Gross v. George W. Scott Mfg. Co.

• Decision Date: 06 July 1891
• Parties: GROSS v. GEORGE W. SCOTT MANUF'G CO. et al.
• Court: U.S. District Court — Northern District of Georgia

48 F. 35

GROSS v. GEORGE W. SCOTT MANUF'G CO. et al.

United States Circuit Court, N.D. Georgia.

July 6, 1891

Bisby &amp Rinehart, for complainant.

Candler Thomson & Candler, for respondents.

NEWMAN J.

The case made by the bill is substantially as follows: Charles H Gross, complainant, is a citizen of the state of Pennsylvania. The George W. Scott Manufacturing Company and the De Soto Phosphate Mining Company, defendants, are corporations organized and existing under the laws of the state of Georgia, and citizens of that state. That complainant was in October, 1889, the owner of certain lands on Peace river, in the state of Florida. That one John Cross a resident of the state of Florida, had been continuously for several years prior thereto, and was at that time complainant's agent to protect and make sales of said lands; under a general contract, he received 10 per cent. of the proceeds of the sales, when other terms were not specially agreed upon; and that complainant relied upon said Cross in these respects. That about the 7th day of October, 1889, Cross came to Philadelphia, where complainant resided, and stated that the Scott Manufacturing Company desired to buy lands from complainant, and offered $2.50 per acre for the same. Complainant inquired if there were phosphates on said lands, but Cross represented that the Scott Manufacturing Company desired the lands for other purposes. Complainant, having been accustomed and obliged to rely upon his agent for information in regard to said lands, acted thereon, and, on the faith of his representations, contracted to sell at same at $2.50 per acre. Thereupon, at Cross' direction, complainant made him a deed to the lands, received his check for the purchase price, and paid Cross 10 per cent. of the amount as commission. The inquiry complainant made of Cross was material and important, and upon the existence or non-existence in said lands of phosphates depended in a large degree their value. That prior to this sale phosphates had been discovered on lands on Peace river of a very valuable character, which was well known to Cross and to defendants. Complainant did not know until six months after the sale that the lands contained any phosphates, and complainant avers said lands were rich in phosphates, and were worth from $25 to $100 per acre at the time of the sale, and some of the land worth over $100 per acre. That the George W. Scott Manufacturing Company, through its president, George W. Scott, and other officers, had before the said sale employed Cross to purchase said lands of complainant under contract to pay him for his services and expenses while attending to the same, and that said company did pay Cross' expenses from Florida to Philadelphia, and compensation in money, while engaged in negotiating the purchase. That said company knew that Cross was complainant's agent to sell the land, and that complainant relied upon him as such, and for information concerning the value of the lands. Complainant did not know until October, 1890, of this arrangement between Cross and defendant. That the Scott Company engaged the services of Cross for the purpose and with the intent of influencing him to act in its interest, and to disregard his duties to complainant, and such was its effect. On the 12th day of October, 1889, Cross made the Scott Manufacturing Company a deed to certain lands, embracing a part of the land conveyed by complainant to Cross, and on the 13th day of November, 1889, made a deed to said company to certain lands, including the remainder of the land conveyed by defendant to Cross, and on November 21st the Scott Manufacturing Company conveyed to the De Soto Phosphate Company part of the land conveyed by complainant to Cross, (which is described, but is immaterial here.) The two defendant corporations are composed, substantially, of the same members and stockholders. That the directors and other officers are substantially the same persons. The phosphate company had been for a year before 1889 mining phosphates on Peace river and vicinity. The Scott Manufacturing Company had been for some years manufacturing fertilizers in Atlanta, Ga. That the two companies are, in interest, the same, though separate corporations. That the phosphate company knew that Cross was complainant's agent, as stated, when the Scott Company employed him, and knew of the fraud on complainant, and acquired its interest with a knowledge of such fraud. Long before October, 1889, defendants' officers and agents had been examining lands on Peace river, and purchasing phosphate lands for their purposes, or to sell. Before Cross' visit to Philadelphia, the president of the manufacturing company, or some other officer, gave Cross a description of complainant's land which the company wished to purchase, and secretly employed Cross to purchase the same as low as he could. The defendants and Cross knew before they bought the land that they contained phosphates, and that their actual market value was many times greater than the amount paid therefor. When Cross was employed by defendants, as stated, their officers and agents represented to Cross that they wanted the land to control the use of the river, and for other purposes, and did not want them for phosphates; which statements were false in fact, and made to deceive complainant, and conceal from him the value of the land; and complainant was deceived, and, relying upon Cross, made no further inquiry. That the legal title of said land is still in the defendants. That complainant is ready and willing to pay the defendant the George W. Scott Manufacturing Company the amount paid complainant for the lands, with interest thereon, with the execution and delivery of the deed to complainant, and complainant would have made tender thereof to said company before filing this bill but for the belief and conviction that such tender would not have been accepted. Complainant tenders in the bill to the defendants the full amount of purchase money received for the land from Cross, with legal interest thereon, and offers to pay the same in any manner or time that the court may decree, upon reconveyance of the land unincumbered, in the same or in as good condition as when conveyed to defendants. Discovery is waived except as to 14 interrogatories which were propounded to the defendants. The prayer is for an order and decree that the defendants convey, by good and sufficient deeds of conveyance, the lands described, and for an account of all the phosphates and phosphate ores, if any, taken from said lands, and for damages, if any, to the land, and for such other and further relief as to the court may seem just to make. There is also prayed for injunction, which has not been insisted upon. The demurrer is upon two grounds: First, that there is no equity in the bill; second, that John Cross is a necessary party to the bill....