Earle v. Berry

• Decision Date: 29 May 1905
• Parties: EARLE v. BERRY.
• Court: Rhode Island Supreme Court

61 A. 671

27 R.I. 221

EARLE

v. BERRY.

Supreme Court of Rhode Island.

May 29, 1905.

Assumpsit by Susan F. Earle against Rudolph Berry. Heard on petition of defendant for new trial. Granted.

Argued before DOUGLAS, C. J., and DUBOIS and BLODGETT, JJ.

James C. Collins, Jr., for plaintiff. Cooke & Angell, for defendant

DOUGLAS, C. J. At the time to which this action relates—about September 2, 1902 —the plaintiff and her family were the owners of 90 shares of the capital stock of the Phoenix Iron Foundry, a corporation doing business in the city of Providence, but all but 5 of these shares were hypothecated for debts—63 shares to the Mechanics' Savings Bank to secure a loan of $12,600, and 22 shares to Alfred Metcalf to secure a debt of $8,000. The plaintiff's husband was a salaried officer of the company, and her two sons were employed there. One hundred and seventeen shares of the stock were owned by Edwin A. Smith, who was treasurer of the Mechanics' Savings Bank. The balance of the stock—30 shares—was in the treasury of the company. On September 2d, as he testifies, but probably a day later, the complainant's husband, who represented her in these transactions, received the following letter:

"Providence, R. I., September 3, 1902. Mr. Charles R. Earle, Treasurer—Dear Sir: I have to inform you that I have disposed of my holdings in the Phoœnix Iron Foundry, having sold all my stock to Mr. Percy H. Brundage, of 49 Wall Street New York, for $300 per share, the same to be paid for at the Rhode Island Hospital Trust Company on October 1st, 1902, and he will take all the other stock at the same price provided he is notified of the same on or before September 15th. Yours truly, Edwin A. Smith."

The purchaser referred to in the letter was acting in the interest of the Textile Finishing Machinery Company, which had acquired a controlling interest in several other manufacturing corporations, and Mr. Earle, on receipt of this letter, was alarmed lest this new controlling power should wind up the business of the Phoenix Iron Foundry, terminate his employment, and force the plaintiff to sell her stock at the price offered. He consulted counsel, who advised him that the treasury stock could lawfully be sold by the directors, and thereupon he conceived the plan of purchasing it for his wife, and thus giving her the control and thereby enabling her to continue the business, or to demand a larger price for her original shares. At first he endeavored to persuade Messrs. Berry & Boyden, a firm of which the defendant was a partner, to advance the money needed to pay for the treasury stock and to redeem the stock which had been pledged. He also approached other capitalists with similar propositions. Finally, he procured $9,000 from Alfred Metcalf, and placed it in the hands of the defendant, who paid it into the treasury of the company, and received therefor a certificate in his own name of the 30 shares of treasury stock. At the same time Mr. Metcalf intrusted the plaintiff's husband with the stock which he had held as security, and certificates for this stock were also placed in the defendant's hands. Mr. Earle continued negotiations with the agent of the textile company, and finally received and accepted, on behalf of his wife, an offer of $500 per share for the 90 shares originally controlled by her and $300 per share for the 30 shares purchased of the corporation. The defendant, on September 30th, with his own money, paid the note at the savings bank, with interest from July 1st to October 1st, amounting to $12,757.50 and obtained possession of the certificate which the bank had held. On October 1, 1902, the plaintiff's stock having been sold and the defendant having received $54,000 therefor, the parties met for a settlement. The defendant retained $2,500 for his own services, paid the counsel who had been employed $1,200, and, deducting the amount he had advanced to the Mechanics' Savings Bank, paid the plaintiff the balance, $20,542.50, and the amount due Mr. Metcalf, $17,000 (who had given an order to pay this sum to Mrs. Earle), and took the following receipt:

"Providence, R. I., Oct. 1, 1902. Received from Rudolph Berry $37,542.50, of which $17,000 is [to be] paid in cash to Alfred Metcalf, and the whole is the entire amount due from him on account of $54,000, collected by him on sale of stock in the Phoenix Iron Foundry by myself and others to Courtland C. Earle, as well as ourselves. Susan P. Earle, Charles R. Earle, and Courtland C. Earle, by Charles R. Earle."

This suit was brought March 19, 1903, to recover the sum of $3,850, which it was alleged the defendant had wrongfully retained out of the sum of $54,000 collected on her account. The defendant pleaded the general issue and a plea in set-off, claiming that the plaintiff owed him $5,000 for services in advancing $12,757.50 to the Mechanics' Savings Bank, and for consultations in regard to the disposal of the stock, and for payments to the attorneys, and for his services in the premises. November 14, 1904, the jury found a verdict for the plaintiff in the sum of $2,667.50, being $2,425 damages, and interest to the date of the trial, $242.50. thus allowing the defendant the amount he had paid the attorneys and $75 for his own services, and the defendant now brings his petition for a new trial on the grounds that the verdict is against the law and evidence, that there had been an accord and satisfaction of the claim in suit before the suit was commenced, that the court erred in charging the jury as requested by the plaintiff's counsel's requests 3 and 4, and that the amount of the verdict is excessive.

The plaintiff's case rested on the establishment of two propositions of fact: (1) That the defendant retained more money for his services than he was legally entitled to. (2) That the plaintiff's signature to the acknowledgment of full payment which she signed was procured by duress. We think she fails to sustain either proposition by satisfactory evidence. Mr. Earle's statement of Mr. Berry's relation to the transactions between them makes him only a voluntary lender of $12,757.50 for one day, upon ample and undoubted security. If this were his only service, a commission of from $50 to $100, as estimated by the stockbrokers who were called as witnesses, would seem to be sufficient compensation. Mr. Berry says that his agreement with Mr. Earle was to assist him with advances necessary to obtain control of the 120 shares, and, if the Textile Finishing Machinery Company should buy them, he should have $5,000 of the profits. If, on the contrary, the Textile Finishing Machinery Company should not purchase the stock, then he should furnish sufficient money to acquire all the stock and to carry on the business, and in the latter case should retain a controlling interest in the business. If this was the agreement, the amount of $2,500 was not excessive compensation for the risk he assumed. We think Mr. Berry's story accords better than Mr. Earle's with the undisputed circumstances in which the parties were placed. The Textile Finishing Machinery Company, in purchasing Mr. Smith's stock, supposed they were securing control of the corporation. Mr. Smith had stipulated for the plaintiff that she should receive the same price that he had obtained for himself. He had acted in good faith towards the Earles. But he was also the treasurer of the bank, and when he found that by the device of using the treasury stock the Earles had outwitted him and his customer it was to be feared that he might retaliate by causing the bank to sell the pledged stock. Mr. Earle told Mr. Berry that the note was not due for six months; but the note itself, which is in evidence, shows that it was a demand note, and that the last interest had been paid only to July 1, 1902. Mr. Earle attempts to explain his statement to Mr. Berry by saying that he had a verbal agreement with Mr. Smith not to enforce payment of the note for six months, but such an agreement would have no binding force. Mr. Smith then had it in his power to make good to the Textile Finishing Machinery Company his agreement to deliver a majority of the stock, or, if they declined to go farther with the bargain, to demand from the Earles that they should redeem their pledged stock and purchase his holdings. The requirement in the charter that the stock should first be offered to the corporation could not have hindered such a sale, for the foundry had just emerged from the hands of a receiver, and had no money to pay out in acceptance of such a proposition. Something more was needed than a mere honest custodian of the stock and proceeds, to wit, a capitalist, able and willing, in case of necessity, to provide funds to satisfy present creditors and to continue the business, and this is the position which Mr. Berry says he agreed to fill. This question, however, of the value of the defendant's services depends upon conflicting evidence; and, though we believe the jury erred in their decision of it, we should not feel warranted for this reason alone in granting a new trial.

Upon the next question of fact there is nothing in the plaintiff's favor worthy of the name of evidence. The claim of duress rests upon the testimony of Mr. Earle alone, and he had been discredited by his statements to Mr. Berry, repeated at the trial, that the savings bank note could not be enforced until December, which a production of the note Itself conclusively contradicts. Mr. Earle's testimony does not show any act of coercion on the part of the defendant. It is, in substance, that he presented an order from Mr. Metcalf directing the payment of his $17,000 to Mrs. Earle, and Mr. Berry refused to pay that until a receipt was prepared for Mrs. Earle to sign, showing the disposition of the whole of the money; and that, after the paper was prepared, Mr. Berry still refusing to pay what he admitted to be due unless she would sign the paper, he and the...