91 N.J. Eq. 520 | N.J. | 1920
The opinion of the court was delivered by
The complainants, Eobert N. Keely and George Pfeiffer, Jr., .holders of eighty shares of stock of the Farmers Telephone Com
The bill is founded upon the theory that Henry M. Black, who was the president of the Farmers Telephone Company, violated the trust and confidence reposed in him as such officer and director of the company, in that he secured the transfer of certain property rights of the company, and the control of the company to the New York Telephone Company, whereby he secretly profited to the extent of $28,635; and, therefore, the complainants ask for relief that he be compelled to account to and pay over to the Farmers Telephone Company the sum alleged to have been received by him as secret profits, and any other profits which he may make by reason of a certain contract entered into between him and the New York Telephone Company.
The court of chancery decreed and ordered that Henry M. Black pay to the Farmers Telephone Company the sum above stated, with interest thereon from March 14th, 1919, and to pay a counsel fee of $500 to complainants'’ counsel. From that decree the appellant, Henry M. Black, appeals to this court.
The facts are these: The Farmers Telephone Company was the owner of a telephone system which covered an area of about four hundred and fifty square miles, and 'was operated in Burlington, Monmouth and Ocean counties, under an agreement with the Delaware and Atlantic Telegraph and Telephone Company and the New York and New Jersey Telephone Company, both of the latter companies being part of the Bell system, by which the Farmers Telephone Company received fifteen per cent, of toll messages in its territory. Under this arrangement the latter company obligated itself to install the telephones and appurtenant equipment. In June, 1917, the cantonment, known as Camp Dix, at Wriglitstown, was constructed by the federal government as a training camp. The cantonment was within the territory of the Farmers Telephone Company. While the cantonment was being put in order for the reception and accommodation of troops, the federal government desired telephonic service provided, and arranged for such service with the Farmers Tele
The dominating idea pervading the vice-chancellor’s conclusions is, that Mr. Black in acquiring the stock of the stockholders and selling the same, together with his own to the telephone companies acted in a fiduciary capacity. In this view we cannot acquiesce. It is true that in bringing about a transfer of the telephone business of the cantonment he was acting in a fiduciary capacity, and any profit he might have made out of that transaction he should account for to his cestui que trust. The proof fails to show that he received anything from the Bell companies or any other source on that account. The moneys paid to him were for his services in acquiring and transferring the stock, and in doing that he did not occupy a position of trust with relation -to the company of which he was president. It seems to us that he had a perfect right, as an individual, to purchase the stock from the holders thereof at such prices as he and they should agree on, and after buying it he was entitled to sell it again for such price as he and a purchaser should agree on. In these transactions he occupied no relation of trust either to the Farmers company or to> the various stockholders. For it is important to observe that he was not dealing with the property of the company, but with his own, the title to some of which he derived from other stockholders. That is the significant feature of the present case, which distinguishes it' from the cases relied on by the respondents.
Moreover, it is a fact not to be overlooked, that although the bill of complaint was filed for the benefit of all stockholders who may see fit to come in, that none of them has seen fit to do so, and the natural inference is that none has any complaint to malee.
It is further to be noted that to carry out the decree of the court below would lead to an anomalous situation. For, as it appears, the holder of all the stock of the Farmers Telephone
The decree of the court below is reversed, with costs.
For affirmance — Wone.
For reversal — Ti-ib Chief-Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisoi-i, White, IIeppeni-ieimer, Williams, Tayloé, Gardner, Ackerson — 13.