Lougee v. Pickrell

250 F. 737 | 6th Cir. | 1918

PER CURIAM.

It is deemed unnecessary to set out at length here a statement of the facts in this case. Such a statement would necessarily be long and involved, although the facts themselves are not difficult to understand. We are content to take the statement made by the learned District Judge as our own, especially as we are compelled to reach the conclusion upon the merits of the case at which.he arrived.

[1] So far as the defendants other than John T. Buckley are concerned, we regard it as rather fanciful^to consider them the principals with Buckley as the agent, and that consequently they become charged, in. the acquisition of stock in the traction company from Buckley, with the knowledge of any secret trust impressed upon it which it is assumed Buckley then had. With the District Court, we think the facts suggest that Buckley,- in the sale of this stock to himself and associates, was the agent of Norvale, the seller, rather than tire agent of his associates in. the purchase, and it is our view that the court below was distinctly x-ight in briefly dismissing from the contentions in this case the defendants Noel, Armstrong, and the estate of Pickrell.

[2, 3] The chance for the plaintiff, appellant, to recover at all from the defendant, John T. Buckley, depends practically upon the solution of the question of fact whether Buckley knew of the contract entered into between Rougee, plaintiff, and Norvale’s Bond & Securities Company, August 5, 1903, with modification five days later, assuming that this contract continued the measure of Rougee’s interest in the Traction Company until Norvale sold the company to Buckley and his associates in December, 1905. Manifestly upon this question of fact the plaintiff has the burden of proof. Buckley has admitted information that Rougee was to receive from Norvale or his company $5,000 and a block of the stock; but this admission, which is sufficient to explain and account for all of the statements in the several letters of Buckley upon which the plaintiff relies for his proof, is not equivalent to charging Buckley with knowledge of the exact interest as Rougee now claims it, equivalent to 25 per cent, of the stock of the Traction Company, for the evidence does not show, certainly not by a preponderance, that Buckley ever saw, or was apprised oí the contents and term?; of, the contracts of August, 1903. The suspicion, amounting almost to a knowledge which Buckley must have entertained, that behind Norvale .stood Rougee to some extent, was not, however, in our judgment, sufficient to put him on inquiry to ascertain the exact relationship between these parties and the extent and character of Rougee’s interest covered by Norvale’s apparent ownership, for Buckley owed no greater duty to Rougee than that he should not take advantage of the latter. •

When the Frankfort & Versailles Traction Company was organized, October 26, 1903, by Rougee’s active participation, all of the stock of the new company, except qualifying shares, was issued to Norvale. This was done upon the nomination of Norvale’s Municipal Bond & Securities Company, and the exhibition of a contract between it and Rougee which recited that all Rougee’s interest, of whatever nature, in the old enterprise had been acquired by the Bond & Securities Company. Rougee had produced Norvale, actively interesting him in this enterprise. The readiest inference from this situation would be that a consideration of some sort had passed from Norvale and his company to Rougee for the satisfaction of which Rougee was content to look to Norvale. There is nothing in the Buckley letter?;, explained as they are by him, and uninterpreted as they are because of the absence oí Rougee’s letters to him, inconsistent with the theory that this was Buckley’s state of mind.

Every scheme which Rougee and Norvale proposed had failed and things were getting worse all the time. Rougee had notice from Buckley in November, 1904, that a crisis had come with an important franchise to lapse within two months, that “if it don’t work out in the next two weeks we are all in the suds,” but he took no definite steps then to look after his interests. It was a month later when Norvale authorized Buckley to sell to the associates who are defendants here. There is no pretense that this sale was for other than an adequate consideration, or that the prospect to which the purchaser looked was anything better than a speculative profit which, itself, was dependent upon the addition of much active capital to be expended for repairs and additions. The expenditures for this purpose, added to the consideration paid to Norvale and assumed of old indebtedness, made the sale, months afterward, to the Rexiugtou Company so modest in the feature of net profit to the defendants that it is ineffective, of itself, to suggest any overreaching of Rougee.

_ The District Court made no error In the application of the law of the case, and we are of the opinion that it correctly decided the facts. Its decree is therefore affirmed, with costs.