Milwaukee Gold Storage Co. v. Dexter

99 Wis. 214 | Wis. | 1898

Cassoday, C. J.

The facts stated are either conceded, or found by the court to be true, and the evidence is sufficient to support the findings. Upon such facts, therefore, the rights of the parties must be determined. Counsel for the plaintiff seek to bring the case within the rulings of this court in Pittsburg Mining Go. v. Spooner, 74 Wis. 307; Fountain Spring Parle Go. v. Roberts, 92 Wis. 345; Franey v. Warner, 96 Wis. 222; Mebgen v. Koeffler, 97 Wis. 313. In the first of these cases the rule of law applicable was tersely stated in a quotation from the opinion of a court in another jurisdiction, as follows: “A trustee or agent cannot purchase on his own account what he sells on account of another, nor purchase on the account of another what he sells on his own account; . . . and, if he does so, the cestui gue trust or principal, unless, upon the fullest knowledge of all the facts, he elects to confirm the act of the trustee or agent, may repudiate it, or he may charge the profits made by the trustee or agent with an implied trust for his benefit.” 74 Wis. 320. In the second case cited it was held that the “ promoters of a corporation are accountable to it for any profits which they may receive from a violation of their duty as such.” In-all of them the persons held liable were promoters of the corporation, or the contemplated corporation, in the purchase and sale of the lands, or agents or trustees of such corporation in making such purchase or sale, or both. This is not such a case.

The defendant Dexter had closed his contract for the purchase of the land from Lindsay Bros., and paid $6,000 of the purchase price thereon, more than two weeks before the time when anything was said about, or done towards, the formation of the plaintiff corporation. That contract bound the defendant personally to erect and construct the buildings, machinery, and outfits necessary for the cold storage business, and to operate the same for seven years, and to pay the balance of the contract price as agreed, and not to transfer the contract, nor his right in the premises, without the approval of Lindsay Bros. We must therefore consider the land as the property of the defendant Dexter at the time the formation of the plaintiff corporation was first contemplated by him. His original purpose of constructing such cold storage buildings, machinery, and outfits himself, and then to operate the same for the period mentioned, was apparently changed by extraneous circumstances into a purpose of doing the same through a corporation in which he and his wife should own at least a majority of the stock.

His prospectus for such corporation stated, “Cost of ground, $40,000.” It is contended that this was a representation to the contemplated subscribers for stock that the land had actually cost .him that amount. A prospectus is naturally supposed to be prospective in its application. In the instant case it was the summary or outline of the plan or scheme for the proposed cold storage undertaking. The $40,000 named was manifestly to be the cost of the ground to the proposed corporation, not the amount which it may have cost the defendant Dexter, or some prior purchaser.

It is contended that, because the defendant Dexter purchased the land of Lindsay Bros, for $22,500, it was only worth that amount. But Lindsay Bros, had other real estate in the vicinity, and the conditions exacted by them from the defendant Dexter in the contract, to construct and operate such cold storage plant thereon, may have been regarded as a great advantage to them, and as a sufficient inducement to accept for the land $7,500 less than at first exacted. The location of the land may have been such as to make it of much more value for the purposes of such cold storage business than for any other use. There is no evidence in the record as to the value of the land at the time of the incorporation of the plaintiff, except such inferences as may be drawn from the contract price and the price exacted.

It is true that the defendant Dewier did not disclose to any of the subscribers to the stock in the plaintiff corporation the amount which he had agreed to pay Lindsay Bros, for the land, and none of them knew, except E. J. Lindsay, and the defendant Godfrey had reason to believe that he was to receive more from the corporation than he had agreed to pay; but none of them made any inquiry, and it does not appear that any false statement or misrepresentation was made by Dexter to any one. The land was open and visible, and well known to all the subscribers; and each knew the price which the plaintiff was to pay for the same, and each knew, or could have ascertained, the condition and value of the land at and prior to the time of subscribing for such stock. The defendant Dexter had large experience in the business of cold storage warehousing, and owned letters patent on certain devices used in such business, and manifestly believed it would become a p"ofitable enterprise. Since the defendant Dexter had obtained the land, and paid more than one fourth of the purchase price, weeks before there was anything said or done, or apparently contemplated, about the formation of the plaintiff corporation, and since the several stockholders subscribed with such knowledge or means of knowledge in respect to the value of the land and the price the plaintiff was to pay for the same, and without being influenced by any false statement or misrepresentation, and without any breach of duty or trust on the part of the defendants or either of them, there seems to be no foundation for claiming that the plaintiff, or any subscriber to its capital stock, was defrauded or injured, merely because the defendant Dexter personally paid to the defendant Godfrey $4,000, to induce him, as a commission man, to subscribe, or procure the subscription of other commission men, for.the balance of the $100,000 capital stock in order that the plaintiff might secure the valuable patronage of such commission men in the proposed cold storage business; nor because the defendant Dexter personally paid to E. J. Lindsay, after his subscription to the stock, $550, in order to remove his apparent dissatisfaction for having sold the land so cheapty,— especially as the contract precluded Dexter from transferring the same to the plaintiff or any one, without the approval of Lindsay Eros.

The question recurs whether the plaintiff is entitled to recover from the defendants, or either of them, upon the facts stated. Certainly there is nothing said in any of the ca’ses cited above to warrant a recovery in such a case as this. In fact, the intimation in some of those cases is strongly to the contrary. Thus, in Franey v. Warner, 96 Wis. 222, Mr. Justice Marshall said: “Cases cited, where a person sells his own property to a company in which he is interested, at an increased price, fairly and openly, free from representations that he is selling the property of another, have no application to this case.” Numerous adjudications are there cited in support of that proposition, and it seems to be applicable to the case at bar. In the language of Mr. Justice Shakswood in Densmore Oil Co. v. Densmore, 64 Pa. St. 49: “ 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 others, and sell that property to the association at any price which may be agreed upon- between them, no matter what it may have originally cost, provided there be no fraudulent misrepresentation made by the vendors to their associates. They are not bound to disclose the profit which they may realize by the transaction.” ,

The defendant Dexter was not the agent or trustee of the plaintiff or any one at the time he obtained the land of Lindsay Bros. Id. Neither of the defendants stood in any confidential relation to any of the subscribers to the capital stock until some step was taken towards the formation of the plaintiff corporation. These views .are supported by In re Cape Breton Co. 29 Ch. Div. 795; Ladywell Mining Co. v. Brookes, 35 Ch. Div. 400; 8. C. 17 Am. & Eng. Corp. Cas. 22. Thus, in the recent case in the house of lords the lord chancellor, Hekschell, said: “It is of the very essence of such a case as this to show that the price at which the property was sold to the company was in excess of what has been called the real price, or the true value. ... I admit that there may be considerable ground for suspicion that the price was in excess of it. But, obviously, for such a case as the appellant seeks to make out here much more than that is necessary. It is of the very essence of the case, which rests upon his proving what he claims, namely, a secret profit improperly made, that he should prove that there has been that excess which he alleges.” Bentinck v. Fenn, 12 App. Gas. 659. There is nothing in the celebrated case of Erlanger v. Few Sombrero Phosphate Co. 3 App. Cas. 1218, in conflict with the principles stated. That case is clearly distinguishable from the one at bar upon its facts, but the principles which govern this case are recognized in that. Upon the facts found or admitted, the trial court properly held that this action could not be maintained.

The brief and supplement on the part of the defendant Dexter cover 135 printed pages, and are in violation of the. rules of this court. If the printed case is incomplete or inaccurate in any substantial particular (but not otherwise), the opposite party may serve a supplemental case with references to the record, as in the principal case, making the corrections; but'no costs shall be taxed for the printing of any case or supplemental case failing to comply with the rule. Rule Till. “ The brief .of the appellant or plaintiff in error must contain a concise statement of (1) the nature of the action and the issues involved; (2) the result of the trial or hearing in the ■ court below; (3) the several errors relied upon for reversal; (4) in cases depending upon the evidence, the leading facts or conclusions which the evidence establishes or tends to prove; (5) the principles of law applicable to the case, and the authorities in support of the same.” Rule IX. “ The leading facts or conclusions which the evidence establishes or tends to prove ” does not mean a recital or restatement of the evidence, but merely that such facts or conclusions should be stated, with a reference to the names of the witnesses and the places in the printed case where the evidence which establishes or tends to prove such facts or conclusions may be found. The rule prohibits extended discussion upon a mere question of fact in any brief. To reprint in a brief what is printed in the case merely incumbers the record and increases the expense, without being helpful to the court. A party failing to comply with the rules takes the chances of losing costs. The defendant Dexter is only to be allowed for fifty pages of printed brief.

By the Court.— The judgment of the superior court of Milwaukee county is affirmed.

As to the duties and liabilities of promoters to the corporation and to its members, see note to Yale Gas Stove Go. v. Wilcox (64 Conn. 101), in 25 L. R. A. 90.— Rep.