69 W. Va. 790 | W. Va. | 1911
A corporation existing under the name of Searls '& Mullen, later called the E. A. Searls Company, in the business of selling furniture. E. A. Searls, W. C. Mullen and Elliott Northcott and others held stock in it. After a time question arose as to the conduct of the business. It seemed to be in bad condition. Mullen was treasurer and book keeper. Searls and Northcott were dissatisfied with Mullen’s action as treasurer and book keeper. Searls demanded that the books be gone over by himself and daughter and Mullen. This inspection was begun. It revealed that Mullen had drawn and appropriated from the corporate money about $4,000. This is not denied. The examination was not carried further. Disagreement between Searls and Mullen existed. Searls offered to sell his interest to Mullen or to give Mullen a certain sum for his interest. Mullen refused the offer of Searls. Searls brought a suit to settle and wind up the affairs of the company, or rather filed a bill in the clerks office. In the bill charges of conversion of corporate money were made against Mullen as treasurer. Shortly after the filing of this bill negotiations were carried on between Mullen and Searls and Northcott, which resulted in a sale and transfer by Mullen to Searls of the stock and interest of Mullen in the corporation. The suit was then dismissed. About four months thereafter Mullen sued Searls to cancel the transfer of stock from Mullen to Searls, charging that that transfer had been procured by fraud by Searls and Northcott and by duress. A great mass of evidence was taken, and a decree was rendered cancelling the said transfer, from which decree Searls and Northcott have appealed.
Take up first the charge of fraud. At the threshold of this case we must never forget a well known rule as a guiding star in it. To rescind for fraud proof of it must be very clear and full. Whitaker v. Improvement Co., 34 W. Va. 217; Greer v. O’Brien, 36 Id. 277. It may be stated that the bill is likely not good in this respect, because it shows on its face that when Mullen made the transfer of stock to Searls he was in possession of the facts upon which he predicates the charge of fraud. He claimed in his bill that the charge of misappropriation of money was set up against him; that certain credits against such money in
As to duress. Mullen rests his case also upon the charge of duress. There was no warrant sworn out, there was no arrest; but it is claimed that Searls threatened criminal prosecution. It is only necessary to say that the burden to show such duress is upon Mullen, and his evidence utterly fails to do so. It rests only on his own evidence and his 'wife’s, and is contradicted by Searls and Northcott and others confirmatory of them. On this duress matter the evidence decidedly preponderates against Mullen. The case shows that it was that suit brought by Searls to settle the corporation business that induced the compromise and sale. Mullen did not hastily make the sale. He says that he took a copy of the bill in that suit and notice of motion for a receiver to his counsel, and sedately advised with that counsel as to what he would do, and pursuant to his advice he made that sale. This counsel so states. . It was the civil suit that caused Mullen to accept the price which before he had refused. A civil suit is not legal duress. Whitaker v. Improvement Co., 34 W. Va. 217. The authorities differ as to whether a threat of a prosecution is duress. Claflin v. McDonnell, 84 Amer. Dec. 54, says not. I would think that a threat of prosecution which would result in imprisonment would be duress. Page on Contracts, section 251. But there is no proof of duress. After threat, as Mullen says, he rejected Searls’ offer to buy. Threat had not then influenced him.
If there was fraud, if there was duress, why did Mullen on the 18 January, 1909, sign a formal written contract by which he purchased from Searls and Northcott the entire corporate stock in the corporation with which he did not comply? Was this not
P'or these reasons we reverse the decree and dismiss the hill.
Reversed, and Decree for Defendants.