Bell v. Carroll

• Decision Date: 18 December 1925
• Parties: Bell, et al. v. Carroll.
• Court: United States State Supreme Court — District of Kentucky

212 Ky. 231

Bell, et al. v. Carroll.

Court of Appeals of Kentucky.

Decided December 18, 1925.

1. Banks and Banking — Complaint for Rescission of Contract of Sale of Bank Stock, Alleging Mistake of Seller and Fraud of Buyer and Wife, Held Sufficient. — Complaint to rescind oral contract of sale of bank stock, and for restoration of stock, alleging facts, and in effect, alleging mistake on part of seller and fraud on part of buyer and his wife, held sufficient.

2. Contracts — Equity has Jurisdiction to Decree Cancellation of Instrument or Contract for Mistake, whether Agreement Executory or Executed. — As general rule, equity has jurisdiction to decree cancellation of instrument or contract because parties, or one of them, labored under mistake of fact, whether instrument relates to executory agreement or to one that has been executed.

3. Banks and Banking — Contract for Sale of Bank Stock, in which Minds of Seller and Buyer did Not Meet, Set Aside. — Where owner of bank stock directed agent to sell it at par, thinking par meant market price, and buyer, hearing such direction, purchased it at par, though knowing it was worth much more, equity will cancel contract of sale and restore stock; seller having promptly offered to rescind, and buyer not having changed position.

Appeal from Harrison Circuit Court.

CHESTER M. JEWETT and E.M. DICKSON for appellants.

M.C. SWINFORD, HANSON PETERSON, T.E. KING and WADE H. LAIL for appellee.

OPINION OF THE COURT BY JUDGE SAMPSON.

Affirming.

This litigation was commenced by appellee, Carroll, in the Harrison circuit court, against John L. Bell and wife, Ella Bell, for the cancellation of a verbal contract on the grounds of fraud and mistake, and the restoration to him of seven shares of the capital stock of the National Bank of Cynthiana, purchased by Bell for his wife from appellee, Carroll, through his attorney, for the price of $700.00 when the market value of the stock was $2,100.00, the stock having been delivered by the attorney for Carroll to Bell at the time of the payment of the money, and was later transferred by the bank on its stock books to appellant, Mrs. Ella Bell, who now holds and claims it, and denies the right of appellee Carroll to a rescission of the contract and a restoration of the stock.

On the morning of February 18, 1924, Carroll entered the office of his attorneys, Swinford & Swinford, at Cynthiana, with a certificate showing his ownership of seven (7) shares of capital stock of the National Bank of Cynthiana, and, delivering the certificate to Mack Swinford, a member of the firm, directed him to sell the stock either at private or public sale. At that time appellant, John L. Bell, was in the office and heard part or all of the conversation concerning the sale of the stock. At his request Bell was allowed to examine the certificate. After Carroll left the office Bell asked young Swinford at what price the stock would be sold and being told "at par" he immediately asked Swinford not to advertise the stock for sale but to hold it until he could see his wife, appellant, Ella Bell, who was considering the purchase of stocks, and perhaps she would take the bank stock. This was agreed to by Swinford. Bell then left the office and went to the bank and inquired of the assistant cashier the market value of the stock and was told it was selling around $300.00 per share; thereupon he drew $700.00 cash from the bank and finding young Swinford on the street told him he would take the stock. Swinford replied that he would see appellee Carroll and get him to assign the stock and would let him have it. This was early in the afternoon of the same day. Swinford soon found Carroll and told him he had sold the stock to Bell, whereupon Carroll asked: "Q. What did you get for it?" to which Swinford replied "Par." Thereupon Carroll said "All right." The stock was duly assigned by Carroll and delivered to his attorney, Swinford, who in company with Bell carried it to the bank and there delivered it to Bell on the receipt of $700.00. Bell had the stock transferred on the books of the bank to his wife. Immediately on returning to his office Swinford learned of the mistake; that the seven shares of stock were worth $2,100.00 instead of $700.00. Immediately he sought out Bell and told him of the mistake and offered to return the money and asked Bell to give up the stock, but Bell declined to do so. The next day Swinford made a formal tender of the money to Bell and asked a retransfer of the stock, which Bell again refused. Thereupon this action was commenced as set out above.

At the inception of the suit an injunction was sought and granted, restraining appellants, John L. Bell and wife, from selling or otherwise disposing of the stock until the case could be prepared and heard upon its merits. A motion was made before a member of this court to set aside the injunction granted to appellee, but this motion was overruled, and the injunction continued in force. Afterwards the case was prepared upon its merits and tried in the Harrison circuit court, the judgment cancelling the contract of sale of the bank stock and directing appellant, Ella Bell, to assign and transfer to appellee, Carroll, the certificate of stock No. 607 for the seven (7) shares of stock in the National Bank of Cynthiana; and further adjudging appellee, Carroll, to pay to the appellants the sum of $700.00 with six per cent interest thereon from February 18, 1924, up to August 15, 1924, after which time no interest was adjudged if the stock was reassigned and delivered by Mrs. Bell in accordance with the judgment. From that judgment this appeal is prosecuted.

There is not much controversy about the facts. It is the contention of appellee, Carroll, that his attorney misunderstood his instructions as to the price at which the stock was to be sold; or, if this was not true, then that he inadvertently used the word "par" when he meant "market value" in instructing his attorneys to sell the stock "at par," if he did so instruct him. Appellee, Carroll, had owned the stock for two or three years before he delivered it to Swinford to be sold. He had paid $260.00 per share for some of it and $270.00 per share for the balance. Only a short time before he offered the stock for sale he inquired at the bank the price at which it was selling and was told it was selling around $300.00 per share and that the most recent sale known to the bank officials brought $310.00 per share. With this information he took his certificate of stock to Swinford and directed him to sell it. Upon this subject Carroll testified: "When young Swinford came in I handed him the bank stock and told him to sell it, and Mr. Bell takes the stock and said, `What do you want for it?' I said $300.00 a share.'"

"Didn't you say `par?' A. More than likely.

"Q. Didn't you say, `I will take par?' A. I thought I said $300.00.

"Q. Not what you thought? A. I always did say `par,' but I thought $300.00 was the par.

"Q. Didn't you say to Swinford, `I want you to sell this stock for `par?'' A. More than likely.

"Q. You thought that $300.00 was par and you told him to sell it for par, didn't you? A. I can't say that I did. I always thought $300.00 was `par.'

"Q. What did Mr. Bell say? A. Mr. Bell had the bond when I left.

"Q. Had the certificate of stock, you mean? A. Yes, I call it a bond. You call it that. I went out and about two o'clock that evening Mr. Swinford told me Mr. Bell had bought it. I know `par' was said then because I said, `What did you get for it?' He said `par.' I said, `Who bought the bond?' He said, `Mr. Bell.' I said, `When will you get it?' I thought it was $300.00, and he said, `I will get the check in a day or two.'

"Q. Nothing was said then except that he sold it at par? A. Yes, sir.

"Q. You said, `all right?' A, Yes, sir, I said `all right,' because I thought it was $2,100.00.

"Q. There wasn't anything said except he said he had sold it at par? A. Yes, sir."

Concerning the same matter young Swinford testified:

"Q. Mr. Swinford, as I understand you, Mr. Bell was present in your office with Mr. Carroll, and you came in and Mr. Carroll told you that he wanted to sell that seven shares of Cynthiana National Bank stock at par? A. Yes, sir.

"Q. Did he say anything to you about selling at $300.00? A. No, sir, not at any time.

"Q. He never mentioned $300.00? No, sir.

"Q. He asked you to advertise it if you couldn't sell it privately? A. Yes, sir; he didn't say it that way. He said advertise it and sell it, and just before he left he told me to sell it privately, if I could.

"Q. You, of course, knew...