Bawden v. Taylor

• Citation: 98 N.E. 941,254 Ill. 464
• Parties: BAWDEN v. TAYLOR et al.
• Decision Date: 21 June 1912
• Court: Illinois Supreme Court

254 Ill. 464

98 N.E. 941

BAWDEN

v.TAYLOR et al.

Supreme Court of Illinois.

June 21, 1912.

Appeal from Appellate Court, First District; on appeal from Superior Court, Cook County; Farlin Q. Ball, Judge.

Bill by Frederick J. Bawden against William H. Taylor and others. Judgment of the Appellate Court for the First District affirming a decree dismissing the bill, and plaintiff appeals. Affirmed.Chilton P. Wilson (Allen F. Rees, of counsel), for appellant.

Frank J. Loesch and T. J. Scofleld, for appellees.

CARTWRIGHT, J.

On March 4, 1908, Frederick J. Bawden, the appellant, and William H. Taylor, one of the appellees, were stockholders of the Taylor Publishing Company, organized under the laws of this state, engaged in the publication in Chicago of a trade journal called ‘The Engineer,’ There were 1,200 shares of capital stock, of which Bawden owned 400, Taylor 451, two employés 49, and 300 were in the treasury. On that day Bawden and Taylor entered into a written contract by which Bawden gave Taylor an option for 10 days to purchase his 400 shares for $66,250, payable as follows: $10,250 cash, $15,000 on May 1, 1908, $25,000 one year from the date of transfer of the stock, and $16,000 in two years from that date, with interest at 6 per cent. on the deferred payments, for which Taylor was to give notes, secured by bonds of the Hill Publishing Company of New York, of the face value of the respective payments. Taylor availed himself of the privilege given by the contract, and the stock was transferred to him on March 9, 1908, in exchange for cash, notes, and bonds, as provided by the contract. The notes were paid, with the exception of the last one for $16,000, and on January 18, 1909, Bawden filed his bill in this case in the superior court of Cook county against Taylor and the Taylor Publishing Company, praying the court to set aside the transfer of the stock, to require Taylor to surrender and deliver up the certificate, and to render a decree against Taylor for such amount as might appear to be due from a full accounting for Bawden's proportion of four-ninths of the assets of the Taylor Publishing Company. The grounds alleged for relief were that a confidential relation existed between Taylor and Bawden creating duties which were disregarded by Taylor in concealing the terms of a proposed sale of The Engineer to the Hill Publishing Company, and that Taylor was guilty of actual fraud in making false representations concerning the price that was to be received on such sale. The chancellor, having heard the evidence of the parties, decided in favor of defendants and directed a decree to be drawn dismissing the bill for want of equity. Bawden then asked leave to amend his bill by alleging that the option given by him to Taylor was void under the Criminal Code, as a gambling contract. The chancellor refused leave to file the amendment, and a decree was entered in accordance with his finding, dismissing the bill. An appeal was taken to the Appellate Court for the First District, where the decree was affirmed, and that court granted a certificate of importance and an appeal to this court.

[1]The chancellor did not err in refusing leave to amend the bill, as there was no element of a gambling transaction between the parties. Section 130 of division 1 of the Criminal Code (Hurd's Rev. St. 1909, c. 38), prohibiting gambling in grain or other commodity, stocks, or gold, was not intended to and does not make it a crime for one who is engaged in an ordinary and legitimate business transaction to obtain a price on stocks as a part of such transaction or incident thereto and where there is no attempt to use the contract as a cover for a wager on the price of stocks. Osgood v. Skinner, 211 Ill. 229, 71 N. E. 869;Kantzler v. Bensinger, 214 Ill. 589, 73 N. E. 874;Bates v. Woods, 225 Ill. 126, 80 N. E. 84. Taylor was negotiating for a sale of The Engineer to the Hill Publishing Company, and would only be able to effect the sale, if he secured Bawden's stock, and, that being a perfectly legitimate business transaction, he did not offend against the Criminal Code by obtaining from Bawden an agreement that he could have the stock for a certain price within a limited time.

[2] The facts out of which it is claimed that a confidential relation arose are that Taylor was the president and general manager of the Taylor Publishing Company, which published The Engineer, and that Bawden was a stockholder in the corporation and a brother-in-law of Taylor. The fact that Taylor was president and Bawden a stockholder did not create a confidential relation. The officers of a corporation are trustees for the stockholders as a body with respect to the business and property of the corporation, which is under their control and management for the benefit of stockholders generally; but an officer has no control over the shares of the individual stockholder and is not a trustee for such stockholder with respect to his stock. Officers of a corporation may purchase the stock of stockholders on the same terms and as freely as they might purchase of a stranger. Hooker v. Midland Steel Co., 215 Ill. 444, 74 N. E. 445,106 Am. St. Rep. 170; Cook on Stock & Stockholders, § 320; 10 Cyc. p. 796.

[3] There was no confidential relationarising out of the fact of relationship by marriage. Brothers-in-law do not uniformly trust and confide in each other in the management of their business affairs to such an extent as to establish the relation claimed, and in this case the evidence shows that Bawden distrusted Taylor, and had accused him of conduct at a stockholders' meeting held on January 7, 1907, which amounted to a flagrant breach of honor and showed a carefully planned scheme of malicious...