Forest Land Co. v. Bjorkquist

110 Wis. 547 | Wis. | 1901

Cassoday, C. J.

The ground upon which the promoters of a corporation are accountable to it for any profits which they may receive by defrauding the corporation or from a violation of their duty as such is well understood. Pittsburg M. Co. v. Spooner, 74 Wis. 307; Fountain Spring P. Co. v. Roberts, 92 Wis. 345; Franey v. Warner, 96 Wis. 222; Hebgen v. Koeffler, 97 Wis. 313; Limited I. Asso. v. Glendale I. Asso. 99 Wis. 54; First Ave. L. Co. v. Hildebrand, 103 Wis. 530; Spaulding v. North Milwaukee T. S. Co. 106 Wis. 481. The same is true where the owner of the property, by agreement with such promoter, and with knowledge of the facts, aids such promoter in secretly perpetrating such fraud, and *552thereby receives a portion of the profits thereof. Id. See, also, Yale G. S. Co. v. Wilcox, 64 Conn. 101; S. C. 25 L. R. A. 90, and note; Atwool v. Merryweather, L. R. 5 Eq. 464; S. C. 37 Law J. Ch. 35; Phosphate S. Co. v. Hartmont, 5 Ch. Div. 394. It is contended that, within the ruling of some of the cases cited, the judgment in this case should be reversed. Confessedly, Myers was a promoter of the plaintiff corporation. Whether he secretly retained $2,000 of the consideration recited in the deed from Bjorkquist to the plaintiff, or whether some of the officers and stockholders of the corporation knew that he retained that amount of the consideration on such purchase, are questions not before us on this appeal, since there is no judgment in the record in favor of Myers,— much less, any appeal from such judgment. There is no pretense that the defendant Growns had any connection with the purchase of the land from Doerflinger by Bjorkquist, nor the sale and conveyance of the land to the plaintiff by Bjorkquist, except that the mortgage was taken back in his name in trust for Bjorkquist. The purchase of the land by Bjorkquist from Doerflinger was fourteen months prior to the incorporation of the plaintiff; and the findings and the evidence preclude the suggestion that such purchase was made through the agency of Myers, for the purpose thereafter of selling to the plaintiff at a profit. As indicated in the statement, Myers brought Doerflinger and Bjorkquist together, and they personally negotiated the terms of the transfer, which resulted in the payment by the latter of $23,000, of which sum Myers retained $500 as compensation for such agency, and the balance was finally received by Doerflinger. Myers had no interest in the land or in the purchase from Doerflinger, except to get such compensation. In the spring of 1890, ten months after such purchase, and before the question of incorporating the plaintiff company was mentioned to Bjorkquist, he was the absolute and sole owner of the land, subject only to his payment of the mort*553gage be bad given to Doerflinger for tbe balance of tbe purchase price. Sucb were tbe conditions existing when, according to tbe findings of tbe court, Myers met Bjorlcquist, in April, 1890, and asked bim for the privilege of selling tbe land; and Bjorlcquist gaye bim tbe privilege of making sucb sale, on condition that be must receive $30,000 net as consideration for tbe sale, and whatever should be paid in excess of that sum Myers was to receive as his commission on sucb sale. Myers testified that be then mentioned tbe proposed incorporation of tbe plaintiff, and that be would have a commission of $2,000 for bis services in tbe transaction. That is denied by Bjorlcquist, and there is no pretense that be ever had any dealing in respect to tbe sale with any representative of tbe plaintiff other than Myers. Bjorlcquist so employed Myers simply to find a purchaser, not to collect any part of tbe purchase price. Tbe articles of tbe incorporation of tbe plaintiff are dated August 2,1890, and were recorded August 4, 1890; and tbe first meeting of tbe directors of tbe corporation. was therein fixed, and was held August 14,1890. At that meeting it was resolved that tbe president (R. J. Schwab) and secretary (A. B. Myers) of the plaintiff be, and they were thereby, authorized and directed to purchase of Bjorlcquist the land in question, and to pay therefor $32,000, of which $16,000 was to be paid on tbe delivery of tbe deed and approved abstract of title, and for the balance to give back a mortgage of $16,000, payable in five years, with interest at six per cent. Tbe deed from Bjorlcquist to tbe plaintiff was executed September 15, 1890, and on the same, day Myers, as secretary of the plaintiff, paid Bjorlcquist on such purchase $8,120, and took his receipt therefor; and on tbe same •day Bjorlccquist paid to Doerflinger the amount of tbe mortgage be bad given bim, and obtained bis discharge thereof. Bjorlcquist testified that be first ascertained that a corporation was to be tbe purchaser of bis land a few days prior to September 15, 1890, when his deed was so executed to tbe *554plaintiff. The findings of the court are abundantly supported by the evidence. The mere fact that Bjorlcquist fifteen months prior to such conveyance bought the land for S7,000 less than the price for which he sold it does not tend to impeach the transaction, especially as it is found by the court, upon competent evidence, that it was then worth the full consideration recited in his deed, which was $2,000 more than he actually received. Milwaukee C. S. Co. v. Dexter, 99 Wis. 214, 230, and cases there cited. Neither of the appellants stood in any confidential relation to the plaintiff or any of the subscribers to its capital stock and hence owed neither it nor them any duty to refrain from making the sale under the circumstances stated. Id. The facts found and proved bring the case squarely within the ruling of this court in Godfrey v. Schneck, 105 Wis. 568. In pursuance of the ruling in that case, we must hold that the mere authority of Myers to find a purchaser of the land did not contemplate the organization of a corporation to effectuate the purchase, and that Myers’s acts in assisting in the formation thereof, in the absence of evidence showing that Bjorlequist had any knowledge of Myers’s plans or shared in any way in his profits, were outside of the real or apparent scope of the authority of Bjorltqmst, and not binding upon him.

By the Court.— The judgment of the circuit court is affirmed.