Abbitt v. Gregory

• Decision Date: 04 November 1931
• Docket Number: 29.
• Citation: Abbitt v. Gregory, 201 N.C. 577, 160 S.E. 896 (N.C. 1931)
• Parties: ABBITT v. GREGORY et al.
• Court: North Carolina Supreme Court

160 S.E. 896

201 N.C. 577

ABBITT v. GREGORY et al.

No. 29.

Supreme Court of North Carolina

November 4, 1931

Appeal from Superior Court, Pasquotank County; Grady, Judge.

Actions by J. L. Abbitt, and by Mae Wood Winslow, by F. E. Winslow by Susan Frances White, by J. H. Aydlett, by Cornie White Abbitt, by T. S. White, Jr., who sues by T. S. White, as next friend, and by Mattie Toms White, against Willis N. Gregory and another, which were consolidated.Judgment for plaintiffs, and defendants appeal.

Affirmed.

Where purchaser of stock, with knowledge that stockholders' representative was fiduciary, secretly agreed to pay him more than stockholders received, purchaser was liable to stockholders for difference.

This and thirteen other actions were begun in the superior court of Perquimans county, N. C., by summons issued on May 25 1927.The plaintiff in each of said actions was formerly a stockholder of the Eastern Cotton Oil Company, a corporation organized and doing business under the laws of this state with its principal office in the town of Hertford, N.C.The defendants in each action are Willis N. Gregory, a citizen of the state of Virginia, residing in the city of Norfolk, Va and the Davison Chemical Company, a corporation organized and doing business under the laws of the state of Maryland, with its principal office in the city of Baltimore, Md.

During the months of May and June, 1926, the plaintiff in each of said actions sold and delivered to the defendantDavison Chemical Company the shares of stock in the Eastern Cotton Oil Company owned by him.These sales were negotiated by the defendantWillis N. Gregory, who was the general manager of the Eastern Cotton Oil Company.The relations, both business and social, between the said Willis N. Gregory and the plaintiff in each of said actions, at the time of said negotiations and sales, were such that each of said plaintiffs had and was justified in having implicit confidence in the said Gregory.It is alleged in each of said actions that the defendantWillis N. Gregory and the defendantDavison Chemical Company, pursuant to a secret agreement entered into by and between them during said negotiations, and prior to said sales, falsely and fraudulently misrepresented to the plaintiffs in said actions the price which the said Davison Chemical Company was willing to pay and did pay for the shares of stock in the Eastern Cotton Oil Company owned by said plaintiffs, and that the said Davison Chemical Company wrongfully paid to the said Willis N. Gregory, and the said Willis N. Gregory wrongfully received from the said Davison Chemical Company, a sum of money in excess of the amount paid by the said Davison Chemical Company to each of said plaintiffs for the shares of stock in the Eastern Cotton Oil Company sold and delivered by said plaintiff to the said Davison Chemical Company.The plaintiff in each of said actions prays judgment that he recover of the defendants the amount wrongfully paid by the Davison Chemical Company to Willis N. Gregory, and wrongfully received by Willis N. Gregory from the Davison Chemical Company in excess of the amount which was paid to said plaintiff by the Davison Chemical Company for his shares of stock in the Eastern Cotton Oil Company.

After the complaint had been filed in each of said actions, on the petition of the defendants therein, said action was removed from the superior court of Perquimans county to the District Court of the United States for the Eastern District of North Carolina for trial.Thereafter eight of said actions, on motion of the plaintiff in each action, were remanded by the judge of the United States District Court to the superior court of Perquimans county.The remaining six actions were retained in the District Court of the United States for the Eastern District of North Carolina for trial in said court.Subsequently an order was entered in each of the actions pending in the superior court of Perquimans county removing said action from said court to the superior court of Pasquotank county, for trial in the latter court.

At February term, 1930, of the superior court of Pasquotank county, each of the actions then pending in the superior court of Pasquotank county was referred to Hon. D. H. Bland, as referee, for trial, in accordance with the provisions of C. S. § 572 et seq.There were no exceptions to the orders of reference made in said actions; the parties to each action expressly waived the right to trial by jury.

At or about the time the actions pending in the superior court of Pasquotank county were referred to Hon. D. H. Bland, referee, orders were entered in the actions which had been retained in the United States District Court by the judge of said District Court, under Equity Rule 59(28 USCA § 723), referring said actions also to Hon. D. H. Bland, as special master.Thereafter it was agreed that Hon. D. H. Bland, as referee appointed by the state superior court, and a special master appointed by the United States District Court, should hear all said actions at the same time and place, and should file his reports as referee in the actions referred to him by the state superior court, in said court, and should file his reports as special master in the actions referred to him by the United States District Court, in said court.This agreement was entered into by and between the parties to all said actions, because the causes of actions alleged in the complaints therein, and the defenses set up in the answers filed in said actions, are identical.The facts alleged in the complaint in each action as constituting the cause of action on which the plaintiff therein prays judgment against the defendants, Willis N. Gregory and Davison Chemical Company, are substantially the same.

Pursuant to the foregoing agreement, Hon. D. H. Bland, sitting both as referee and as special master, heard all said actions at Elizabeth City, N. C., beginning on the 24th day of June, and continuing through the 27th day of June, 1930, when by consent the hearing was continued to the 10th day of July, 1930, on which day the taking of testimony was concluded.Thereafter, having first heard arguments by counsel for all the parties in said actions, Hon. D. H. Bland filed his reports as special master in the actions referred to him by the United States District Court, in said District Court, and at the same time filed his reports as referee in the actions referred to him by the superior court of Pasquotank county, in said superior court.He filed a transcript of the evidence taken by him at the hearing of said actions in each of said courts.In his report in each of the actions pending in the superior court of Pasquotank county, the referee referred to his findings of fact and conclusions of law in his report in the action entitled, "T. S. White vs. Willis N. Gregory and Davison Chemical Company," pending in the United States District Court, and by such reference embodied said findings of fact and conclusions of law in said report in so far as same are applicable in said action.

Upon his findings of fact and in accordance with his conclusions of law set out in his report in the above-entitled action, the referee recommended that judgment be entered in favor of the plaintiff, J. L. Abbitt, and against the defendants, Willis N. Gregory and Davison Chemical Company, for the sum of $3,753.06, with interest on said sum from May 6, 1926, and the costs of the action.

Both the plaintiff and the defendants in each of the actions pending in the superior court of Pasquotank county filed exceptions to the report of the referee in said action.The exceptions in all said actions were identical.At June term, 1931, of said court, all said actions came on for hearing upon the reports of the referee and the exceptions thereto, before his honor, Henry A. Grady, Judge Presiding, who rendered judgment as follows:

"J. L. Abbitt vs. Willis N. Gregory and Davison Chemical Company.

"Mae Wood Winslow vs. Willis N. Gregory and Davison Chemical Company.

"F. E. Winslow vs. Willis N. Gregory and Davison Chemical Company.

"Susan Frances White vs. Willis N. Gregory and Davison Chemical Company.

"J. H. Aydlett vs. Willis N. Gregory and Davison Chemical Company.

"Cornie White Abbitt vs. Willis N. Gregory and Davison Chemical Company.

"T. S. White, Jr., who sues by T. S. White, as next friend vs. Willis N. Gregory and Davison Chemical Company.

"Mattie Toms White vs. Willis N. Gregory and Davison Chemical Company.

"Each one of the above named plaintiffs, together with certain other stockholders of the Eastern Cotton Oil Company, prosecuted a civil action against the defendants, Willis N. Gregory and Davison Chemical Company, in the Superior Court of Perquimans County, North Carolina.Because of a diversity of citizenship, some of said actions were removed to the United States District Court for the Eastern District of North Carolina; and by order, duly entered, the causes named in the caption hereof, were removed to Pasquotank County for trial.As the same questions were presented in the several causes, both as to the law and the facts, an order was made in the State Court appointing David H. Bland, of Goldsboro, N. C., as Referee in each of said cases, and a similar order was entered in the United States District Court, appointing the said David H. Bland as Special Master in Chancery, to hear and determine the several causes pending in that Court.

"All of said causes were thereupon heard by said Referee and Special Master, and his reports in each case were filed in the respective courts from which he derived his authority; and upon the incoming of said reports, it was agreed between the partiesplaintiff and defendant that all exceptions

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