Grueby v. Chase Harris Forbes Corp.
| Decision Date | 17 September 1935 |
| Citation | 197 N.E. 624,292 Mass. 156 |
| Parties | GRUEBY v. CHASE HARRIS FORBES CORPORATION. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Exceptions from Superior Court, Suffolk County; Donnelly Judge.
Action of contract heard without a jury by William H. Grueby administrator, against the Chase Harris Forbes Corporation. The judge found for the plaintiff in the sum of $13,932.83 and the defendant brings exceptions.
Exceptions overruled.
J. W. Vaughan and A. Brown, both of Boston, for plaintiff.
C. B. Rugg and W. F. Farr, both of Boston, for defendant.
This is an action of contract to recover the price paid by the plaintiff to the defendant for ten $1,000 of National Press Building Corporation which the plaintiff purchased from the defendant on July 25, 1928.
The grounds on which the action is based are that the sale was illegal for the reason that no notice of intention to offer the bonds for sale had been filed with the department of public utilities as required by the sale of securities act, G. L. c. 110A, § 5, St. 1924, c. 487, § 2, and that after the plaintiff discovered this violation of law, he rescinded the sale by tendering back to the defendant the bonds which he had bought. Kneeland v. Emerton, 280 Mass. 371, 183 N.E. 155, 87 A.L.R. 1. After a finding by the judge for the plaintiff, the case is here on the defendant's exceptions to the granting of certain rulings requested by the plaintiff, to the refusal of certain rulings requested by the defendant and to the finding for the plaintiff.
The defendant's first contention is that notice of intention to offer for sale had been filed in compliance with the statute. On April 14, 1928, Faxon, Gade & Co. Inc., a registered broker, wrote a letter to the department enclosing a formal notice of intention to offer for sale an issue of ‘ General Mortgage 6 1/2% Bonds of the National Press Building Corporation.’ This was an issue of the same corporation junior to the 5 1/2% first mortgage sinking fund gold bonds which the plaintiff bought in July, 1928. This letter contained the following references to the first mortgage issue:
This was not a notice of intention to offer for sale the first mortgage bonds. The letter and the enclosure were plainly intended as a notice with respect to the second issue and not with respect to the first. The purpose of the statute in requiring the notice of intention to offer for sale is to call the department's attention to the fact that a new security is about to be offered, so that the department may investigate and, if it sees fit, forbid the sale under the provisions of sections 5 and 6 (). The letter and the enclosure were adequate to this end as to the second issue, but not as to the first. An officer or clerk of the department examining the letter and the enclosure would find his attention directed to the second issue and not the first. If he read the letter carefully, he would infer that a first issue had been offered ‘ on Tuesday’ and he might surmise that the offer continued, but he would also be entitled to infer that such offer had been made lawfully, after notice to the department and that the department had already taken cognizance of the matter. He could not be held bound to remember that there had been no notice of the first issue or to make search for the purpose of ascertaining that fact. The detailed statement filed May 9 in connection with the second issue was not notice of intention to offer for sale the first issue. Although it mentions first mortgage bonds as constituting part of the funded debt of the corporation, it refers to the bonds as ‘ Sold.’ In the context in which this word is used it cannot be construed as the equivalent of ‘ to be sold.’ Moreover, the statute requires a clear and unequivocal declaration of intent to offer for sale ‘ the security named and specified in the notice.’ Such casual references as these, occurring in documents prepared for the purpose of qualifying an entirely separate and distinct issue, are not enough. Kenady v. City of Lawrence, 128 Mass. 318; McNulty v. City of Cambridge, 130 Mass. 275; Miles v. City of Lynn, 130 Mass. 398; Dricoll v. City of Fall River, 163 Mass. 105, 107, 39 N.E. 1003; Sweet v. Pecker, 223 Mass. 286, 111 N.E. 908; Bychower v. United Cigar Stores Co., 253 Mass. 542, 149 N.E. 411; Rankin v. Wordell & McGuire Co., 254 Mass. 109, 149 N.E. 609.
But before a purchaser can maintain an action at law to recover the price paid for securities sold in violation of the statute he must make a proper tender which, if accepted, would restore to the seller the securities themselves and all dividends or interest which the purchaser has received therefrom. Kneeland v. Emerton, 280 Mass. 371, 378, 183 N.E. 155, 87 A.L.R. 1; Bauer v. Bond & Goodwin, Inc., 285 Mass. 117, 118, 188 N.E. 708; Cummings v. Hotchkin Co. (Mass.) 197 N.E. 473. We proceed to consider separately the several objections of the defendant to the tender which the plaintiff made of the identical bonds purchased:
(1) The plaintiff is described in this action as administrator of the estate of Edward L. Grueby. The original purchase of the bonds, which the plaintiff has sought to rescind, was made by the plaintiff himself in his capacity as administrator and not by the interstate before his death. After the purchase and before the tender, the plaintiff distributed five of the bonds to his sister, Mrs. Bates, and the other five to himself, he and his sister being the only persons interested in the estate. The judge has found that the tender was made by the plaintiff and Mrs. Bates in their individual capacities. It was proper for the plaintiff to make the tender in his individual capacity, because in law he is deemed to have made the original purchase in his individual capacity, even though he may have described himself as administrator and may have been accountable to the probate court with respect to the transaction.‘ The general rule is, that an executor can make no contract which shall bind the estate of his testator by a new promise.’ Kingman v. Soule, 132 Mass. 285, 288. The contract binds him personally. Durkin v. Langley, 167 Mass 577, 46 N.E. 119; Eaton v. Walker, 244 Mass. 23, 30, 138 N.E. 798; Tomlinson v. Flanagan, 287 Mass. 38, 190 N.E. 785. It has not been argued, and we think could not be argued successfully, that the effect of the tender was in any way weakened because the plaintiff's sister, the sole other distributee of the estate, joined therein through the plaintiff as her agent. He had in hand and tendered her bonds as well as his own. The defendant cannot now argue that there was no evidence of the plaintiff's authority from Mrs. Bates to deliver her bonds, as the judge at the request of the defendant granted the finding numbered fourteen, wherein the tender is described as ‘ by William H. Grueby and Minnie G. Bates.’ Nor is the fact that the plaintiff in the present action has described himself as administrator any bar to recovery, as it is settled that where one is in fact administrator and is accountable as such with respect to the subject-matter...
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