Hebgen v. Koeffler

• Decision Date: 22 October 1897
• Parties: HEBGEN ET AL. v. KOEFFLER.
• Court: Wisconsin Supreme Court

97 Wis. 313

72 N.W. 745

HEBGEN ET AL.

v.KOEFFLER.

Supreme Court of Wisconsin.

Oct. 22, 1897.

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

Action by Gustav Hebgen and others against Hugo Koeffler, impleaded with others. From a judgment in favor of plaintiffs, defendant Hugo Koeffler appeals. Affirmed.

This was an action, among other things, to rescind a sale of real estate on the ground of fraud, and to recover of the promoters of a corporation profits alleged to have been fraudulently made by them. The trial resulted in findings in plaintiffs' favor, which cover the issues formed by the pleadings. So far as necessary to the decision of this appeal, such findings are as follows:

1. Plaintiffs are stockholders of the corporation hereafter named, and this action is brought for the benefit of such corporation and the stockholders thereof.

2. Defendant Van Eimeren was the owner of the lands described in the complaint. H. J. Mabbett had the exclusive right to sell such lands for $700 per acre, to be paid: $14,000 as soon as the papers were ready (out of which $100 was to be deducted), and the balance within five years from the exchange of papers, with interest at the rate of 5 per cent. per annum, payable annually, secured by a mortgage on the premises.

3. Defendant Hugo Koeffler, for the sum of $6,000, obtained the Mabbett interest in the lands, and on the same day he obtained from Van Eimeren a land contract, whereby the latter agreed to sell said lands to Koeffler for $700 per acre, payable: $600 down at the making of the agreement; $13,400 on or before January 2, 1893; and the balance five years from the date of the delivery of the deed, the deferred payments to be secured by a mortgage on the premises, and the total purchase price to be $31,000. Thereafter Koeffler sold a one-third interest to defendant Preusser.

4. Koeffler and Preusser then formed a plan for organizing a corporation for the purpose of turning the lands over to it for $55,000, and of thereby making a profit out of the transaction at the expense of such persons as they might induce to become associated with them in such corporation.

5. Pursuant to the plan mentioned, Koeffler and Preusser prepared a subscription paper which bound the subscribers to join in the organization of a corporation for purchasing the Van Eimeren farm for $55,000, to be paid: $25,000 on the 20th day of December, 1892; $13,000 January 2, 1895; and $17,000 January 2, 1898, with interest on the deferred payments; and to take stock in the corporation for the amount set opposite their names, and pay therefor as required by the board of directors.

6. Said paper was so prepared as to conceal the interest of Koeffler and Preusser therein and to induce those who signed it to believe that the promoters were going into the corporation on the same basis with other subscribers.

7. Koeffler employed one Fernekes to assist in obtaining subscriptions, and, to make it appear that Fernekes was to be a stockholder, caused him to subscribe for $3,000 of the stock, but the subscription was in fact for Koeffler. Koeffler subscribed $10,000 in his own name, and Preusser $10,000. Koeffler and Fernekes obtained subscriptions to the balance of the stock of 550 shares of the par value of $100 each.

8. None of the plaintiffs who signed the agreement would have signed it had they known that Koeffler or Preusser had any interest in the land other than as subscribers to the agreement or that the land was to be purchased so as to give them a secret profit.

9. After the subscriptions were obtained the corporation was organized and the stock taken. Thereupon a meeting of the stockholders was had, at which Koeffler and Preusser represented a majority of the shares, and a board of directors was elected, including Koeffler and Preusser.

10. Immediately after the election of the board of directors, they held a meeting at which Preusser was elected president and Koeffler secretary and treasurer. Then a resolution drawn by Hugo Koeffler was adopted, referring an abstract of the property to his brother, defendant C. A. Koeffler, Jr., for examination, and, with the proviso that if the title were reported good, the president and the secretary should buy the property for the company, according to the agreement contained in the subscription list, draw the necessary money from the corporation treasury to make the down payment, and execute the necessary papers to complete the transaction. To provide for the down payment an assessment of 46 per cent. was immediately made on the stock, which assessment was paid. Nothing was said at this meeting to indicate that Hugo Koeffler or Preusser had any interest in the land different from other stockholders, and all of the stockholders, except those engaged in the scheme for secret profits, believed that the purchase was to be made of Van Eimeren by the corporation for the full sum of $55,000.

11. On the 10th day of January, 1893, Hugo Koeffler made, in his official capacity, a check for $25,000 payable to the order of Mabbett & Jefferson, as agents of Van Eimeren, and delivered it to such agents. Such check was paid out of the corporation moneys, and the money was disbursed by paying $13,400 to Van Eimeren and the balance to Hugo Koeffler. Upon such payment being made to Van Eimeren, he and his wife made a deed of the lands to Hugo Koeffler, who mortgaged the same back to Van Eimeren to secure payment of $17,000, according to the terms of the contract before mentioned. Hugo Koeffler made a deed to the corporation, conveying the...