130 Mich. 531 | Mich. | 1902
(after stating the facts). The learned counsel for complainant state the theory of their case as follows:
1. Defendants secured complainant’s stock, and all the other stock, by fraud in misrepresenting material facts, and in concealing the secret agreement.
3. Defendants acted as trustees of the complainant and other stockholders, i. e., a fiduciary relation existed between them; and, when such relation exists, the trustee cannot retain a secret profit from the execution of the trust.
3. Defendants, being directors, could not profit by the sale, when such sale was brought about or influenced by their official action.
4. A trustee or agent cannot make a secret profit for himself as a result of his agency or trusteeship.
5. The agent cannot be a purchaser.
The principles of law stated in the above propositions are not disputed. Although the sale of the stock was a very advantageous one for the stockholders, yet, if the
“Mr. Lynn, within a week or 10 days of the final closing of the sale, met me, and said :
“ ‘We want you to stay in the company, sure, and I have got these bonds to sell. I want you to sell some of the bonds in Ann Arbor for us; and then I have got some other projects, too, — other gas companies, — I want you to be interested with me. You can control capital of your own and others in Ann Arbor, and I want to go in with you.. I want to have you go in with this company.’
“And I have heard Mr. Goulden and Mr. Bennett, several times (and had agreed with them, too), express their determination when they sold the stock to get right out. They didn’t want anything more to do with it. We saw there was a big storm coming here when the price of gas was_raised, and a fight before the council, probably, for a charter, so that they just wanted to get out. They had expressed themselves that way.
“ Q. In your presence ?
“A. In my presence several times, and I had agreed with them.
‘ ‘ Q. Agreed with whom ?
“A. With Mr. Bennett and Mr. Goulden.
*538 “ Q. That you would get out ?
“A. Yes; that we would close right out. And then Mr. Lynn came to me and said that Goulden and Bennett would stay in if I would; if I would stay in, why, they would give us five thousand of the bonds apiece. They had, of course, a lot more bonds — Mr. Lynn — than was actually paid for the plants, and those bonds were theirs; and they were very anxious to sell the bonds, and were selling them at a discount, at times, and also with a stock bonus of 25 per cent. Anybody that would take $1,000 of bonds would have $250 of stock.
“ Q. The stock bonus went with the bonds ?
“A. Yes; that went with the bonds. And Mr. Lynn said:
“ ‘ Mr. Goulden and Mr. Bennett will stay in if you do, and I want to have you. We need you three. You understand the business up there, and have a knowledge of the situation; and, in this fight that is going to come on us, we want your hearty support and help and assistance, and, if you will do that, we will give you the bonds and the accompanying stock.’
“ Q. He would give you how much of the bonds ?
“A. Five thousand of bonds and 25 per cent, of stock. * * *
“ Q. After having this conversation with Lynn, did you then see Mr. Bennett and Mr. Goulden, to see whether or not they had agreed to accept this offer if you did ? Did you talk that over with them ?
“A. Yes.
“ Q. Before you finally consummated it ?
“A. Yes.
“ Q. Now, let me see if I understand you. The contract was finally closed that day ?
“A. Yes.
“ Q. Did that five thousand that was paid you, or paid to either of these men, have anything to do with the price of the plant, according to the actual terms of your agreement ?
“A. Nothing whatever. That had been settled long before.”
Mr. Bennett’s version of the transaction is the same. This is all the evidence on the subject.
Under’ this record, complainant received every cent he contracted for. He was not deceived. The terms of the
Counsel’s statement that an agent cannot be a purchaser states the rule too broadly. An agent may purchase from his principal, so long as he acts in good faith, and his principal is informed of the situation. If the defendants or Mr. Beal had at one time been the agents for complainant to sell his stock, and afterwards complainant made a contract, with full knowledge of all the facts, to sell his stock to Mr. Beal, that contract would be binding. Directors, of course, stand in a fiduciary relation to the corporation itself. They do not stand in that relation, however, when dealing with other stockholders for the purchase or sale of stock. In the purchase and sale of stock between stockholders there must be some actual misrepresentation in order to constitute fraud. Mere silence is not sufficient.
Decree is affirmed, with costs.
Viz.: Tippecanoe Co. Com’rs v. Reynolds, 44 Ind. 509 (15 Am. Rep. 245); Deaderick v. Wilson, 8 Baxt. 108; Alexander v. Rollins, 84 Mo. 657; Crowell v. Jackson, 53 N. J. Law, 656 (23 Atl. 426); Gillett v. Bowen, 23 Fed. 625; Smith v. Hurd, 12 Metc. (Mass.) 371 (46 Am. Dec. 690); Spering’s Appeal, 71 Pa. St. 11 (10 Am. Rep. 684); Allen v. Curtis, 26 Conn. 456; Bloom v. Loan Co., 152 N. Y. 114 (46 N. E. 166).