Birks v. McNeill

• Decision Date: 17 January 1919
• Docket Number: No. 32035.,32035.
• Citation: 185 Iowa 1123,170 N.W. 485
• Parties: BIRKS ET AL. v. MCNEILL ET AL.
• Court: Iowa Supreme Court

185 Iowa 1123

170 N.W. 485

BIRKS ET AL.

v.MCNEILL ET AL.

No. 32035.

Supreme Court of Iowa.

Jan. 17, 1919.

Appeal from District Court, Mahaska County; John F. Talbott, Judge.

Suit in equity to compel defendants to account for and pay over to plaintiffs the difference between the par value of 800 shares of stock and its actual value. Other issues were included not necessary to state. On hearing, the petition was dismissed. Affirmed.W. H. Keating, of Oskaloosa, and Thomas A. Cheshire, of Des Moines, for appellants.

Burrell & Devitt and L. E. Corlett, all of Oskaloosa, and William McNett, of Ottumwa, for appellees.

LADD, C. J.

Hobart W. McNeill died testate January 27, 1900, at the city of San Jose, Cal., leaving surviving Elizabeth McNeill his widow, and an only child, Anna McNeill Birks. His will, dated November 3, 1896, bequeathing all stock in the corporation known as “McNeill Bros., Inc.,” owned by himself, to W. A. McNeill, was admitted to probate March 13, 1900. He was owner of 2,000 of the 5,000 shares of stock in this company and owned no other property. W. A. McNeill, who was nominated executor in the will, was appointed and qualified as such. On the same day that the will was made decedent had addressed to W. A. McNeill the following letter:

“Oskaloosa, Iowa, November 3, 1896.

Wilbur A. McNeill: I attach this letter to my last will bearing date November 3, 1896, as instructing you to do with the proceeds, whether dividends of cash or property or final results arising from sale of my McNeill Bros. Stock.

One-half shall go to my wife Lizzie McNeill if while living then to my daughter Annie--then to her children.

The other half shall go to my niece E. L. Little who has been a daughter to me nearly all her life.

In the event of my death you should at once make a will so leaving this property.

Because failing to do so it with all your own property would all go to your heirs, and both my wife and Annie would be cut out.

Better make no additional will or codicil yourself without the advice of a careful lawyer as to its effect on the will made by you to-day. It is a slippery business.

Affectionately, H. W. McNeill.”

About three years later another letter was transmitted to the same person:

“San Jose, Cal., 12--18--1899.

Dear Wilbur: Having reference to my letter of instructions in yourself to govern you in the final disposition of my McNeill Bros. stock I would like to add to it this:

Set aside five thousand dollars of McNeill Bros. Stock for the use and benefit of each of the following named parties:

Hobart M. Birks, Montreal.

Hobart Phillips, Oskaloosa.

Hobart Little, son of C. F. Little, Oskaloosa.

Hobart Morris, Canmore.

Hobart Hill, son of F. A. Hill, Seattle.

Hobart Rice, son of Fred Rice, South Bend, Wash.

Wilbur M. Little, Anthracite.

Walter McNeill, Fairfax.

The remaining amount of the two hundred thousand to be divided into two parts, one-half going to my wife Lizzie McNeill, and the other to my niece, E. L. Little.

+-------------------------------+
                ¦Affectionately,¦H. W. McNeill.”¦
                +-------------------------------+
                

McNeill Bros., Inc., appears to have been organized in 1891, but certificates of the capital stock were first issued October 16, 1893, there being then issued 3,531 shares, of the par value of $100 each. Two certificates, of 1,444 3/4 shares, were each issued to W. A. McNeill, one certificate of 134 1/2 to E. L. Little, one for 97 1/4 shares to J. F. McNeill, and 409 3/4 shares to W. T. Phillips. The capital stock was increased to $500,000, April 25, 1898. The additional certificates making up this amount were distributed to the McNeills, Phillips, and others, including 65 1/2 shares to E. L. Little, and thereafter a certificate for 2,000 shares was issued to H. W. McNeill, February 10, 1899, upon the surrender of one certificate of 1,444 3/4 and another of 555 1/2 shares, previously issued to W. A. McNeill, and the cancellation thereof. In pursuance of the letters accompanying the will and addressed to W. A. McNeill, a certificate of 800 shares of the stock held by decedent, H. W. McNeill, was issued to his widow, Lizzie McNeill, February 15, 1900. A like certificate was issued on the same day to E. L. Little and certificates for the remainder of the 2,000 shares of stock held by said decedent were issued either to W. A. McNeill or those entitled thereto under the letters mentioned. The McNeill Bros., Inc., was a holding company for the stock in different corporations organized to carry on the various enterprises of the three brothers, Hobart W., Wilbur A., and James F. McNeill. These companies at the time of the death of H. W. McNeill were the American Coal Company, located at Evans, in Mahaska county, Iowa; the Oskaloosa Livery & Transfer Company and the Oskaloosa Electric Light Company, located at Oskaloosa, Iowa; the H. W. McNeill Company, which operated a coal mine at Canmore and another at Anthracite, Canada; E. L. Little Company, which operated stores at Canmore and Anthracite; the Western Coal Company, the Pacific Coast Company, and the Brenton Coal Company, at Seattle, Wash.

The day after the issuance of the certificate of stock to Lizzie McNeill, one of the plaintiffs herein, she appointed “W. T. Phillips, of Oskaloosa, Iowa, proxy to vote her shares in McNeill Bros., Inc.” On the back of the certificate there was a blank assignment, without date, signed by Lizzie McNeill, witnessed by her son-in-law. Shortly before March 30, 1901, W. T. Phillips made W. A. McNeill the following proposition:

“As attorney for Mrs. Lizzie McNeill, I will sell you eight hundred shares of the capital stock of McNeill Bros., being certificate 14, issuedFebruary 15, 1900, for the sum of eighty thousand ($80,000.00) dollars cash, and for myself and associates I will buy the American Coal Co., including all of its outstanding capital stock, and the American Supply Co., paying therefor the sum of seventy-five thousand ($75,000.00) dollars, as follows: I will give you 580 shares of the capital stock of McNeill Bros. and $17,000.00 cash, with the understanding that the said American Coal Co. and the American Supply Co. operating stores for supplies to coal miners, be turned over to me as of date May 1, A. D. 1901, with a clean balance sheet of that date.

+------------------------------+
                ¦Yours truly,¦W. T. Phillips.” ¦
                +------------------------------+
                

Subsequently, and on March 31, 1901, an option was executed in words following:

“In consideration of the sum of one dollar, in hand paid, the receipt of which is hereby acknowledged, I hereby give W. A. McNeill the exclusive option until May 1, A. D. 1901, to purchase the eight hundred (800) shares of McNeill Bros. stock, as represented by certificate No. fourteen (14), issued February 15, A. D. 1900, and which stands in the name of Lizzie McNeill, whose attorney in fact I am, and the four hundred and nine and three-quarters (409 3/4) shares of McNeill Bros. stock as represented by certificate No. one (1) issued October 16, A. D. 1893, in my name, and the one hundred and seventy and one-quarter (170 1/4) shares of McNeill Bros. stock as represented by certificate of thirteen hundred and eighty (1,380) shares, upon the following conditions, to wit:

The said W. A. McNeill shall, on or before May 1, A. D. 1901, tender me the entire amount of the outstanding stock of the corporation known as the American Coal Company, together with a clean balance sheet of said American Coal Company to that date, and the sum of sixty-three thousand dollars ($63,000.00) in cash, and, in the event of his so doing, I hereby bind myself, for myself and as the attorney of the said Lizzie McNeill, to surrender to the said W. A. McNeill the said thirteen hundred and eighty (1,380) shares of McNeill Bros. stock, and failure on the part of the said W. A. McNeill to make the said tender by the 1st day of May, A. D. 1901, shall work a forfeiture of this option after said date.

Signed this 30th day of March, A. D. 1901.

Witness:

P. S. It is understood and agreed that the stock of goods at Evans, Ia., known as the American Supply Company, belongs to the American Coal Company, and is to be treated as a part of the assets of the said corporation. W. T. Phillips.”

W. A. McNeill exercised his option on May 1, 1901, and took over the stock described in the foregoing instrument, and transferred the property of the American Coal Company and the American Supply Company, with the $63,000, to Phillips, who paid the plaintiff Lizzie McNeill the sum of $80,000.

Many issues are raised in the petition filed September 8, 1914. Only one appears to remain, and that concerns the transfer of the 800 shares of stock to W. A. McNeill at about one-fifth of its value as is alleged. Plaintiffs say that a fiduciary relation existed between W. A. McNeill as president of McNeill Bros., Inc., and Lizzie McNeill, a shareholder, and that the former violated his duty to make full disclosure of value before dealing with the latter, and in not doing so was guilty of fraudulent concealment.

Without setting out the needlessly voluminous pleadings, we are of opinion that this issue, as well as that said McNeill occupied such relation because being executor under the will of her husband, was raised.

It appears that there were three brothers, a sister, and a half-sister in the McNeill family. The youngest, Hobart W. McNeill, was a man of large business capacity, possessing a genius for promotion, especially in mining enterprises. His brothers, W. A. and James F. McNeill, were men of ordinary ability, and likely acquired riches through the sagacity and foresight of Hobart. The sister married one Little, one of whose children was E. L. Little. Hobart was married to the plaintiff Lizzie McNeill in 1869. He appears to have undertaken to practice law for several years, then developed into a telegraph operator, and later became owner and manager of coal mined in Mahaska county. After serving as assistant manager...