
Meservey,
allegations
peti-
demurrers the
(1)
purposes of the
For
*2
liberally
Sec.
construed.
and
accepted
true
tion must be
137
Nicholson,
579; Hood v.
Hamm, 97 Mo.
1919;
v.
R. S.
Stillwell
allega-
(2) The
W. 820.
Co., 204 S.
400; Erwin v. Commerce
Mo.
of a
of the elements
all
of
the existence
petition disclose
tions of the
all
of
fact
deceit. The
for fraud and
cause
action
incorporation of the
Pitt after
and
obtained
individually was material.
to them
belonged
and not
to the
property
they were the
representation
The
defendants
false, was
false,
to be
known to
defendants
individually was
assignors, was
deceiving plaintiff and his
purpose
made for the
their
inducing'
sale .of
cause
by them,
relied
and was
,
they were
and
par
value
for
respecting such
justified
relying
statements of defendants
on'the
knowledge
within
of defendants.
peculiarly
matters which were
Foundry
Heskett,
v.
979; Funding
114
Walker,
Judd
S. W.-
&
Co.
v.
(3)
531.
Benton,
125
57 Mo.
Since defend-
App.'516; Pomeroy v.
Mo.
the,
ants,'
and
Irving and Pitt
officers
executive
occupied
patents, they
respecting
ownership
knew
the facts
minority
knowl-
who had no
stockholders
edge
and
facts and
bound to make full
true disclosures
such
minority
respecting
stockholders
property
Mo., 531;
Oliver, 118
Pomeroy
Benton,
362;
v.
Gá.
and
57
Oliver
(4)
McMullen,
begin
Bitehie
79
Limitations did
v.
Fed.
against
pleaded
run'
the cause
in the
of action
until the dis-
covery
bring
entitled
this action at
Parker,-
discovery.
within five
such
time
from
McClain v.
129-S.
506;
26;
Krim,
397;
W.
27 C.
v.
100 Mo.
Pomeroy
J.
Cottrell
v..Benton,
Wendell Cloud Berger H. & for respondents Irving-Pitt Irving. Mfg. Co. and J. B. W. Flournoy S. respondent Pitt; Cloud, William P. H. Wendell E. R. Morrison if. H. L. Hassler counsel. facts,
If
stating
construed as
sufficient to constitute
deceit,
cause of action
fraud and
it appears
nevertheless
on the
face of
that such cause
'action accrued more than five
years before the
commencement
this suit and
is barred
Statute of
1919;
Limitations. Sec.
S.
Mester
Jones,
R.
v.
286
56;-State
Mo.
ex rel.
231
Yates,
290;
v.
Mo.
Heisler v. Clymer, 179
App. 110;
Mo.
Priest,
Bent v.
86 Mo.
Rys.
Johnson v. United
Mfg.
Irving-Pitt
BeowN v.
346; Shelby’ Co. v.
175 Mo.
Callan,
278; Callan v.
243 Mo.
Co.,
& n
S.
Scott
101 U.
Carpenter,
Wood
Bragg,
Mo.
y.
White,
601; Powell
App.
Mo.
Boswell, 136
Bowker
Krum,
Mo.
Cotrill
Smith, 213 S. W.
598; Hays v.
App.
The rights and assignee all of the . “(1) that he is Plaintiff states M. Brown under Etta Brown, A. Brown of Amelia C. claims mentioned. the contract hereinafter “ 13th, 1913, prior June (2) Plaintiff states that Manufacturing Com- assignors stock of the owned common *3 $9,900; that par value of defend- pany, corporation, a Missouri president herein was the Irving all times mentioned ant J. B'. at of said “ assignors his said and (3) 13th, 1913, plaintiff and That on June the. acting for himself and for other de Irving, defendant J. B. contract, copy a of which is at herein, a written fendants made A;? by of that the terms said tached hereto and marked 'Exhibit contract, agreed company organ a new to be that either was was with stock take larger capital ized a amount of over the assets properties Irving-Pitt Manufacturing Company, and or that plain capital company be of said increased and that stock exchange holdings assignors tiff and an of their then make of company preferred capital the common of for stock stock said by any organized, company issued new so or out of the be increase of capital if company, capital stock of defendant and that stock increased, $200,000 be per pre should should be seven cent thereof plaintiff assignors exchange ferred stock and that and his said were to ’par $110,000 preferred for of their said common stock value such stock; $90,000 that preferred par should stock be sold at and a an corporation, that new increase said stock corporation completed old should be within four from July months 21st,- parties on 1st, that thereafter June amended supplemented agreement by writing said a 21st, 1913, dated June by signed copy Irving, agreement defendant B. a J. 21st, 1913, B,’ June marked ‘Exhibit attached hereto and a made part hereof, whereby agreed in preferred it was that addition to said exchange in stock be issued said for common plaintiff was paid in $12,500, cash the difference between the sum of less 316 Mo.—65. Supreme Missouri, Vol. agreement of original in reorganization mentioned a cost of stock; that $90,000 13th, 1913, sale and the June said J. signed, supplementary at the time said herein. all the defendants acting on for and behalf Irving
B. assignors into the entered and his said (4) plaintiff That before acting all Irving, for B. amendment, the said J. agreement and said financial copy herein, submitted the defendants represented to company and April 30th, 1913, of said statement of the assets and true statement it was a correct that copy said financial statement company; of said that liabilities ‘ ’ part hereof; made a hereto and is marked Exhibit C and attached statement, patents owned in said financial the item assets by company $50,000 at and that the total assets of said' valued were $624,333.49; acting be- plaintiff, said company were assignors half of said statement and himself said relied thereupon signed agreements 13th aforesaid of June and June Irving-Pitt 21st, that in truth and fact the said Manufactur- ing patents Company at said time the owner of worth valued $450,000 $50,000 specified at excess in said financial state- ment and that assignors, owning and his said virtue of one-third of Manufacturing the common of the said Company, pat- entitled to of said excess value said ents; represented Irving’ said J. B. that there was no value patents belonging said excess said because patents not assigned to said assignable and were not to said company, having been taken Irving out defendant and defendant Pitt, and relied on said statements and did not learn until organization the time of of said defendants and Pitt had made effect, advised, is now all taken out defendants *4 and Pitt, or them, any either of at 1903 time after in connection with the business of company said should become property of defend- company; ant if he had known of said or the effect thereof, and of facts as were, neither he nor his assignors said would have entered into said’ contract of 13th, 1913, June capital and said agreement; amended when the said said com- pany was increased, $450,000 of said stock was issued to defendants Irving and presumed Pitt as sole owners of said' patents, when in truth and patents fact said belonged to said and that plain- tiff assignors and his by virtue owning one-third of the common stock of said company before increase, was entitled to one-third $450,000. of said' “That reason premises the defendants and each of them are indebted to in sum $150,000, with lawful in- terest thereon; has demand been made therefor and that no Mug. 1027 BROWNv. inter- lawful sum with which paid, for been has part said amount each against defendants judgment prays he est and costs them.” notice follows: need w'e ground the demurrer only The ‘‘ a cause to constitute sufficient facts state petition does not That said defendant, in that it this against in favor of of action cause of plaintiff’s face of said appears from the the com- years before five than had, action, any accrued if he Stat- by the completely barred become and has mencement of this suit Limitations.” ute of the action face that on its I. aver the shows Defendants apposite, Sec- statute portion barred limitation. The years: . . . “Within five 1919 reads: Statutes
tion Revised ground of on the fifth, an for relief action Pleading. not to have deemed in such ease be caiise 0f action any with- party, at time discovery by aggrieved until accrued constituting fraud.” years, in ten of the facts petition shows the action support position To their assert, first, a cause by limitation, defendants fraud barred by proper or when the fraud action accrues discovers circumstances, ordinarily prudent man, he, under the diligence as an Second, party seeking to avoid the bar it. should have discovered fraud must aver and show that he statute on account of it, if he had the means of dis showed due to detect it; plaintiff have must covery power in his will held to known showing diligence part in his facts dis set out guilty fraud, or that of some active conduct cover the defendant thwarting investigation. Third, brought action must be such discovery constituting within five of the facts fraud. position: following contend cases maintain their Defendants Mes 56; Yates, 286 231 Jones, 276; ter v. Mo. State ex v. Mo. rel. Heisler 110; Clymer, App. Priest, Bent v. 86 Mo. Johnson Mo. Railways Co., Callan, United Mo. Callan v. Shelby County Bragg, Mo. Boswell, Scott v. App. Mo. charge only petition regarding The of the fraud - is as follows: That did learn 1923 that, until at the organization time of the of said in 1904, said' defendants Pitt effect, had made as he is now advised, that all taken out Pitt, defendants them, or either of after 1903 in time connection with the busi- ness of said property should become defendant com- *5 pany. apparent
It is limitation that the is conditioned on aggrieved the party having ten to discover the fraudulent facts. The con- Supreme Missouri, Yol. one shall subject the rule however, years, of ten is
dition have been that should with facts cognizant of or conversant deemed could, by the facts that he known, is have known held to one circumstances, dis- ordinary with the care commensurate exercise of power. diligence within his the means due or cover discovery so as to take general of The relative doctrine to relieve statute, plead facts sufficient of without the bar the obtaining at the knowledge of pleader presumption actual the the ignorance at general charge A agreement. the consummation of well as mere knowledge another, subsequent one time and of Something further must be silence, is the statute. insufficient to toll pleader aver facts presumption, should To delete the shown. diligence to requisite due care and sufficient show the exercise acquir- on, fraudulent facts relied' or the means discover knowledge power, or that an artifice or trick ing were without used, fiduciary relation existed. When dis- to conceal was or that pleading covery statute, should aver relied to toll was, made, why it was what it how it was made and it was Carpenter, 101 135, not made U. S. Ed. sooner. L. [Wood 807.] develops 1923,
The record this was 12, suit filed on June representation 'while the states that was made before 1913. Unless June demonstrates that a existed, later, nothing avers toas discovery except of the fraud a bald statement did not learn until 1923 of Irving and Pitt relative out 1903 in taken after connection with' the business company becoming property of company. pleading The fails show whether the parole relied or in writ- ing, or its terms further herein forth, than set or whether it en- forcible and still in 1913, force or whether it was based on a consideration, valuable or was actually there such an agree- whether ment, any patents or whether .out taken after or were taken out connection with the business of Carpenter, Wood v. supra, say: the court “In this class stringent cases is held to rules of pleading and evidence, especially ‘and must there be distinct averments as to the time when fraud, mistake, concealment, misrepresentation was discov- ered, and is, the discovery what so that the court clearly see by ordinary whether might not have been made before.’ v. Page, [Stearns How. ‘This is 829.] neces- sary to enable the defendant to meet the fraud and the time its discovery.’ general A allegation ignorance at one time knowledge at another are of no If the effect. made any par- *6 Mfg. Ikving-Pitt BROWN it made, what it was when be stated it should discovery, ticular made sooner.” why it was not made, and was, it was how re- facts that the petition reading of the from the apparent .It is part on the any only to show fail not lated therein a lack to affirmatively show tends fraud, but to discover the diligence. any that may be shown it running the statute In to avoid the order from party the prohibit used defrauded to or artifice was some trick fraud; it must or regarding the investigation making inquiring or inquiring prevented from party defrauded that the be shown prove to necessary As it is of concealment. particular acts about the plead necessary to them. facts, it is these quoting from court, the Yates, ex In State rel. avoid say': concealment “The Carpenter, supra, fraudulent Wood v. It go beyond mere must must silence. running of the statute ing the prevent directly intended to something actually or said done be (Smith thwarting investigation discovery conduct active —some Brown, 116 Ind. l. 173). c. Stone v. Blachley, 198 Pa. In St. has often been de follows: ‘As exposition the matter was as repose, in order a statute of Limitations
clared, the Statute of to, avoid the referred bring to section above case within the silence, gen something than or mere operation statute, part person liable, must speeches, on eral declarations or It or artifice been em appear must that some trick shown. has prevent investigation ployed inquiry or or calculated to mis to elude by obtaining information, party lead and entitled from hinder the exists; ordinary right of action diligence, the use or misrepresented must appear that the concealed from facts were to or by party, positive declarations, inquiry some or acts being sought, particular made or information and the acts con misrepresentation pleading.’ or cealment made must be set out Beside, ‘the discovery fully circumstances of the must be stated and proved, delay and the to occurred must be shown be con has ' ” requisite diligence.’ sistent with the
In the ease, nothing instant avers relative to defend- ants’ by artifice, concealment trick or means prevent so as to by plaintiff.- its again
We apparent think it petition, from the relative to the representation that there no value belonging patents assigned assignable because to the com- pany, had regarding alleged actual notice facts put fraud that him on inquiry. his passing, say we we infer from represented plain- the whole it was tiff that the so-called -patents” “excess were owned Pitt. That put had sufficient notice to him on inquiry SupRbme Missouri, You. fi- valued averments that
is shown Irv- and that common stock $50,000, nancial statement at Manufacturing upon the Company, increase ing-Pitt from the further infer belong and Pitt. We stock, was to Irving and common stock was issued patents presumed have during year payment 1913 in Pitt alleged by owed have been but them, been owned *7 con- transaction was alleged is not that this the It way. may plaintiff and his as- any presumed It cealed in peti- According signors ordinary intelligence. to the men of were receiving par value Irving $450,000 were tion he and Pitt knew company, payment patents, the in stock of the company they they stockholder, owned. As a the books of the stated open papers. plain- A in were as well as all suit court to Pitt, tiff rights by Irving a and would have obviated denial his any if made, boobs, inspect papers was to the and documents of the corporation. ordinarily prudent think an in- We would have man quired investigated right and the to issue to others par stock of payment patents, in especially value of to inquiry open since means of him. were (cid:127)II. Plaintiff that, petition alleges maintains inasmuch as the president was company, fiduciary existed, a relation and Oliver, 362; cites Oliver 118 Grannis, v. Ga. Baird v. 434; O’Brien, v. 58 Mulvane Stewart Kan. . ., Fiduciary Relation. Cattle Ranch 128 S. Co U. Wyoming Co., Chetlain v. Ins. 86 Goulden, Ill. Walsh v. 130 Mc Mich. Lain Parker, 229 68, precedents Mo. in his behalf. Plaintiff contends that and Pitt as chief corpo executive officers of the required ration were to make full respect and accurate disclosures ing the financial condition of and the assets which it owned, for minority stockholders in were where situation compelled rely upon defendants; statements of that the individual defendants controlled the corporation, directed the books and records that were kept to be and the entries that were made therein, obviously and suppressed the facts from that the books th.e subsequent patents belonged to company, since the financial prepared statement from the books failed to show the true facts respecting patents. these It is evident, however, dealing defendants were at arm’s length respect with to the stock each upon was to receive capitalization.
increased Plaintiff was a stockholder, entitled ex- amine the books, papers. documents It peti- clear from the tion that both plaintiff and maintaining defendants were they each entitled to a proportion certain adjustment of stock Mug. BROWNv. They agreement. This a matter of rights. tbeir mutual proportionate one- than his agreed receive the sum of sto,ek thereto and in addition part third stock. It $12,500, to take common while defendants were investigate and determine duty then thereafter no We find lay him. rights. If fault with so, his did not do 'the he existing. cites Baird Plaintiff of a relation evidence point contention, but the here Grannis, support 426, Mo. respond- although many cited decided, cases issue is there relation between brief in a confidential ent’s that case determine that a sale of of a so far as stock officer a stockholder obtain, corpora- between them is does not an officer concerned buy stock other individual. tion and sell like its fact McMullen, In Ritchie v. Fed. the court holds: “The pledgee company, owns that the of stock other stock the same duty any greater therein, impose he is a director of does not officer him, respect pledged, than if had no company at all.” Goulden, “Directors, Walsh Mich. said: *8 course, They stand in itself. relation, however, dealing stand in with do not other' purchase stockholders for the or sale of stock.” Co., In Hooker v. Steel stated: Midland it is “A di- Ill. (trustee) rector, however, does not that relation to an sustain individ- respect ual stockholder with his over which has no con- may whatever, trol but he deal with individual stockholder purchase practically stranger. "on the same terms as a purchase the absence fraud such a will not set actual aside for failure disclose information a mere the director have affecting the value of the stock.” by plaintiff applicable do not think the eases cited We are to the . ' ~ here
facts involved. prolonging no discussion. We see need It results from what action plaintiff’s cause of we have barred the Statute judgment. Hígbee, therefore affirm the C., of Limitation. We concurs. foregoing opinion Davis, C., PER CURIAM:—The adopted judges opinion All of of the court. concur.