Newhall v. Enterprise Mining Co.

• Decision Date: 18 May 1910
• Citation: 205 Mass. 585,91 N.E. 905
• Parties: NEWHALL v. ENTERPRISE MINING CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

205 Mass. 585

91 N.E. 905

NEWHALL v. ENTERPRISE MINING CO.

Supreme Judicial Court of Massachusetts, Suffolk.

May 18, 1910

COUNSEL

P. H. Kelley, for plaintiff.

Stephen H. Tyng and James P. Prince, for defendant.

OPINION

KNOWLTON C.J.

One Woodin was the promoter, the treasurer and a director of the defendant mining corporation, whose capital stock was 10,000 shares, of a par value of $100 each. Of these shares 9,391 had been issued to Woodin in payment for his interest in certain mines, 9 shares had been issued to other corporators, and 600 shares were not issued nor subscribed for. Woodin conveyed 1,000 of his shares to one Prince as a trustee for the corporation, under a stipulation agreed to by the board of directors, that he (Woodin) should be appointed the fiscal agent for the sale of them or of any portion of them, with authority to take a commission of not more than 33 1/3 per cent. from the selling price, this selling price to be such as the board should determine, and the proceeds of the sales to be placed in the treasury of the corporation, to be expended in the discretion of the directors, with a proviso that the balance due upon the bond given for the purchase price of the mining property should be paid in accordance with its terms. Woodin, as agent for the defendant, contracted to sell to the plaintiff and the plaintiff's wife stock belonging to the company at three different times, amounting to 134 shares in all, for $33.33 1/3 per share. The plaintiff's wife has deceased and the plaintiff has succeeded to her rights. The plaintiff brought a bill in equity against the defendant, alleging the these sales were made upon false representations by Woodin of matters of fact, which, if true, would have shown that the stock was very valuable, and the purchases were made by the plaintiff and his wife in reliance upon these false and fraudulent representations. He attempted to rescind the contracts on account of these alleged frauds, and to obtain a decree for a return of the money paid to Woodin for the defendant. Upon a hearing in the superior court this bill was dismissed on the ground that the alleged frauds were not sufficiently supported by evidence, and that, if they were, the plaintiff had delayed too long before attempting to rescind the contracts.

Subsequently the plaintiff brought this action at law on the ground that all the sales, according to their terms, were of a part of the 1,000 shares of stock belonging to the defendant and held by the trustee, called in the plaintiff's declaration 'treasury stock,' and that the plaintiff and his wife paid Woodin for this stock, and that Woodin, in executing the contract, failed to deliver the defendant's stock, except to the amount of 45 shares, and delivered his own stock instead. For this reason, as the property was not that which the plaintiff bought, he elected to rescind the contract and reclaim the money paid to the defendant's agent, which this agent had never paid over to his principal, but had kept as his own. The defendant's answer was a general denial, and a plea of res judicata founded on the decree dismissing the bill in equity. At the hearing the judge made the following finding: 'In the above action the court finds for the defendant. I find the defendant's agent did not represent that he was selling any of the original treasury stock of 600 shares, but he agreed to sell the syndicate stock referred to in the bill in equity, held in trust by James P. Prince, and that the plaintiff agreed to buy such stock; that for relief for any misrepresentations by Woodin in such sale the plaintiff could have obtained a remedy in the bill in equity referred to in the answer, and should have sought it by proper allegations in the bill.' This so-called syndicate stock was the 1,000 shares above referred to. The plaintiff made many requests for rulings, and the case comes before us on his exceptions to the refusal of the judge to grant them.

The finding indicates a decision by the judge that the dismissal of the bill in equity was a bar to this suit. The argument of the defendant's counsel upon the exceptions...