Smith v. Anderson, 110 N.Y.S. 191

Smith v. Anderson

110 N.Y.S. 191 | N.Y. App. Div. | 1908

Laughlin, J.:

The action is brought to recover the purchase price of 386 shares of the capital stock of the Manufacturers’ Commercial Company, which, it is alleged, was purchased and paid for by the plaintiff pursuant to an agreement between the plaintiff and defendant, whereby it was to be purchased by them on the understanding that the defendant was to save the plaintiff harmless and to reimburse the plaintiff the amount paid- for the stock and take over the same. The answer of the defendant put in issue many of the material allegations of the complaint and interposed three separate defenses. The first is that the agreement between plaintiff and defendant and the owners for the purchase of the stock was void as to plaintiff for want of consideration. With respect to this defense the order requires the defendant to furnish a bill of particulars of the specific words, acts or writings of the plaintiff or defendant or of the vendors of the stock or their respective agents or representatives, or any other facts or circumstances “ and the times and places thereof by or on account of which defendant claims that there was no consideration or a want of consideration for the plaintiff entering into or executing the agreement.” The order in this regard requires the defendant to set forth not the nature of his claim, but his evidence. It is alleged that the agreement was in writing and signed by the parties. The defense that there was no consideration for the execution of the agreement by the plaintiff is a sufficient specification ■ of *26the defendant’s claim. The plaintiff does not require to enable him to prepare for trial a bill of particulars of the defendant’s claim that there was no consideration. That would be requiring defendant to present either his evidence or his argument thereon. Plaintiff must show a consideration to warrant a recovery, and if he does, the defendant, by this defense, is permitted merely to impeach' the evidence offered by the plaintiff. The facts bring the case within the rule that a bill of particulars of allegations in an answer which are, in effect, merely denials of material allegations of the complaint will not be ordered. (Wilks v. Greacen, 120 App. Div. 311.) The-rule still obtains that where the pleading specifies the nature of the claim, that is sufficient, and the party will not be required to disclose his evidence. (Hamilton v. American Vote Machine Co., 24 App. Div. 544; Roberts v. Cullen, 40 N. Y. St. Repr. 672; Hazard v. Birdsall, 61 Hun, 208; Bennett v. Wardell, 43 id. 452; Brandt v. City of New York, 99 App. Div. 260; Stanley v. Block, 56 id. 549.)

The second defense is that the vendors released the plaintiff from any obligation on his part to purchase the stock before the purchase and delivery thereof. He is required to give a bill of particulars of the specific words, acts or writings upon which he relies as constituting the release. The observations already made and authorities cited render it clear that this part of the order should not have been granted, excepting to the extent of requiring defendant to state whether or not the release was express, and if so to set forth a copy thereof, and if implied from acts set forth in general terms, the nature of such acts.

The third defense alleges in effect that acts of the plaintiff and of others whose conduct he influenced and his failure to carry out certain agreements made with the defendant, resulted in depressing the market value of the stock from $110 to $85 a share at the time the plaintiff and defendant were obligated to consummate the purchase thereof. The material facts set forth in the defense, upon which the claim that plaintiff caused the depression in the market value of the stock is predicated, are in substance that the defendant was president and 'owner of the majority of the stock of the Manufacturers’ Commercial Company; that plaintiff had been a stockholder and president of the Metropolitan Finance Company, in *27which one Colgate and one Macy were also stockholders; that plaintiff was also president of the Bank of Long Island, in which Colgate and Macy were stockholders, and of which the latter was a director; that plaintiff represented and promised to the defendant “ that if a combination upon certain terms specified were effected between the Commercial Company and the Metropolitan Company,” plaintiff, Colgate and Macy would he able to and would effect for the Commercial Company loans upon its securities to the amount of $5,000,000, and that the rate of interest which the Commercial Company was paying for its loans would be so reduced as to save it about $50,000 a year; that upon the faith of such representation and such promise by the plaintiff to the defendant, and relying thereon, the defendant agreed to the combination between the companies upon the terms specified by the exchange of the entire capital stock of the Metropolitan Company for $200,000 preferred stock and $200,000 common stock of the Commercial Company, and the sale to plaintiff, Colgate and Macy and their associates of $100,000 preferred stock and $50,000 common stock of the Commercial Company for $100,000; that defendant, also upon the faith of said representation and promise and relying thereon, agreed as part of said combination to give to plaintiff, Colgate and Macy and their associates joint control of the . Commercial Company with the other stockholders, including the naming of half of the members of the board of directors and of the executive committee and the appointment of plaintiff as chairman of the executive committee, notwithstanding the fact that plaintiff, Colgate, Macy and their associates controlled less than one-third of the stock of the Commercial Company issued and outstanding; that plaintiff thereafter determined and planned to obtain the full and compjete control of the Commercial Company, of its board of directors and its management, and to depose defendant from his position as president thereof and thereby to obtain the control and management of the assets of said company, then amounting to about $4,900,00(1, and formed a conspiracy to that end with Colgate, Macy and others; that in carrying out this plan and conspiracy, the plaintiff and others of the conspirators, circulated false rumors with respect to the management of the Commercial Company for the purpose and with the effect of diminishing its power to borrow money, which was neees.*28sary for the proper prosecution of its business; that plaintiff, also in carrying out said plan and- conspiracy, utterly failed to carry out his promise to obtain said loans upon the security of the Commercial Company, with the result that the loans effected for said company through him, Colgate, Macy and their associates at no time amounted to $500,000 and that plaintiff utterly failed to effect the saving of interest to the Commercial Company, as promised; that in furtherance of said plan and conspiracy, Colgate and the plaintiff induced the defendant to sell to Colgate and Macy a sufficient number of shares of the common stock of the Commercial Company to enable plaintiff, Colgate, Macy and their associates, witli other stock obtained for them by the defendant, to control the company, upon the express representation, promise and agreement by Colgate and Macy to the defendant that the common stock so sold by the defendant to the company and the common stock owned by the defendant, Colgate and Macy, which together amounted to $690,000 par value, would be voted as a unit; that Colgate and Macy repudiated their said promise and agreement and refused to vote said stock as a unit and voted it without conference with or the consent of the defendant and used their control thereof to force the withdrawal of the defendant from the management of the Commercial Company and to place it under the full control of the plaintiff and his associates; that at the time said combination was effected between the Metropolitan and the Commercial Companies, some of the preferred stock of the Commercial Company sold at $110 a share, the price specified in the agreement between plaintiff and defendant and the owners of said 386 shares of the stock of said company and that as a result of the circulation of said rumors by plaintiff and of said other acts of the plaintiff and the other conspirators as set forth in the answer, and-of the failure of plaintiff to fulfill his said promise therein set forth, the preferred stock of the Commercial Company became depressed in price to $85 per share and that this depression in price existed at the date upon which the stock was to be purchased by plaintiff and defendant and was occasioned solely by the acts of the plaintiff and his fellow-conspirators, and but for their acts set forth in the answer, the stock would lpwe'been of the market value of at least $110 per share.

The order in subdivisions (f) and (g) relating to the third defense *29requires the defendant to furnish a bill of particulars of the false rumors with respect to the management of the Manufacturers’ Commercial Company alleged to have been circulated by the plaintiff and others alleged to have been conspirators, and of the parties by whom and to whom they were circulated and communicated. In this respect the order is proper, but in most other respects we deem it erroneous so far as it requires a bill of particulars of the third defense. With respect to that defense it requires a bill of particulars of the terms of the agreement for a combination between" the Manufacturers’ and tlie Metropolitan Companies specified in the answer as having been made upon “certain terms specified,” but not therein set forth. The terms of the agreement not specified are not material. The material charge is that in consideration for forming the combination plaintiff promised and agreed to do the things specifically set forth. The terms of the combination are not material. It is sufficient that the combination was consummated as contemplated. It also requires a bill of particulars giving in detail the words, acts or writings constituting the alleged agreement for joint control of the Manufacturers’ Company. The effect of this part of the order is to require the defendant to set forth the evidence upon which he will claim that such an agreement was made. This is contained in subdivision (d) of the order relating to the third defense. It should be modified by confining the bill of particulars to a statement as to whether the agreement for joint control was in writing, and if so, requiring defendant to set forth a copy thereof. If the agreement rests in parol, the evidence thereof may not be had by a bill of particulars, but plaintiff may, on proper application, obtain it by an examination of the defendant. Subdivision (e) of the order requires the defendant to give a bill of particulars of the words, acts or writings, “ or any other facts or circumstances,” and the times and places thereof by and on account of which defendant claims that plaintiff determined or planned to obtain control of the Manufacturers’ Company. This also requires the defendant to give a bill of particulars of his evidence, and as his claim is sufficiently set forth, the order in this respect is erroneous. By subdivision (h) of the same part of the order the defendant is required to give a bill of particulars of the effect of the false rumors in diminish*30ing the power of the company to borrow money, and the names of those who refused to loan it money on account of such rumors, and the amount so refused. The effect which the defendant claims the false rumors had is sufficiently set forth in the charge that it diminished its power to borrow money. The materiality of this allegation in the answer is not apparent, but since the defendant has seen fit to allege it, he was properly required to give the names of those, if any, who refused on account of the alleged false rumors to lend money to the company, and of the amounts so refused. By subdivisión (i) of the order the defendant is required to give a bill of particulars of the words, acts or writings, “ or any other facts or circumstances, and the times and places thereof, by or on account of which defendant claims ” (1) that plaintiff failed to carry out his promise to obtain loans on the securities of the Manufacturers’ Company; (2) that the loans effected by or through him and others at no time amounted to more than $500,000; (3) that he failed to effect a saving of interest; (4) that he induced defendant to sell stock to enable him and his associates to control the company; (5) that the express representation, promise and agreement by Colgate and Macy was that the common stock owned by them and defendant would be voted as a unit; (6) that they repudiated their promise to vote the stock as a unit; (7) that they voted the stock without conference with or the consent of the defendant and forced the defendant to withdraw from the management of the company; and (8) that but for said acts the stock would have been of the market value of $110 per share., The claim of the defendant with respect to all of these matters is sufficiently set forth, and the effect of the order is to require him to present his evidence in the bill of particulars. It is, therefore, erroneous. Subdivision (j) of the order requires a bill of particulars as to when, where and to whom and what amount of the shares of the preferred stock of the company sold at $110 per share. In this respect the order was proper.

It follows that the order should be modified as herein indicated, the order to be entered to be settled on notice, and as so modified affirmed, without costs.

Ingraham, Clarke, Houghton and Scott, JJ., concurred.

Order modified as directed in opinion, and as so modified affirmed, without costs. Settle order on notice.