Dowling v. Wheeler

• Decision Date: 13 March 1906
• Citation: 117 Mo. App. 169,93 S.W. 924
• Parties: DOWLING v. WHEELER.
• Court: Missouri Court of Appeals

93 S.W. 924

117 Mo. App. 169

DOWLING v. WHEELER.

St. Louis Court of Appeals. Missouri.

March 13, 1906.

Rehearing Denied April 10, 1906.

1. CONTRACTS—JOINT AND SEVERAL.

An agreement binding the stockholders of a corporation to deposit their certificate of shares with a third person, with authority to sell the assets of the corporation, consisting of the stock, etc., is a joint agreement only in so far as it binds each stockholder to place his certificates of stock in the hands of the third person to sell, and is several so far as it entitles each stockholder to receive the price per share bid on the whole number of shares, and one stockholder may sue a purchaser of the assets and stock of the corporation for breach of contract on his failure to pay for the stock at the price agreed on.

2. STIPULATIONS—EFFECT—SPLITTING OF ACTIONS —WAIVER.

In an action for breach of contract to buy corporate stock, defendant showed that plaintiff had claimed his proportion of the earnest money paid by the buyer by interpleading in a former suit. The parties stipulated that the interpleader's suit should abide the result of the present one. Held, that the stipulation was a waiver of the objection that plaintiff had split his demand.

3. CONTRACT — BREACH — EVIDENCE — SUFFICIENCY.

Evidence, in an action for breach of contract for the purchase of corporate stock, examined, and held to support a verdict that the buyer did not purchase the stock under a misapprehension as to the value of the assets of the corporation, and he could not rescind the contract.

4. APPEAL—VERDICT—CONCLUSIVENESS.

A verdict supported by substantial evidence is conclusive on appeal, though the court may believe that it is against the weight of the evidence.

Appeal from St. Louis Circuit Court; O'Neil Ryan, Judge.

Action by Patrick J. Dowling against Herbert A. Wheeler. From a judgment for plaintiff, defendant appeals. Affirmed.

The Standard Tile Company is a Missouri corporation and did business in this state. From its organization until the year 1901, defendant was its business manager and was a director of the company during the year 1901. As manager, he was succeeded by W. C. Hutchinson. The business of the company proved unprofitable, and at a meeting of the stockholders held on December 28, 1901, the following agreement to dispose of all the assets of the company was signed by all of the stockholders:

                           "St. Louis, Mo., December 28, 1901
                

"By this agreement, we, the undersigned, hereby deposit our certificates for shares of stock in the Standard Tile Company set opposite our respective names, with Willi Brown, trustee, with authority in said trustee to sell the entire assets of said company, consisting of stock on hand, furniture, book accounts, good will and personal property of every nature, kind and description, to the highest bidder at the office of said company, No. 1416 Chemical Building, 721 Olive street, St. Louis, Missouri, on the 20th day of January, 1902, at noon, without further notice or advertisement, and said trustee is hereby authorized to execute to said highest bidder a quitclaim deed from said company for the real estate and plant situated in St. Louis county, Missouri, and to turn over to the highest bidder all the shares of stock in said company, mentioned below, for which purpose we have deposited with said trustee our said certificates of stock, properly indorsed in blank:

                   Name                                 No. of Shares
                P. J. Dowling...............................     64½
                F. G. Eaton (provided all stockholders
                  sign this or similar agreement and deposit
                  all stock for such purposes)    ..........      87
                Louis Chauvenet (under same conditions
                  above stated by Mr. Eaton)            ....      80
                H. A. Wheeler (provided it is unanimous)....     138
                Nicholas Sauer .............................      40
                F. E. Bush .................................      25
                A. V. Bohm .................................      50
                C. A. Bohm .................................      50
                Arthur Thacher .............................       2
                John D. Davis ..............................      10
                Willi Brown ................................      90
                W. Christy Hutchinson ......................      50"
                

In pursuance of this agreement, on January 20, 1902, Brown, as trustee, offered all of the stock for sale at auction; bids to be so much per share of stock. At the sale, defendant was the successful bidder for all the stock at $10 per share, and deposited with Brown $500 as earnest money on his purchase. On January 24, 1902, defendant repudiated his purchase and demanded a return of the $500 deposited, by the following letter delivered to Brown:

                         "St. Louis, Mo., January 24, 1902
                

"Willi Brown, Esq., Trustee for Standard Tile Co., Stockholders, City.—Dear Sir: When the capital stock of the Standard Tile Company was offered for sale by you as trustee, Mr. W. C. Hutchinson, your manager, stated and represented that the company owned outstanding accounts receivable on January 1, 1902, amounting to $5,621.50, all of which were stated to be good. He also stated and represented that the stock on hand January 1, 1902, exceeded that on hand January 1, 1901, by 136 squares of first and second-class tile. I find on investigation that these statements and representations were not correct, that in fact the amount of good accounts and tile on hand were both grossly exaggerated. When I bid ten ($10) dollars per share for the stock I relied upon the correctness of Mr. Hutchinson's statements, and would not have bid ten ($10) dollars per share but for those statements which I believed to be correct. Therefore, on account of these material misrepresentations, I now rescind the said sale and demand from you the return of the five hundred ($500) dollars earnest money paid to you before said sale. Yours truly, H. A. Wheeler."

Brown declined to return the tender, and on January 31, 1902, by consent of all the stockholders, he again offered the property for sale at auction. At this sale W. C. Hutchinson became the purchaser at $5 per share for the capital stock, conceded by both parties to be the full value of the assets of the company, including its franchise. Plaintiff was the owner of 64½ shares of stock. The suit is for a breach of defendant's contract to complete payment for the stock at $10 per share. The damages are laid at $322.50, the difference between what defendant bid for plaintiff's stock and what plaintiff was compelled to accept for it on the second sale.

The answer states, in substance, that at the stockholders' meeting, December 28, 1901, when defendant and all the stockholders were present, W. C. Hutchinson, the manager of the corporation, submitted to the stockholders a statement in writing of the financial condition of the company for the express purpose of enabling the stockholders to intelligently determine what disposition should be made of the assets of the company; that said report was false and materially overstated the amount of bills receivable and bills payable and of the quantity of tile on hand; alleges that defendant read the report, believed it to be true, relied upon it as true and correct when he made his bid of $10 per share and would not have made the bid but for the report and his reliance thereon; and that, as soon as he discovered the report to be untrue, he repudiated his purchase and demanded his deposit of $500. "Defendant further says that the said stockholders' agreement of December 28, 1901, which is attached to plaintiff's petition as Exhibit A, provides for the sale of all the assets of the Standard Tile Company, including its franchise, as assets, and does not provide for the separate sale of each stockholder's stock, as stock, as alleged in plaintiff's petition, and therefore this plaintiff and the other stockholders in said company have a common interest in the funds realized at said sale, if the same was a valid one, and a common or united interest in any claim for damages arising therefrom; and in any event plaintiff cannot have or maintain this suit without joining the other stockholders of said Standard Tile Company herein. Further answering defendant says that there is another action now pending in this court instituted prior to this one between plaintiff and this defendant, involving the same subject-matter, being the case of Brown against this defendant and this plaintiff as interpleaders, and being case No. 24,280, Room No. 10 of the St. Louis circuit court. Wherefore, having fully answered, defendant asks to be discharged with his costs."

The evidence is that by a request made on Hutchinson prior to the meeting of December 28th, by one or more of the stockholders, he...