Patton v. Commonwealth Trust Co.
| Decision Date | 03 January 1923 |
| Docket Number | 4,6,3,2 |
| Citation | 276 Pa. 95,119 A. 834 |
| Parties | Patton et al. v. Commonwealth Trust Co., Executor, et al |
| Court | Pennsylvania Supreme Court |
Argued October 5, 1922
Appeals, Nos. 6, 2, 3, and 4, May T., 1923, by plaintiffs from decrees of C.P. Dauphin Co., Equity Docket, Nos. 672 673, 686 and 674, dismissing bills in equity, in case of J. Hervey Patton et al. v. Commonwealth Trust Co., Executor of William T. Hildrup, Jr., deceased, D. E. Tracy, Wm. P. Starkey et al. Affirmed.
Bills in equity to set aside sale of stock, and for accounting. Before HARGEST, P.J.
The opinion of the Supreme Court states the facts.
Bills dismissed: 25 Dauphin Co. R. 316. Plaintiffs appealed.
Errors assigned, inter alia, were decrees, quoting them.
Each of the four appeals is dismissed at the costs of the respective appellants.
J. W. Swartz, of Swartz, Swartz & Swartz, with him Beidleman & Hull, for appellant.
Owen J. Roberts and Charles L. Bailey, Jr., with them William S. Snyder and Charles H. Bergner, for appellees.
Before MOSCHZISKER, C.J., FRAZER, WALLING, SIMPSON, KEPHART, SADLER and SCHAFFER, JJ.
These four cases against the same defendants were argued together and, as they involve the same questions, we will so treat them. They are companions to the case of Kinter v. Commonwealth Trust Co., 274 Pa. 436, where we held plaintiff's bill properly dismissed on the ground of laches. The bill was filed, in each of the five cases, to set aside the sale of the respective plaintiffs' stock in the Harrisburg Pipe & Pipe Bending Company, to William T. Hildrup, Jr., et al., on the ground of fraud. In March, 1915, Hildrup, an executive officer of the corporation, secured one year options on the stock of the respective plaintiffs, by virtue, inter alia, of a circular letter sent to all stockholders; and nine or ten months thereafter closed the option contracts by accepting and paying for the stock. As the general features of the five cases are similar it is needless to restate here the facts appearing in the Kinter case; our main question is, whether there is a controlling difference between the instant cases or any of them and that case. With this in view we have carefully examined the four records now before us and, while some of the defects pointed out in the Kinter case have been cured here by amendments to the bills, others have not, and, on the vital question of laches, there is no crucial difference.
In the bill of J. Hervey Patton, laches appears more clearly than in the Kinter case. Patton, residing in Harrisburg, was a charter member of the corporation and one of its two largest stockholders (he and Hildrup each owning 4,004 shares of the par value of $50 each), and, more, Patton was a director and salaried officer of the corporation. With all he knew, and had the opportunity of knowing, of the corporation and its business, it is unthinkable that he had no notice or means of knowledge, for over five years, of the alleged fraud perpetrated upon him in the transfer of his stock to Hildrup. The other three appellants (plaintiffs), viz: Waldo Newcomer, Ernst Schmeisser and Florence Basshor, resided in Baltimore and, while we called attention to the local residence of Kinter, as we have here to that of Patton, it is not a controlling circumstance. The other facts and circumstances to which reference is made in the Kinter case are present in each of the instant cases, except that one or two of the plaintiffs deny having seen the annual statement for 1915, prior to the transfer of the stock, but such statement could have been had for the asking. True, it is averred that Patton, as the innocent agent of Hildrup, made certain false representations to the other appellants to induce them to execute the options, but that was early in March, 1915, and they had about ten months thereafter to ascertain the truth of such representations before they actually parted with their stock.
The conditions at the plant, when the options were given in March, 1915, and from that time on until and long after the actual transfer of the stock, were such as to warn all interested parties that munitions were being made there in large quantities. In fact the plant ordered $140,000 worth of lathes for war work in February, 1915, and early that year not only erected an addition to the plant for that purpose but began the delivery of shells.
The mere fact of taking options on the stock at par, when, just prior to that time, the corporation was considered insolvent and its stock worthless, was itself a cogent circumstance that war contracts or others of equal importance, were in sight. The known facts and circumstances existing prior to the actual transfer of the stock were such as should have led to an...
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