Farwell v. Colonial Trust Co.

• Decision Date: 07 June 1906
• Docket Number: 2,330.
• Citation: 147 F. 480
• Parties: FARWELL v. COLONIAL TRUST CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

147 F. 480

FARWELL v. COLONIAL TRUST CO. et al.

No. 2,330.

United States Court of Appeals, Eighth Circuit.

June 7, 1906

Benjamin Schnurmacher and Colin C. H. Fyffe (Leo Rassieur, Theodore Rassieur, and Arthur E. Kammerer, on the brief), for appellant.

P Taylor Bryan (Harvey L. Christie, on the brief), for appellees Commonwealth Trust Co., Colonial Trust Co., and St Charles & St. Louis County Bridge Co.

W. C Scarritt, John K. Griffith, Elliott H. Jones, and Edward L Scarritt, for appellees Freygand and Trocon.

Before SANBORN and HOOK, Circuit Judges.

SANBORN Circuit Judge.

This is an appeal from a decree of dismissal of a bill to rescind a purchase by the complainant from the Colonial Trust Company of 15 bonds, of $1,000 each, and 90 shares of stock, of the par value of $100 each, of the St. Charles & St. Louis County Bridge Company, to recover back their purchase price of $13,125, and for other relief, upon the ground that the bill failed to state facts sufficient to constitute a cause of action. The material facts it set forth were these: In April and May, 1902, the Colonial Trust Company was promoting the construction of a railroad bridge across the Missouri river at St. Louis, St. Charles & Western Electric Railroad Company, which extended from Wellston in that state to a point on the bank of the river opposite St. Charles, with the latter city. The trust company had made a loan of $400,000 to some of the directors and others connected with the railroad company and was deeply interested in the construction of this bridge. The capital stock of the bridge company was $2,000. Thereupon the trust company issued a plan, pursuant to which the complainant purchased his bonds and stock, wherein the proposal was made that the bridge company should increase its capital stock to $400,000; that it should issue bonds to the amount of $400,000, and secure them by a mortgage upon the bridge; that the bridge company should agree that its capital stock should be full-paid and nonassessable; that its stock should be delivered to the contractors in consideration of their construction of the bridge; that the trust company should be the trustee in the mortgage, and the trustee and manager for the subscribers, and should accept subscriptions and sell the bonds and stock at the price of $875 for one bond and six shares of stock. Before the complainant subscribed, the trust company, in answer to an inquiry, wrote him on April 21, 1902:

'The issuance of these securities will be made in strict accordance with the Missouri statutes and will come out through the contractors as full-paid and nonassessable. The greatest care is being exercised by our attorneys in this matter. * * * In reply to your inquiry as to the guarantee of an amount sufficient to pay at least the interest on the bridge bonds by the St. Louis, St. Charles & Western Electric R.R. Company, the estimate is based on the amount of through traffic now existing, together with the ferry business. The bridge company, through its contract, gets all the 5-cent arbitrary over the river.' The complainant avers in his bill that the trust company wrote another letter on April 24, 1902, which will be the subject of subsequent consideration. By these various representations the complainant was induced to subscribe and pay for his stock and bonds. At the time these statements were made there was no contract between the railroad company and the bridge company about the fare for the transportation of passengers over the bridge, but on June 3, 1902, such an agreement was made by which the railroad company agreed to pay the bridge company 5 cents for each passenger carried over the bridge in any car operated by the railroad company during the term of 50 years. The capital stock of the bridge company was increased to $400,000. Its bonds to the amount of $400,000 were issued and secured by a mortgage on the bridge. The bonds and 399 shares of the stock were, on May 1, 1902, sold to the contractors in consideration of their construction of the bridge, and on the same day they assigned and delivered them to the Colonial Trust Company for $310,000, which the latter company agreed to pay them only in the event that it obtained the same from the subscribers for the bonds and stock under the proposed plan. The bridge was completed in 1904. The Commonwealth Trust Company has succeeded to the rights and has assumed the liabilities of the Colonial Trust Company. All the parties that have been mentioned except the complainant and the railroad company are defendants in this suit.

In this state of the case the complainant seeks a rescission of his purchase of the stock and bonds because of the misrepresentations that the stock of the bridge company would be full-paid and nonassessable; that the bridge company had a contract with the railroad company on April 24, 1902, to the effect that it should receive 5 cents for every passenger carried across the bridge by the railroad company; and that the latter company should not receive any more for their transportation. The defendants challenge the bill on the ground that the complainant has an adequate remedy at law by an action to recover of the trust companies the price he paid for his bonds and stock or the damages which have resulted to him from the false representations he avers. But the adequate remedy at law which will deprive a court of equity of jurisdiction is a remedy as certain, complete, prompt and efficient to attain the ends of justice as the remedy in equity. Boyce's Ex'rs v. Grundy, 3 Pet. 210 215, 7 L.Ed. 655; Williams v. Neely, 134 F. 1, 10, 67 C.C.A. 171, 180, 69 L.R.A. 232; Brown v. Arnold, 131 F. 723, 727, 67 C.C.A. 125, 129; Wiemer v. Louisville Water Co. (C.C.) 130 F. 246, 250; ...