Franey v. Wauwatosa Park Co.

• Decision Date: 22 March 1898
• Citation: 74 N.W. 548,99 Wis. 40
• Parties: FRANEY v. WAUWATOSA PARK CO. MALONEY v. WAUWATOSA PARK CO.
• Court: Wisconsin Supreme Court

99 Wis. 40

74 N.W. 548

FRANEY

v.WAUWATOSA PARK CO.

MALONEY

v.WAUWATOSA PARK CO.

Supreme Court of Wisconsin.

March 22, 1898.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Separate actions by Joseph L. Franey and Thomas J. Maloney against the Wauwatosa Park Company and others to recover back payments made for corporate stock.From a judgment for the Wauwatosa Park Company, plaintiffs appeal.Affirmed.T. S. Murphy, for appellants.

L. G. Wheeler and O. T. Williams, for respondent.

CASSODAY, C. J.

It appears from the record: That November 1, 1891, one Benjamin Seigert was the owner and in possession of 27 3/11 acres of land described, and was willing to sell the same for $1,200 per acre,––that is to say, for $32,727.27.That about the middle of November, 1891, he made a contract with the defendantEdgar E. Warner to sell the land to him for that price.That thereupon the defendants Edgar E. and Arthur W. Warner and John S. Wambold, with the purpose of purchasing the land at that price, and selling the same to the defendant corporation to be thereafter formed, drew up a subscription to the following effect, with the description of the land omitted: “We, the undersigned, hereby subscribe the amount set opposite of our respective names in a corporation to be formed and known as the Wauwatosa Park Company for the purchase and selling of the following property * * * for the sum of $45,000, and agree to pay for the same as follows:” One–third or more of the amount subscribed in cash within 30 days from the date of subscription, the balance within 5 days from said date, with interest on deferred payments at 6 per cent., payable semiannually.That thereupon Edgar E. Warner signed such subscription for the amount of $10,500, but neither Arthur W. Warner nor Wambold signed the same, but other persons, including the plaintiff Franey for $3,000, and the plaintiff Maloney for $500, so that the total amount, with the subscription of Edgar E. Warner, was $54,500.That December 9, 1891, in pursuance of the purpose mentioned, the two Warners and Wambold did prepare, sign, and acknowledge, and cause to be filed, as required by the law, articles of incorporation of the defendant park company, with a nominal capital of $45,000, divided into shares of $100 each, for the purchasing, holding, leasing, and selling and dealing in real estate, and doing all things necessary, incident to, convenient, or desirable in or about said business.That January 7, 1892, the defendants Edgar E. and Arthur W. Warner and Wambold convened, and elected themselves and others a board of directors.That on the same day such directors held a meeting, and elected Wambold president, Arthur W. Warner vice president, and Edgar E. Warner secretary and treasurer of the corporation for the then ensuing year.That the defendants caused the whole amount of the capital stock of the corporation––that is to say, $45,000––to be issued to various persons, some of whom were subscribers and some of whom were not subscribers, and, among others, to Edgar E. Warner $4,382, to Arthur W. Warner $1,409, and to John C. Wambold $1,409, each for full–paid stock, no consideration being paid therefor by either of them, or, if paid, then they were, respectively, paid out of the moneys realized by them, and unlawfully appropriated to their own use in the amount of the difference between $45,000 and $32,727.27.That January 14, 1892, the plaintiff Franey paid the defendant park company, upon his subscription, $1,000 in cash, and July 1, 1893, the further sum of $120, and received in return therefor three certificates of stock in the company, each for ten shares of the capital stock of the company, signed by Edgar E. Warner, secretary, and John C. Wambold, president, certifying that one–third of the same had been paid to the company.That January 22, 1892, the plaintiff Maloney paid to the park company upon his subscription $500, and received in return therefor a certificate of stock in the company for five full–paid shares of the capital stock, signed by Edgar E. Warner as secretary and John C. Wambold as president, certified to be full–paid stock.That February 27, 1892, Benjamin Seigert, as owner of the land mentioned, conveyed the same to the defendantWauwatosa Park Company, the deed reciting a consideration of “$1.00 and other valuable considerations.”That April 10, 1895, the plaintiffs Franey and Maloney respectively gave notice to all of the defendants that they elected to rescind their contracts of subscription to purchase the land and to the stock of the corporation on the ground that the same were entered into by them in pursuance of the false and fraudulent representations made by the defendants, and then and there demanded the repayment of the moneys so paid by them, respectively, with interest, and the return to the plaintiff of the contract of subscription, and therein offered to reconvey, assign, and deliver to the defendants, or either of them, the several certificates of stock, to the end that the contract might be canceled and held for naught; which demands and offers were then and there refused by the defendants respectively.That April 16, 1895, the plaintiff Franey commenced an action against the park company and the two Warners and Wambold for the rescission of such contract, and to recover back the $1,120 so paid by him, and interest thereon from the times of payment; and on the same day the plaintiff Maloney commenced an action against the same defendants for the rescission of such contract, and to recover back the $500 so paid by him, and interest thereon from the time of payment.That the Warners and Wambold answered, and the park company separately answered.At the close of the trial the court found, in effect, that such subscriptions and payments thereon by Franey and Maloney, respectively, were procured by the false representations and fraud of the two Warners and Wambold; that the defendant the Wauwatosa Park Company was properly made a partydefendant therein, but that it was not responsible for the frauds practiced upon the plaintiffs, respectively, by the other defendants above named, and did not participate therein; and that this suit, as to the said corporation, could not be maintained for the recovery of damages against it.And as conclusions of law the court found, in effect, that Edgar E. Warner and Arthur W. Warner and Wambold were promoters of the corporation in the matter of the organization thereof, and were agents of the corporation in the matter of the purchase of the land; that both of such relations were trust relations; that they had no right to make any profit out of the purchase of the land, and that the profits so made by...