Schrier v. B&B Oil Co.

• Decision Date: 09 April 1945
• Docket Number: No. 11.,11.
• Citation: 18 N.W.2d 392,311 Mich. 118
• Court: Michigan Supreme Court
• Parties: SCHRIER v. B & B OIL CO. et al.

311 Mich. 118

18 N.W.2d 392

SCHRIER

v.B & B OIL CO. et al.

No. 11.

Supreme Court of Michigan.

April 9, 1945.

OPINION TEXT STARTS HERE Appeal from Circuit Court, Kalamazoo County; George V. weimer, judge.

Action by Harold D. Schrier against B & B Oil Company, Robert Buss and George J. Bolender for sale of stock contrary to the Blue Sky Law and for fraud, wherein jury returned verdict for defendants on both counts. From an order denying plaintiff's motion for new trial on the Blue Sky count and granting plaintiff a new trial on the fraud count, the plaintiff appeals.

Affirmed, and cause remanded for new trial on the fraud count.

Before the Entire Bench.

Frost, Frost & Ford, of Kalamazoo (Gerald T. Wiley, of Chicago, Ill., of counsel), for appellant.

Howard, Howard & Howard, of Kalamazoo, for appellees.

BUSHNELL, Justice.

Beginning in June of 1940, defendants Robert Buss and George J. Bolender were copartners in a fuel oil business in Kalamazoo. On May 1, 1941, these two defendants, together with their wives, formed B & B Oil Company, a Michigan corporation, which succeeded to the business of the partnership. Sometime during May, 1941, Buss and plaintiff Harold D. Schrier had a talk about the fuel oil business, and Buss stated to Schrier that Bolender was without experience, and his only contribution to the enterprise was to provide a part of the capital. Schrier is a petroleum engineer, in the employ of the Standard Oil Company of New Jersey. He has lived in Kalamazoo all his life. Buss explained that, with the aid of Schrier's practical experience, the business, although then making a nice profit, could be expanded. Schrier, after making some inquiries regarding Buss' representations gave Buss his check for $3,000 on June 24, 1941, in payment of 3,000 shares of common stock of the company. Prior to the date of this check a stockholders' meeting had been held on June 11th, at which Schrier was present, when the by-laws of defendant company were amended to reduce the number of directors from four to three. At this meeting the resignations of directors Emily Buss and Inez M. Bolender were accepted and Schrier was elected to the vacancy on the board. On June 16th the directors accepted the resignation of Bolender as vicepresident and Schrier was elected in his place. A meeting of the stockholders was held on September 19th, at which Schrier moved to amend the by-laws of the corporation to increase the number of directors to four, and W. Kent Kidder was elected to the vacancy. On the same day, at the directors' meeting at which Schrier was present, Kidder moved that a service and management charge of 8 1/2 per cent. per annum on $20,000 be charged to the service station at 355 E. Kalamazoo avenue, and, on Bolender's motion, regular meetings were provided for and it was agreed that each director in attendance should receive a fee of $10.

At a meeting in October, on motion of Kidder, the capital stock of the company was increases to $40,000, and Schrier, together with Buss, Bolender and Kidder, subscribed and paid $2,800 for 2,800 shares each, of the increase thus authorized. On Schrier's motion, a cash dividend of 6 per cent. on the increased capitalization was ordered payable in four instalments during the succeeding 12 months. At a special meeting of the stockholders in November, on Schrier's motion, the purposes of the corporation were broadened and the authorized capital stock was increased to $100,000. In November, Schrier reported the purchase of equipment for service station No. 2 at a cost of approximately $6,000, and, upon his motion, such purchase was ratified. At the December meeting certain difficulties with one E. H. Graff were discussed and action taken. At the adjourned meeting that same month it was agreed that equipment for recapping and retreading tires be acquired at a price of $7,300, plus freight. In January the purchase of vulcanizing equipment was authorized and alteration of the service station and purchase of other equipment discussed. At both a regular and an adjourned meeting in February, business in connection with service station No. 1 was discussed, and in March, on Schrier's motion, radio advertising was authorized. The April and May meetings were devoted to a discussion of company business in general, and the June meeting to the purchase of supplies of fuel oil for the 1942-1943 season. In July a new agreement as to rentals was entered into with Graff upon Schrier's motion, and at the annual stockholders' meeting in July, Schrier was re-elected a director, together with Buss, Bolender and Kidder, and was re-elected vice-president at the directors' meeting which followed. He was appointed on a committee, with power to act regarding the operation or disposition of service station No. 2. He participated in two meetings in August, and after the last of these, on August 12, 1942, the record is silent as to any further connection with the affairs of the company. However, Schrier attended each of the regular and special meetings of the directors and stockholders, from June 11, 1941, to the meeting of August 12, 1942, and participated in the conduct of the general business of the corporation at those meetings.

Schrier's first investment of $3,000 in the stock of the company was made, according to the minute book, after he had been elected a director and vice-president. The second investment in the sum of $4,200 was made on July 24, 1941, and his last investment of $2,800 was made after he had participated with others in authorizing an increase in the capital stock of the company.

On December 7, 1942, Schrier began an action at law against the company, Buss and Bolender for repayment of the total amount of his investment, charging in the first count of his...