146 Mo. 302 | Mo. | 1898
About the middle of March, 1890, the defendant, Charles H. Sawyer, having conceived the idea of forming a company for the purpose of buying a certain tract of land of about one hundred acres in
“Whereas, C. H. Sawyer is about to form a company for the purpose of buying a certain tract of land of about one hundred acres, in St. Louis county, lying on and south of the Wabash railroad, opposite Woodland station, and being about 400 yards west of Jennings station, as shown by plat attached hereto, said land to be bought at the price of $500 per acre, or $50,000.
“Now, therefore, the undersigned hereby agree to bind ourselves to take stock in said company for the number of shares and amount set opposite our respective names, one fifth of amount subscribed to be paid at the time of signing, or when called upon to pay by C. H. Sawyer, the other four fifths to be paid in monthly instalments equal to ten per cent of the amount subscribed.
“Said company shall be incorporated and known as the Edgefield Land and Improvement Company, or some other suitable name.”
Sawyer began procuring subscriptions to this list about the middle of March, 1890. It took a week or ten days to get the necessary amount to buy the land subscribed. The subscriptions were all paid to Sawyer. As soon as a sufficient amount was subscribed to pay for this tract of land, Sawyer conceived the idea of enlarging the proposed company, increasing its capital, and selling to it a certain.tract of land, known in this, litigation as the “Ramona” tract, for which purpose he issued a second subscription list, which was in words, and figures as follows:
*307 “Whekeas, C. H. Sawyer has secured subscriptions to the amount of $50,000 for the purpose of organizing and incoroporating a stock company to be known as the Edgefield Land and Improvement Company (or some other suitáble name), to purchase a tract of land of one hundred (more or less) acres situated on the Wabash railroad, at or near Woodland station; the subscriptions to said stock to be paid as follows: One fifth at time of signing, or when called for by C. H. Sawyer; the balance, four fifths, to be paid in monthly instalments (commencing thirty days from March 13) equal to ten per cent of the amount subscribed; and
“Whekeas, it is desired by a majority of the stockholders to increase the capital stock of said company to $100,000 for the purpose of purchasing an additional tract of land of 142 acres (more or less) at the sum of $350 per acre, said land situated on or near Narrow Gauge railroad, Carsonville, Mo., as shown by plat accompanying this instrument; said subscribers to the original $50,000 of stock to be allowed to subscribe to the new stock an equal amount of their first subscription, and pay five per cent on said new stock at time of signing, or when called for by C. H. Sawyer, and ten per cent of amount subscribed every thirty days, from date thereof, until the remaining ninety-five percent shall have been paid. The new subscribers, or those not subscribers to the original stock, or original subscribers subscribing to more stock than their original shares, are to pay one fourth of the amount subscribed in cash at the time of signing, or when called for by O. H. Sawyer, and the remaining three fourths to be paid in monthly instalments equal to ten per cent of the amount subscribed.
“Now, therefore, we, the undersigned, hereby agree and bind ourselves to take stock in said company*308 for the number of shares and amounts set opposite our respective names, subject to all the terms and conditions hereinbefore mentioned.”
All of the payments for stock called for by the subscription lists were to Sawyer, and by him deposited to his personal account and used by him in the acquisition of the two tracts of land for the acquirement of which he secured the organization of the Edgefield Land and Improvement Company. Sawyer ' first contemplated purchasing the Jennings tract, in January or February, 1890, and about the same time procured an option upon it in writing from Jennings, at $300 an arpent. On March 15,1890, Sawyer, and Jennings entered into a further agreement in regard to the same tract, at which time Sawyer paid him the sum of $1,000 earnest money.
This contract is as follows:
“McLaeen Real Estate and Investment Co.
“Rooms 224 and 225 Commercial Building.
“St Louis, March 15, 1890.
“Received of McLaren Real Estate and Investment Company the sum of $1,000 on account of the purchase of a certain parcel of unimproved property lying in St. Louis county, and being a part of the Jennings survey by Solomon and Schultz, and bounded on the east by the land of Mrs. Duryea, on the west by estate of D. A. January, on the north by Woodland station and on the south by Mary E! McOleny, containing 100 arpents or more, known as the northern part of lot fourteen, being the same conveyed by Robert Jennings to the Connecticut Mutual Life Insurance Company to secure the incumbrance of $10,000 herein mentioned, on which is situated tenant houses, which property is this day sold to Mr. C. H. Sawyer for the total sum of $300 per arpent, payable on terms*309 of $20,000 in cash, and the balance to be assumed, $10,000 now standing against the property and due May 17, 1891, with six per cent interest, possession given when deeds are passed, and said Sawyer is hereby authorized to collect rents for 1890 now due. The title of said property to be perfect and to be conveyed by warranty deed free from liens and incumbrances except as to the taxes for the year 1890, which the undersigned purchaser agrees to pay. If, upon examination, the title proves to be defective and can not be made good, within a reasonable time, the sale shall be off and the earnest money returned, as also a reasonable fee for the investigation of title.
“The said C. H. Sawyer is accorded thirty days’ time from this date to close the above purchase and have the title investigated. I agree to the above terms and conditions, (Signed) C. H. Sawyer, (Seal); Robert M. Jennings, (Seal); McLaren Real Estate and Investment Company, Theodore DeEorest, President. Witness, T. W. Copening.”
On April 14, 1890, Jennings and wife conveyed the “Jennings tract” to C. H. Sawyer, the nominal consideration in the deal being $50,000. The real consideration was $35,100. The nominal consideration was inserted at Sawyer’s request. On April 28, 1890, Sawyer and wife conveyed to the Edgefield Land and Improvement Company the “Jennings Tract” reciting in the deed a consideration of $80,283.
Sawyer says he took the first steps towards acquiring the title to the “Ramona tract,” in December, 1889. His efforts to acquire the “Ramona tract” at that time resulted in the execution of the following agreement between Sawyer and the owners of said “Ramona tract.”
*310 “St. Louis, December 31,1889.
ilM. M. Fitsgerrell, Esq., No. 9 North Eight Street, City.
“Dear Sir: — I hereby propose to trade for the 142.88 acres located at Carsonville on the Narrow Gauge railroad, and running along the Natural Bridge road in St. Louis county, Mo., as shown by plat now in my possession, on the following terms, to wit: I will give my 1200 acre place, located in Ellis county, Texas, and known as the Brown farm (of which you have plat), with an incumbrance of eighty-five hundred dollars, with $850 interest due the 18th day of March, 1890, balance due in one and two years from 18th of March, 1890, and turn over to you or your party rent notes amounting to $1,023, due 15th day of September, 1890, with twelve per cent interest after maturity, and hay contract, also all implements now on the place belonging to me and represented in description I gave Mr. Sass, and will take the 142.88 acres above mentioned, subject to incumbrance of $14,000, due in three years at six per cent interest, and also give an additional incumbrance on said 142.88 acres of $8,500, one half with ten per cent interest, due 18th of March, 1890, balance due in one and two years from 18th of March, 1890, with ten per cent interest from date. Title of both properties to be good with the exception of the incumbrances herein named. You to furnish certificate of title by Sterling & Webster Abstract Co. and Aug. Gehner & Co., of this city. I will furnish same by reliable abstracter in county seat of Ellis county, Texas. And agree further to give you twenty days from this date in which to examine my property. And if you find on such examination it to be as represented, agree to close trade on such basis. The representations made are as follows, viz:
*311 “The deed will call for 1,145 acres, but is considered by many that it will overrun this largely. That the land is located in Ellis county, Texas, about eight miles from Ennis and about two miles from Faulkne station, on branch of the Houston & Texas Central R. R. That the soil is a black, waxy and sandy loam. There is now 212 3-4 acres, more or less under cultivation or to be put in cultivation, as shown in contracts; also 150 acres, more or less, under hay contract. The contracts and notes above mentioned hereto attached. Said contracts and notes to be transferred without recourse on me. It is further understood that I do not claim that the school house, church and store are my property, but are located on my land according to survey made by George H. Hogan, surveyor of Ellis county, Texas.
“C. H. Sawyer.”
“Accepted to date, January 3, 1890.
“M. M. Eitzgerrell, Agent.
“Wm. E. Berkely, Agent.”
This agreement was changed by another in writing, which is as follows:
“McLaren Real Estate and Investment Company.
“Rooms 224-225 Commercial Building.
“St. Louis, April 4, 1890.
“Received of C. H. Sawyer the sum of ten dollars as earnest money, on account of the purchase money of a certain tract or parcel of land located, lying and being in the county of St. Louis, and State of Missouri, and described as follows:
“One hundred and forty-two acres of land situated in St. Louis county, Mo., known as the Clement Woodward farm, being and lying in section 22, township 46 north, range 6 east, which lies south of the Natural Bridge road, and east of the Hanley road, where said*312 road crosses said Natural Bridge road at Carsonville, and being at the southwest corner of said crossing.
“Which property is this day sold to C. H. Sawyer, for the total sum of $50,000, payable as follows: $5,000 in cash and a warranty deed to 1,145 acres in Ellis county, Texas, now owned by said Sawyer, subject to $8,500 incumbrance, bearing ten per cent interest.
“Title to said 142.88 acres to be perfect and to be conveyed by warranty deed, and to be clear of liens and incumbrances, except an incumbrance of $14,000 bearing six per cent interest, which the undersigned purchaser agrees to assume.
“If, upon examination, the title proves to be defective and can not be made good, within a reasonable time, the sale shall be off and the earnest money returned, as also a reasonable fee for investigation of title not to exceed $50.
“The said parties hereto are accorded thirty days’ time from this date to close the above purchase and have the title investigated.
“I agree to the above terms and conditions. Signed in duplicate.
“ — . E. Berkeley, [seal].
“C. H. Sawyer. [seal].”
“Farmers’ Co-operative Club,
“By M. M. Fitzgerrell, Mgr.
“This receipt to be returned to the McLaren Real Estate and Insurance Company on closing purchase.”
Under this agreement Sawyer paid $10 earnest money to bind the contemplated trade, and on April 24,1890, received a deed for the “Ramona tract.” On April 26,1890, Sawyer'conveyed to the Edgefield Land and Improvement Company the “Ramona Tract,” by a deed in which the consideration was stated to be $80,000.
He also testified that by express agreement between himself, Fitzgerald and Chew, his “Texas Equity” was to be taken in the Eamona deal at a valuation of $31,000. To a committee of the stockholders appointed to ascertain the amount of claims asserted by Sawyer against the Edgefield Company, he gave the following statement: “ ‘Eamona Tract’ cost me, option, $22,500. Equity, $16,500. Total, $39,000. Option, December 31, 1889, closed April 4, 1889. Berkeley’s deed, April 24, 3890. Woodward deed to Berkeley, April 11,1890; deeded by Sawyer & Company, April 26, 1.890. Total cost to C. H. Sawyer of the two properties, $74,100; total profit to Sawyer, $26,983; price paid Sawyer as agreed $101,083.” This statement was furnished about May, 1892.
He further stated that Ewing and DeForest knew that he had traded his Ellis county property in Texas for the Eamona tract, but that he told no one else that he had traded said property. That in all this matter from first to last, no one ever asked him the question, as to whether he owned the land, or had an option on it, or was selling it at a profit, or ever intimated a desire to know who owned it or what his relation to it wrns, except Mr. Bannantine. That on the fifteenth of March (1890), when he signed the contract for purchase of the land, he was worth in real estate, bank stocks and other stocks the sum of $200,000. That he could not tell what sum of money he had deposited in
After having his attention called to his notice of March 17, 1890, to Captain Bull, informing him that the subscriptions for the first $50,000 had been completed, Sawyer was asked: “Q. What do you say now as to your efforts to organize this company prior to March 15, 1890, when you closed your option with Dr. Jennings?” and answered: “A. I stated I didn’t know how many days. It is possible it was a few days before that. I am not positive as to dates. I can not remember. I am inclined to think from this document that I commenced to organize this company a few days before I closed the option with Dr. Jennings, if it was closed at that date. I know of no reason why I waited till March 15 to close the option with Dr. Jennings, unless it might have been a matter of convenience to me. I don’t remember whether it was or not,” etc.
To Captain William Bull, Sawyer in substance stated that he had an option on the “Jennings tract” at $500 per acre; that the option would run out soon, and it was necessary to get sufficient money to take it in; that he did not have enough himself and wanted a few of his friends to go in with him, and put up the money and secure the property; that there was a party waiting to take the property at $550 an acre, and that the price that he was to pay for it, $500, was considerably less than the actual value; that there were certain facts that were known only to himself and a few others that would increase the value of the property very much; that he had raised quite a sum of money to induce the Wabash railroad to put on additional trains, and as soon as that would become known the property would be worth a great deal more money; that he was a subscriber and was putting in all the money he could
Captain Bull’s subscription to the capital stock of the Edgefield Company was made not later than March 10, 1890.
To Fred C. Exter, Sawyer stated that the option on the “Jennings tract” would expire about the middle of April, 1890, and that they would have to fill the subscription list and get enough money on or before that time, because Mr. Jennings would not wait longer than that time.
To George A. Bannantine, Sawyer stated that he represented a syndicate which was organized to buy the Jennings tract for the sum of $500 per acre under an option and that he was one of the syndicate.
To R. S. Logan, a subscriber to both lists, Sawyer stated that he was organizing a syndicate for the purpose of purchasing the “Jennings tract” and the “Ramona tract;” that he was one of the syndicate and would manage the business of the company; that
To John J. Broderick, a subscriber tó said Edge-field stock, Sawyer stated that he had an option on the land that had to be closed at a certain time, and that all subscribers to the stock would “stand on the same basis” in the purchase of the two tracts of land, and that he was acting for the stock subscribers and the contemplated company in purchasing the two pieces of land;-that Sawyer never told Mr. Broderick that he was the owner of the two tracts of land and proposed to sell them to the company he was then forming to buy lands; that he never told Broderick that he would make a profit out of the sale of the lands to the proposed company. Broderick testified that he “never heard of such a preposterous proceeding until this suit was begun.”
To Benj. Lynds, a subscriber to the stock of the Edgefield Company, Sawyer stated, You see my name on the subscription list for $5,000 of the stock. “You can see how much faith I have in it; I am going to take more if I can get the money to pay for it.” That Sawyer stated .to him that he was one of the syndicate, and that Mr. Ewing, in Sawyer’s presence, stated that Sawyer was to manage the company for the subscribers ; that Sawyer did not tell Mr. Lynds that he owned the two pieces of property for the acquisition of which the Edgefield Company was formed, and intended to sell the lands to such company; nor did Sawyer say anything about the costs of the properties to him, the subscription list indicated what the lands would cost. Lynds testified that he first knew that Sawyer had made profit out of the lands after this suit was brought.
Theodore DeForest, a witness for defendants, testified that Mr. Broderick correctly summarized the transaction, when he stated that “all parties were to stand on the same floor.”
James F. Ewing, a witness for defendants, testified that the first time he heard that Sawyer had acquired the “Jennings Tract” at $300 an arpent and sold it to the Edgefield Company for $500 an arpent, was after this suit was begun, and that he was as much surprised by such a disclosure as any one.
There was evidence introduced by plaintiffs tending to show that at the time Sawyer exchanged his “Texas farm”for the “Ramona tract,” the entire value of the “Texas farm” was $10,000 or $12,000, about the amount of the incumbrance thereon. Defendants introduced evidence tending to show that at the time
The evidence on the part of plaintiffs tended to show that at the date of the purchase of the “Ramona tract” by Sawyer, its full value was from $19,000 to $20,000, while upon the part of defendants it tended to'show that the value of “Ramona tract” at that time was from $25,000 to $50,000.
After the two tracts of land were conveyed by Sawyer to the Edgefield Land and Improvement Company, the Edgefield Company executed a deed of trust on the “Jennings tract” for $20,000 to the Connecticut Mutual Life Insurance Company, out of which the $10,000 deed of trust existing on said tract was paid and the remaining $10,000 was paid to Sawyer. The Edgefield Company also executed to Sawyer a second deed of trust on the “Jennings tract” for the sum of $30,000. This second deed of trust for $30,000 has been paid off until but $5,200 remain unpaid, the note being held by Sawyer.
The Edgefield Company at the same time executed to Sawyer its deed of trust on the “Ramona tract” to secure the sum of $30,000, a portion of the profits made by him through the sale of the two tracts of land to the Edgefield Company.
Fred C. Exter, one of the subscribers to the Edge-field stock, afterward became satisfied that Sawyer had abused the confidence imposed in him and, in violation of the duty due from him to the proposed Edgefield Company, had wrongfully and fraudulently appropriated a large portion of the values of said Edgefield Company. After having come to this conclusion said Exter made upon the directors of the Edgefield Company a demand in writing, requesting them to institute against said Sawyer a suit for the cancellation of the deeds of
The court made a finding of facts substantially as hereinbefore stated.
It is insisted by defendant Sawyer that he occupied no fiduciary relation to the company, was not
It is indisputable that Sawyer was promoter of the Edgefield Land and Improvement Company, and that he had an option only on the land in question at the time of the organization of the company, and if with respect to such land he occupied no fiduciary relation to the corporation this action can not be maintained. It was in January or the early part of February, 1890, that Sawyer secured an option on the Jennings tract, and about the ninth or tenth of March next thereafter he determined to organize a corporation for the purpose of selling to the same said land. He did not then at the time of acquiring the option occupy a fiduciary relation to the corporation with respect thereto. In such circumstances it was said in Densmore Oil Co. v. Densmore, 64 Pa. St. loc. cit. 49. “There are two principles applicable to all partnerships or associations for a common purpose of trade or business, which appear to be well settled on reason and authority. The first is, that any man or number of men, who are the owners of any kind of property, real or personal, may form a partnership or association with
Thus in New Sombrero Phosphate Company v. Erlanger, L. R. 5 Ch. Div. loc cit. 118, it was said: “A promoter is, according to my view of the ease, in a fiduciary relation to the company which he promotes or causes to come into existence. If that promoter has a property to sell to the company, 'it is quite open to him to do so; .but upon him, as upon any other person in a fiduciary position, it is incumbent to make full
So in the South Joplin Land Co. v. Case, 104 Mo. 579, it was said that persons who “project and form a corporation, by soliciting and procuring others to subscribe for and take shares of stock, for the purpose of selling or turning over to the company property which they own, or have a right to acquire by executory contract, do occupy a double position. On the one hand they represent their own interest in respect to the disposition of the property; on the other, they represent the proposed corporation.” The court said further: “A vendor is a promoter, and is bound to protect the interests, of those who ultimately constitute the company......He assumes this duty if he assumes to act for them, or if he induces them to trust him or to trust persons who are under his control, and who are practically himself in disguise. He also assumes such duty if he calls the company into existence in order that it may buy what he has to sell; but he does not assume such duty by negotiating with persons who have themselves assumed that duty, and who are in no way under his influence.” See, also, Quinlan v. Keiser, 66 Mo. 603.
According to the rule thus announced Sawyer was agent for the Edgefield Company in acquiring the two tracts of land. This was not only shown by the verbal evidence, but it is shown by the recitals in the subscription lists in the first of which it is said, that “Sawyer is about to form a company for the purpose of buying a certain tract of land of about one hundred acres, the Jennings tract for $500 per acre, or $50,-000; that all subscriptions for stock are to be paid
In the second subscription list it is stated that Sawyer has secured subscriptions to the amount of $50,000 for the purpose of organizing and incorporating a stock company to be known as the Edgefield Land and Improvement Company to purchase a tract of land;.......that it is desired by a majority of the stockholders to increase the capital stock of said company to $100,000 for the purpose of purchasing an additional tract of land,.......the “Ramona Tract;” that all stock subscriptions shall be paid to C. H. Sawyer, who also subscribed for $5,000 of this increased stock.
Sawyer acted for the company in organizing it, and in securing its incorporation, and in purchasing the two tracts of land; he concealed from the subscribers of stock and the directors of the company the fact that he had purchased each tract of land at a much less sum than that at which he sold it to the company, when it was his duty, owing to his relations with the company and its stockholders, to speak out and fully advise them with respect thereto, and in his failure to do so he violated his obligation of good faith which he owed to his associate stockholders, and for which he must be held to respond in damages.
Another insistence is that error was committed by the trial court in proceeding upon the theory that, if a wrong had been committed by a promoter against subscribers or stockholders in procuring their subscriptions, which wrong was not commonto all stockholders, the remedy lies with the corporation, and consists in an action by it.
In Mórawetz on Private Corporations [2 Ed.], sec. 272, it is said: “It is true that an act committed by a portion of the members of a corporation can not, in the nature of things, be a wrong against the whole company ; it can be a wrong only against those shareholders who were not parties to the act. Yet, it is impossible, under these circumstances, to work out the exact rights of the individual shareholders, except by regarding
It seems that DePorest was the only stockholder and •director of the company, who was aware that Sawyer had made a profit out of his sale of the lands to the company. He testified himself that he did not disclose to any of the stockholders, excepting Babcock
With respect to the “Ramona track,” Sawyer at the time of its purchase by him was the agent of the Edgefield Land and Improvement Company, and must be held to have purchased that tract for it and it is as much entitled to the benefit of such purchase as if it had purchased it direct, and Sawyer is only entitled to recover the actual value of what it cost him. If he suffered loss by reason of his misconduct in failing to disclose to the company what he gave in exchange for the land, and the total amount that it cost him, there is no one to blame but himself. The court seems to have adjusted this transaction upon an equitable basis, and we are disposed to defer to its findings.
“If an agent undertakes to act for himself, and at the same time for his principal, and reaps an advantage by his double-dealing, the law will take it from him, unless the principal, knowing all the facts, has-allowed the agent to so change his condition that he can not be put in statu quo, and thus make it inequitable to rescind the contract.” Euneau v. Rieger, 105 Mo. 675.
The'conclusion reached by the trial court was well warranted by the evidence, and finding no reversible error in the record we affirm the judgment.
Note. — Decided October 17, 1S9S. Motion for rehearing filed; overruled November 21, 1S9S.