Burwash v. Ballou

• Decision Date: 23 October 1907
• Citation: 82 N.E. 355,230 Ill. 34
• Parties: BURWASH v. BALLOU et al.
• Court: Illinois Supreme Court

230 Ill. 34

82 N.E. 355

BURWASH

v.BALLOU et al.

Supreme Court of Illinois.

Oct. 23, 1907.

Appeal from Appellate Court, First District, on Appeal from Circuit Court, Cook County; Charles M. Walker, Judge.

Bill by Henry J. Burwash against A. Percy Ballou and others. From a judgment of the Appellate Court, affirming a decree for defendants, complainant appeals. Affirmed.

Frank M. Burwash, for appellant.

Holcomb & McBean (Edgar Bronson Tolman, of counsel), for appellees.

This was a bill in chancery, filed by the appellant in the circuit court of Cook county against the appellees, to set aside a sale of 7,000 shares, of the par value of $1 per share, of the capital stock of the International Copper & Gold Company, a corporation purporting to be organized under the laws of Arizona, made by the appellees to the appellant at 80 cents per share on the 15th day of July, 1903, and to enjoin the appellees from converting to their own use $1,400 in cash paid on said sale by the appellant to appellees, and from transferring 15 promissory notes, aggregating the sum of 4,200, given by the appellant to the appellees in part payment for said stock, which promissory notes were not due at the time said bill was filed, and to require the appellees to repay to the appellant said sum of $1,400, and to cause said promissory notes to be surrendered and delivered up by appellees for cancellation, on the ground (1) that said International Copper & Gold Company was not legally organized; (2) that the appellees fraudulently represented to the appellant, at the time he purchased said stock, that said International Copper & Gold Company owned rich and valuable mines and water rights in Mexico, Colorado, and Montana, which were fully developed, which representations were relied upon by appellant, but were known to be untrue by appellees; and (3) that the appellees represented to appellant, at the time of said sale, that said shares of stock were the stock of the International Copper & Gold Company, which were held by the appellees in trust for said company, and that the proceeds of the sale of said stock made to the appellant would be used by said company to develop the property of said company, when in truth and in fact said stock was the individual stock of the appellees and they were intending to convert the proceeds of said sale to their own use. Answers were filed by the appellees, admitting the sale of the stock by the appellees to the appellant, and averring that the International Copper & Gold Company was duly organized under the laws of Arizona, and that said company had the lawful right to issue the stock sold by the appellees to appellant, and denying that the appellees, or any of their agents, made any false representations to the appellant, at the time of said sale, with reference to the value of the mines or other property owned by said International Copper & Gold Company, or the character of said mines, or stated that the same were fully developed, or represented to the appellant that the 7,000 shares of the capital stock of said company sold to the appellant by them belonged to said company and were held by them, or either of them, in trust for said company, or that the proceeds of said sale would be used for developing the property of said company. Replications were filed, and the cause was tried in open court, and a decree was entered dismissing the bill for want of equity, which decree, on appeal, was affirmed by the Appellate Court for the First District, and a further appeal has been prosecuted to this court.

HAND, C. J. (after stating the facts as above).

The International Copper & Gold Company was a de facto corporation, and, the appellant having purchased its stock of the appellees, in a proceeding like this, no warranty having been made by the appellees that the corporation issuing said stock was a de jure corporation, the appellant cannot escape the payment of the consideration agreed to be paid by him for said stock, by showing that the International Copper & Gold Company, which issued said stock, was not legally organized, or that its increase of stock, of which that purchased by appellant formed a part, was illegally issued. Marshall...