255 F. 633 | 9th Cir. | 1918
The appellees Henry J. and Francis A. Woodward, for themselves and other stockholders of the Monetary Trust Company, brought suit against that corporation and the appellant to set aside as fraudulent and void an alleged purchase of 1,175 shares of the capital stock of the Point Richmond Canal & Land Company, made by the appellant from the trust company, and to require the appellant to account for moneys of the trust company alleged to have been fraudulently misapplied and misappropriated by him. On the trial the court below entered an interlocutory decree, holding the
The appellant contended that in the fall of 1906 the other two members of the committee gave him an option to purchase the said 1,175 shares of stock in the Canal & Land Company at $1 per share. No written option could be produced in evidence, but Wernse testified that the option gave the appellant the right to purchase the stock at $1 per share, and that he thought it was to run six months from September 3, 1906. The minutes of the hoard of directors of the trust company show that a meeting was held on September 3, 1906, at which it was resolved that the annual meeting of the stockholders be held on September 29, 1906, at an hour and place named, and one purpose of the meeting was declared to be the taking into consideration whether or not the assets of the company should be disposed of. There was no evidence that notice of the meeting was ever given, and there was no record of the minutes of a stockholders’ meeting on September 29, 1906. The secretary testified that no such meeting was ever held. There was introduced, however, a record of a stockholders’ meeting held on November 10, 1906, recited to have been held “pursuant to adjournment,” at which Wernse, who was the only member of the executive committee present,-offered for ratification and approval “the following option given to H. C. Cutting,” which motion was approved by the holders of a majority of the shares of the corporation. No option, however, was inserted in the minutes, or attached to the record. The minutes show also a meeting of the directors on December 20, 1906, at which Wernse presented the check of the appellant for $1,175,
The evidence was that tho appellant’s check for $1,175 was presented at that meeting by Wcrnse, but was not cashed by the trust company; that shortly after that date the $1,175 was loaned to the appellant upon his promissory noto, and $1,093 was also loaned to him upon his note ; that neither of the notes was ever paid; and that the statute of limitations was permitted to run against both. Wernse testified that no meeting of the directors considered or authorized either of the loans. The court below found that the transfer of the 1,175 shares of stock in the Canal & Land Company was-the merest sham, and was not made in good faith, that the intention was to transfer the stock to the appellant without any consideration whatever, and that the trust company having failed to act in the premises for its own protection, the appellees were entitled to recover the stock for the corporate benefit.
We find no ground to disturb the finding of the trial court. At no meeting of the stockholders was the question of the sale of the company’s assets considered. The board consisted of five members, of whom three were a quorum. At the meeting of the stockholders of November 10, 1906, at which the option was offered for ratification and approval, it was necessary to vote the appellant’s stock in order to constitute a sufficient representation of stock to hold the meeting, and to carry the resolution. At the following meeting of the directors on December 20, 1906, but three directors were present, and the appellant was counted a member of tho board in order to make a qupritm. At no meeting of the directors was a resolution passed authorizing either of the loans to the appellant. The court below found that during all this period the appellant had virtual control of the majority of the board of directors, and that they were ever ready to do his bidding. These transactions constitute actual and not constructive fraud.
Taking these allegations to be true, they were sufficient, we think, to show prima facie that the causes of action were not barred. In Bailey v. Glover, 21 Wall. 342, 22 L. Ed. 636, Mr. Justice Miller said:
“In suits in equity, where relief is sought on the ground of fraud, the authorities are without conflict in support of the doctrine that, where the ignorance of the fraud has been produced by affirmative acts of the guilty party in concealing the facts from the other, the statute will not bar relief, provided suit is brought within proper time after the discovery of the fraud.”
In that case the allegations of the complaint were that the defendants “kept' secret their said fraudulent acts, and endeavored to conceal them from the knowledge” of the plaintiff, whereby he was “prevented from obtaining any sufficient knowledge or information thereof until within the last two years.”
In Rosenthal v. Walker, 111 U. S. 185, 4 Sup. Ct. 382, 28 L. Ed. 395, the court reaffirmed the rule that where it is sought to obtain redress: against fraud concealed by the defendant, or which, from its nature remains secret, the bar of the statute of limitations does not begin tO' run until the fraud is discovered, citing Bailey v. Glover, which case, said the court, “has been often cited by this court, but has never been doubted or qualified.” We followed and applied the doctrine of those cases in Pickens v. Merriam, 242 Fed. 363, 155 C. C. A. 139.
In Townsend v. Vanderwerker, 160 U. S. 171, 186, 16 Sup. Ct. 258, 262 (40 L. Ed. 383), it was said:
*637 “The question of laches does not depend, as does the statute of limitations, upon the fact that a certain definite time has elapsed since the cause of action accrued, but whether, under all the circumstances of the particular case, plaintiff is chargeable with a want of due diligence in failing to institute proceedings before he did.”
But the appellant contends that the matter falls within another provision of the same section, which provides that interest shall be paid on money due on a statement of account from the day on which the balance is ascertained, and this for the reason that in his dealings with the trust company various payments had been entered to his credit up to the time of the accounting before the master, and he asserts that interest can run only upon the balance found due at that time. The master allowed the appellant interest on all his payments from the time when made, and this was proper. Prom and after August, 1907, all the said payments were for state license taxes and other taxes and advertising. There was no mutual account. The appellant could not stop interest on the sums he owed on and prior to September 1, 1906, by thereafter making from time to time payments to the corporation or for its benefit.
The decree is affirmed.