195 Mo. 183 | Mo. | 1906
— This cause is here upon appeal from a judgment and decree rendered in the circuit court of the city of St. Louis. The cause of action upon which this decree and judgment rests is thus stated in the petition:
“Plaintiff, for cause of action, by attorney states that heretofore, to-wit, on or about the 5th day of June, 1901, the defendants, being the owners of twenty-five hundred shares of the capital stock of the Kier Lead Company, a corporation organized under the laws of the State of Missouri, desired to sell the same to plaintiff for the sum of eight thousand dollars. That in order to induce and persuade plaintiff to purchase the same, they represented to plaintiff that said Kier Lead Company had a capital stock of seven hundred and fifty thousand dollars, divided into seventy-five thousand shares of the par value of ten dollars each, and that said stock was fully paid up and non-assessable. That the said company had a tract of land in the county of St. Francois, and State of Missouri, of great value. That the company had no indebtedness save some inconsiderable debts owing to a few persons, amounting, in the aggregate, to less than eight thousand dollars, and that it was for the purpose of paying off and discharging such indebtedness that they desired to sell said shares of stock. The defendants further stated to*187 plaintiff that they themselves had invested in the company more than seventy thousand dollars, twenty thousand dollars of which had been expended in boring said land in St. Francois county.
“Plaintiff further states that believing the said representations and statements to be true, and being influenced thereby, he did, on said 5th day of June, 1901, purchase from the said defendants, the said twenty-five hundred shares of stock, being certificates No. 120 for 1,000 shares; No. 121 for 1,000 shares, and No. 122 for 500 shares, paying them, the said defendants, therefor the sum of eight thousand dollars, which sum was paid in the following manner; two thousand dollars in cash on said 5th day of June, 1901, and six thousand dollars in the shape of a draft or acceptance for said amount dated June 5, 1901, at. four months, drawn by the defendant, Henry L. Whitman, •on plaintiff and by plaintiff accepted.
Plaintiff further states that each and every of the said representations and statements made by defendants to plaintiff as aforesaid was false, and was known by defendants to be false at the time the same was made, and that said false representations and statements were willfully made by defendants for the purpose of deceiving, misleading, cheating and defrauding plaintiff.
“That said Kier Lead Company’s stock was not fully paid up and but a trifling amount had been paid thereon. That its property in St. Francois county had a speculative and unsubstantial value only, and was subject to a deed of trust made to secure the payment of one hundred thousand dollars, being almost the entire purchase price thereof. That the company had no assets save the equity of redemption in said St. Francois county land. That the defendants had not invested seventy thousand dollars in said company, but had invested only twelve hundred and fifty dollars each, and had never expended a dollar in boring said land. That*188 defendants did not desire the said eight thousand dollars for the purpose of paying debts of the company, but for their own private use, and plaintiff avers that they did apply the cash and the proceeds of said draft for sis thousand dollars, which they discounted, to their own private uses.
“Plaintiff further states that upon the maturity of the said draft he refused to pay the same, and it was duly protested for non-payment, and has since been taken up and is now held by defendants.
‘ ‘ Wherefore, and on account of the premises, plaintiff herewith tenders defendants said twenty-five hundred shares of stock and prays for a decree of this honorable court rescinding the said sale, ordering and requiring defendants to pay back to plaintiff said sum of two thousand dollars with interest thereon from June 5, 1901, ordering and directing defendants to surrender said draft or acceptance to plaintiff for cancellation,, and enjoining and restraining them from negotiating' or otherwise disposing of the same, and for such other and further relief as to the court may seem just and proper.”
The answer to this petition in substance avers that plaintiff purchased this stock on May 3, 1901, paying for it on June 5, 1901, as alleged in the petition; that the 2,500 shares of stock stood on the books of the company in defendant’s names,' and that they were authorized to sell and did sell them for themselves and as agents' or trustees of William H. Miltenberger, all of which plaintiff well knew. Further answering defendants deny the other allegations of plaintiff’s petition generally, and in addition set up a counterclaim for the mnount of the draft, $6,000, which they were obliged to take up at maturity, and $240 statutory damages because of its non-payment.
The reply denies the allegations of the answer in extenso, and repeats the allegations of the petition.
In December, 1900, Jacob Day was and for many years had been the owner of a certain tract of land in St. Francois county, Missouri, known as the “Day farm,” and containing three hundred and fifty-eight acres. It was situated in the lead district of St. Francois county; was of small value for agricultural purposes, but of considerable value for lead mining purposes, if the fact that it contained lead in quantities justifying mining operations could be satisfactorily established. From time to time various parties, some three or four in number, had secured options on the land, and had bored or drilled it with diamond drills. The result, in each and every case, was that each of the parties abandoned his option and contented himself with the loss of the money paid for the option and expenses in boring or drilling. During that year Wm. II. Miltenberger and Wm. C. Doak, two promoters, learning of the situation, secured an option on the land, paying so much a month therefor, and later decided to take a deed for the land, give a deed of trust back for the unpaid purchase money, form.a corporation with a large capital stock, convey to it their ownership in the land and then sell stock. In order to raise the amount of cash required to make a payment on this land, and not desiring their names to be used in ■connection with it, it was necessary to associate others with them. The men selected for the purpose were the ■defendants in this case, Dr. Kier, a practicing physician of the city of St. Louis, and Mr. Whitman, the secretary of an agricultural machine manufacturing company. The plan agreed, upon and carried out by these four people was as’ follows: They were to contribute $1,250 each and thus raise the $5,000 required for the cash payment. The $5,000 was to be paid to Jake Day, a deed for the land was to be taken in the name of W. S. Browning, and Browning was to execute
Several months after the company was organized the respondent, Z. W. Tinker, a wealthy man, engaged
“St. Louis, Missouri, May 3, 1901.
“Mr. Wm. H. Miltenberger, City:
.“Dear Sir: — I will take the 2,500 shares stock in the Kier Lead Company spoken of by Mr. Whitman, for eight thousand dollars. Will call on you in regard to same upon my return from New York.
“Sincerely,
“Z. W. Tinker.”
Respondent testified that this memorandum was written at the request of Mr. Whitman, the latter even writing the memorandum in pencil and handing to him to copy, which he did.
In company with Miltenberger respondent visted Dr. Kier at his home on Lindell avenue; that Mr. Whitman was present at this meeting. At this meeting matters generally were discussed and a proposition was made to him to elect a new board of directors. That a second visit was made to Dr. Kier’s house, at which time Mr. Miltenberger and Mr. Tate, the manager of the Columbia Theater, were present. On this visit Mr, Tate and Dr. Kier had quite a conversation as to the amount of capital they had invested in this property, and that he heard Dr. Kier tell Mr. Tate that they had upwards of $70,000 in money in the property. That a proposition was made to him to sink and equip a shaft on this property for ten thousand shares of stock. As to when this proposition was made it is not clear from the testimony, but that it was after the letter of May 3rd. That as the shaft would cost about forty thousand dollars the question required some consideration on his part. At the various interviews had upon the subject it was urged upon the respondent that the stock would go to par as soon as the shaft was in lead. Negotiations still pending, the four promoters had their attorney, Mr. Wind, put the matter in the form of a written con
In the meantime, May 25th, Tinker purchased from Miltenberger and Browning 4,500- shares at two dollars per share. On the 5th of June Whitman tendered the 2,500 shares referred to in the talk at Faust’s and in* Tinker’s letter of May 3rd, and Tinker having at that time no suspicion of the real state of affairs, accepted them, paying two thousand dollars in cash and six thousand dollars in a four months’ acceptance, drawn on him by Whitman. The two thousand dollars was in the shape of a check, to the order of Whitman, at his request, he stating that the company had no hank account and that he was the president and attended to the company’s finances. No part of the $8,000- was used to pay the debts of the company, but the whole was divided amongst the four promoters.
Thus matters rested until sometime in the latter part of August or the fore part of September, when Miltenberger, having quarreled with his associates, met Mr. Tate at the Columbia Theater. What their conversation was does not appear verbatim, but Tate learned and promptly advised Tinker of the real facts in the case.- Tinker then learned for the first time that the matters had been misrepresented to him by the four promoters, and that at the time they came- to him they
Mr. Tate testified that he was the manager of the Columbia Theater, and that Mr. Tinker, being one of the principal stockholders in that company he was on close confidential business relations with him. He details an account of a trip he made to the lead district of St. Francois county in company with Mr. Tinker and Mr. Miltenberger, sometime in the latter part of April; that this trip was made by Mr. Tinker for the purpose of visting the agents of his brewing company, and to see the Day land. That during the month of May and about ten days after this trip to the lead district, at the request of Mr. Tinker he accompanied him on a visit to Dr. Kier’s house; that respondent suggested to him that he get as much information as he possibly could on this visit. That those present at this meeting were Kier,- Miltenberger, Tinker and himself. That Dr. Kier was delighted to have Mr. Tinker join him in the enterprise and that during the conversation and in the presence of Tinker and Miltenberger he asked Dr. Kier how much money he had in the enterprise, to which the doctor replied: “Why we have got upwards of $70,000; I have just put money in it, been bothered with it, been up to the Boatmen’s Bank and fixed it with old man Lackland to supply the money, have just been sinking money in it ever since I have had it. Now I want to get somebody in it that has got some money, and put it on
We have carefully read in detail tbe evidence of tbe defendants as disclosed by tbe record; it can serve no good purpose to give tbe details of their testimony, but it will suffice to state tbat their testimony tended substantially to show tbat Tinker was, prior to bis purchase of the 2,500 shares, fully informed by them of the fact tbat they bad paid but $5,000 on tbe land; tbat there was a deed of trust on tbe land for $104,800; tbat tbe drilling which bad been done on tbe land was done by prior companies; also tbat tbe proceeds of tbe 2,500 shares were to be divided amongst tbe four promoters to reimburse them for tbe $5,000 they bad paid on tbe land, and about $2,000 which they bad expended in office rent and miscellaneous expenses. They denied tbat they bad represented to him tbat they bad invested $70,000 in tbe property, $20,000 of which bad been spent in drilling tbe land.
As to what was paid for tbe property and tbe existence of tbe Day deed of trust, Dr. Kier testified tbat either at the meeting at Faust’s or very shortly thereafter at tbe next meeting, four or five days afterwards, Tinker was told tbat only $5,000 bad been paid for tbe property and tbat there was a mortgage of $104,800 on tbe property. Whitman testified tbat respondent asked him one time what they bad in tbe property and tbat be evaded tbe question. He testified tbat be thinks be told Tinker about tbe existence of tbe Day deed of trust
Mr. Tinker was recalled in rebuttal and repeated practically the former testimony; he denied the statments of the other witnesses in relation to his knowledge of the existence of the hundred thousand dollar deed of trust and stated that he did not hear of it prior to August, 1901. ■
This is a sufficient indication of the facts in this
At the close of the testimony the cause was submitted to the court and the following decree and judgment was rendered:
“Now at this day come the parties, plaintiff and defendants by their attorneys, and the cause having been submitted, the court being fully advised in the premises, doth find the issues therein joined in favor of the plaintiff. And the court doth order, adjudge and decree that the contract between plaintiff and defendants set forth in the petition, for the purchase of twenty-five hundred shares of stock (being certificate No. 120, for one thousand shares, certificate No. 121 .for one thousand shares and certificate No. 122 for five hundred shares) of the Kier Lead Company, be and the same is hereby rescinded, cancelled and for naught held.
‘ ‘ The court doth further order, adjudge and decree that the bill of exchange mentioned in said petition and given defendants by plaintiff under said contract in part payment for said shares of stock, said bill of exchange being dated at St. Louis, Missouri, June 5,1901, drawn by the defendant Henry L. Whitman, directed to plaintiff by and under the name of Z. W. Tinker at the said city of St. Louis, requesting the said Tinker to pay to the order of said Whitman four months after the date of said bill of exchange the sum of six thousand dollars, which bill of exchange was on the day of the date thereof accepted in writing by plaintiff under the said name of Z. W. Tinker, and was thereafter indorsed by the defendant William F. Kier, and which bill of exchange was filed in this cause as an exhibit to the answer of the defendants herein, be and the same is hereby cancelled and adjudged to be null and void and of no force and effect, and defendants are required and ordered to surrender and deliver the same to plaintiff.
“The court doth further o^der, adjudge and de*199 cree that plaintiff have and recover from the defendants, jointly and severally, the sum of two thousand dollars paid them by him on June 5, 1901, in part payment for said shares of stock, together with interest thereon, amounting in the aggregate to the sum of two thousand two hundred and twenty dollars, and that he have execution therefor.
‘ ‘ The court doth further find the issues on the counterclaim filed by defendants in favor of plaintiff. The court doth further order that the defendants 'William F. Kier and Henry L. Whitman pay the costs of the action, and that plaintiff recover his costs from said defendants and have execution therefor.”
Motions for new trial and in arrest of judgment were timely filed and by the court taken up and overruled. From the judgment and decree rendered in this, cause the defendants prosecute this appeal and the record is now before us for consideration.
OPINION.
The record in this cause presents but one proposition for consideration, that is as to the sufficiency of the evidence to support the decree and judgment rendered by the trial court.
This is an action to cancel and rescind a sale of stock in the Kier Lead Company and to compel the refunding of money paid for the same, on the ground of certain false and fraudulent representations, which are fully set out in the petition. There is no dispute as to the law upon the subject involved in this controversy. That plaintiff must establish to the satisfaction of the chancellor that the representations made by defendants were false, that such representations were in respect to material facts in this transaction and that plaintiff relied upon such representations and was thereby induced to enter into the contract and was thereby
We are 'simply confronted in this record with a pure question of fact; in other words, is the evidence disclosed by the record sufficient to support the judgment and decree of the trial court 1 That the testimony in this cause is in conflict is plainly disclosed by the record.
We have carefully read in detail all the testimony in this cause and if the testimony of the respondent, corroborated as it is in some material particulars by witness Tate, was believed by the trial court, it affords ample support upon which the decree and judgment must rest. At the very inception of the consideration of this controversy we find the respondent without experience in the business, enterprise sought to be inaugurated by the promoters, in other words, a stranger to the business in which the corporation was about to engage; he, therefore, had the right to rely upon the representations of the defendants, who were the promoters of the' enterprise. [Hess v. Draffen & Co., 99 Mo. App. 580, and cases cited.]
Plaintiff clearly testified as to the representations made by defendants, as well as his reliance upon them, which induced him to purchase the stock in the corporation. Doubtless the trial court felt that the reasonable probability of the truth of the testimony of the plaintiff and witnéss Tate was emphasized by the disclosures of the true nature and character of the enterprise sought to be inaugurated, as it appears from the record in this cause; for it is nearly impossible to conceive how any man possessed of the slightest business intelligence would have purchased the stock in the Kier Lead. Company had all the facts been disclosed to him as contended by appellants. Plaintiff testifies that defendants represented that this corporation was free from debt, except about eight thousand dollars, and that his purchase
This corporation did not have a dollar in its treasury and its only assets was a mere shadow, consisting of an equity of redemption in the St. Francois county land, upon which there was a deed of trust for over one hundred thousand dollars. However, it is earnestly contended by learned counsel for appellants that this incumbrance upon the land was not a debt of the corporation, but simply a debt by Browning who executed the notes and deed of trust for the balance of the purchase money. While it may be true that this corporation was not liable for this indebtedness, evidenced by the Browning note, it is equally true that this land was the basis and foundation of the corporation, and if the corporation was formed for any purpose other than to get some one to buy stock, it was for the purpose of mining operations upon this land, and unless the promoters expected to assume this indebtedness and hold this land as their capital stock, then we confess that the whole transaction must be treated as the basest fraud upon the public or individuals who might deal with it. The entire talk with respondent related to this valuable lead land, which was understood to be the entire asset of the corporation, and if appellants represented to respondent that this corporation was free of debt, a court of equity would be of dull conscience that would not treat such representations as it would naturally be understood by the party to whom the representations were made. It would be folly to say that representations' were made that a corporation was entirely solvent and not indebted, when as a matter of fact its entire assets, were covered by a deed of trust for over one hundred thousand dollars. A representation that a corporation is free of debt must be treated as it would ordinarily be regarded, that the body or assets of the corporation was not encumbered.
The same conflict of evidence is disclosed as to
In Carter v. Dilley, 167 Mo. l. c. 571, this court in
To the same effect was Dunivan v. Dunivan, 157 Mo. l. c. 160. It was said by this court in that case: “Appellant urges this court to review the testimony and reverse the finding of fact by the trial court as to the notice of and participation in the fraud by defendant Milner, and to enter a decree here in his favor. This court will examine the facts in equity cases and render a judgment for the right party, notwithstanding the finding of the trial court. But proper deference is always accorded the finding of the trial court, especially where witnesses were present in that court and testified orally, and its conclusions and findings will not be lightly treated nor arbitrarily disturbed. It is only where the result is manifestly wrong that this court will Set aside the finding of facts of the trial court, in equity cases.”
We see no necessity for pursuing this subject further. Turning to whatever page of the record disclosing the testimony in this cause you may see fit and we are confronted with the same conflict in the evidence by all these parties, all of whom, as heretofore stated, have some interest in this controversy. All of these witnesses were present and testified orally before the trial judge, who during his occupancy of the circuit bench
We have carefully reviewed the evidence of all the witnesses, and we have no hesitancy in saying, after a.careful consideration of the history, nature and character of this new enterprise, that the decree and judgment rendered by the trial court is fully supported by the testimony elicited upon the trial and is in harmony with good conscience, justice and equity.
The decree and judgment of the trial court should be affirmed, and it is so ordered.