Proctor v. Appleby

• Decision Date: 22 March 1920
• Docket Number: 15559.
• Court: Washington Supreme Court
• Parties: PROCTOR v. APPLEBY et al.

188 P. 481

110 Wash. 403

PROCTOR v. APPLEBY et al.

No. 15559.

Supreme Court of Washington

March 22, 1920

Department 2.

Appeal from Superior Court, Pierce County; E. M. Card, Judge.

Action by H. F. Proctor against Stephen Appleby and others. From a judgment for plaintiff, defendants appeal. Reversed and remanded, with instructions.

Hayden, Langhorne & Metzger and John A Shackleford, all of Tacoma, for appellants.

John B Hart, of Seattle, and Bates & Peterson, of Tacoma, for respondent.

FULLERTON J.

In this action the respondent sought to recover from the appellants some 400 shares of the capital stock of a corporation known as the Camp Lewis Amusement Company, or in the case return of the stock could not be had the value thereof. As the assignments of error are based to a large extent on the admission of evidence, a somewhat minute statement of the issues is necessary.

In his complaint the appellant alleged that the corporation named was organized for the purpose of developing a part and portion of the army cantonment known as Camp Lewis, which was set aside by the duly constituted authorities as Greene Park and that for that purpose the corporation had become and was the owner of a certain license, franchise, and privilege granted by the commanding officer of the cantonment on October 22, 1917; that the capital stock of the corporation was 1,000 shares of par value of $100 each; that on the organization of the corporation the respondent became and was the owner of 600 shares of such stock, and that the defendants Neely and Smyly each became and was the owner and holder of 200 shares of such capital stock; that the license, franchise, and privilege held by the corporation was secured for the corporation largely through the efforts and labors of the respondent, in which he was greatly assisted and aided by a certain committee, composed of citizens of Pierce county, who had theretofore been appointed and selected as an advisory committee by the commanding officer at Camp Lewis, of which committee the appellant Appleby was chairman; that on June 11, 1918, the privilege held by the corporation was of large value, although subject to cancellation at any time by the commanding officer of the army post or by any higher military authority; that its business consisted of locating and granting concessions to persons desirous of establishing them in such park, and in supervising the construction, operation, and conduct thereof, and of putting in and constructing permanent utilities therein; that previous to June 11, 1918, the corporation had expended, or caused to be expended, in the construction of permanent utilities in such park, and in the laying out of its streets and alleys, and in its gas, water, and sewer systems, a large sum of money, approximating $100,000, and had also expended or caused to be expended by concessionaires holding rights in such park additional large sums approximating $500,000; that all of such concessions and improvements were largely secured by the labors and at the instance of the respondent.

It is further alleged that for several years prior to June 11, 1918, the appellant Appleby was the cashier of the National Bank of Tacoma, at which bank the respondent had for several years done a general banking business; that in the course of such business he had become acquainted with an friendly with the appellant, and had frequently sought his advice and counsel regarding business matters; that by reason of his friendship for Appleby, and of Appleby's apparent friendship for him, he had on June 11, 1918, the utmost faith and confidence in Appleby, and in his honesty, truth, and probity; that he also had confidence in the truthfulness and integrity of the appellant Kelly; that on and prior to June 11, 1918, the appellants Appleby, Kelly, Neely, and Smyly confederated and conspired together for the purpose of obtaining from him 400 shares of the capital stock of the Camp Lewis Amusement Company, and for the purpose of injuring and defrauding him out of such stock, and for the purpose of securing the stock for themselves; that on June 11, 1918, in pursuance of the conspiracy aforesaid and for the purposes aforesaid, the appellants Appleby and Kelly willfully and falsely represented and stated to him that the commanding officer at Camp Lewis had threatened and was threatening to cancel the privileges held by the Camp Lewis Amusement Company, and had also stated that he was greatly dissatisfied with the respondent and with the way in which he was handling the business of the corporation; that he the commanding general was tired of the complaints of the concessionaires, and that he would cancel the privileges granted to the corporation unless there was a change in the management of the corporation, and unless the respondent would transfer to Appleby and Kelly 200 shares each of the capital stock of the corporation so that they could become actively identified with the management thereof; that the respondent, by reason of his implicit faith and confidence in Appleby and Kelly, and believing to be true the representations so made, turned over and delivered to Appleby 400 shares of the corporation stock; that the representations so made were false and untrue, and were made by the appellants and each of them and known to be so by Appleby and Kelly when so made, and that they were made for the purpose of cheating and defrauding him out of the stock; that the stock is and on June 11, 1918, was of the reasonable market value of more than $40,000; and that he had demanded the return thereof from the appellants which demand had been refused.

It was further alleged that at all times prior to June 11, 1918, the respondent was treasurer and vice president of the corporation, in the active management thereof, and was receiving a salary of $350 per month; that as soon as the appellants Appleby and Kelly got possession of the stock all of the defendants met and removed the respondent from his official connection with the corporation, and assumed the management of the corporation themselves; that since assuming such management the appellants have grossly mismanaged the affairs of the corporation; that because thereof many of the concessions theretofore granted have not been fulfilled, and the commanding officer of Camp Lewis has notified the company to perform work which has not been performed, and that there is danger that the concession granted the corporation may be canceled; that all of said work would have been performed had he not been defrauded of his stocks and removed from the active management of the company, and that by reason thereof his remaining stock has greatly decreased in value and in earnings and dividends, all to his loss in the sum of $10,000.

The prayer of the complaint is: (1) For the return of the shares of stock, or in case they cannot be returned judgment for their value in the sum of $40,000; (2) for judgment in the sum of $10,000 for damages and injuries sustained by the detention of the stock; and (3) for the costs and expenses in the action to be incurred.

The appellants Smyly and Neely answered the complaint jointly, and the appellants Appleby and Kelly answered separately. Their answers were in substance the same, and were in effect a general denial of the traversable allegations of the complaint. No special affirmative defense was interposed by Neely, Smyly, or Appleby. Kelly set up affirmatively by way of a separate answer that of the 600 shares of stock issued to respondent on the formation of the corporation 200 shares thereof were held in trust by the respondent for him, and that by the terms of the trust he was entitled to receive from the respondent at any time on demand a transfer to him of the stock. A reply was filed to the affirmative answer of Kelly denying each and every allegation therein contained.

The action was tried by the court sitting with a jury. The jury found 'for the plaintiff and against the defendants Stephen Appleby, Elliott Kelly, P. W. Smyly, and H. J. Neely that the plaintiff is the owner of and entitled to the return of the 400 shares of stock in controversy,' further finding the value of the stock to be $33,000.

The shares of stock were introduced as evidence during the course of the trial. Later on a question arose as to the form of verdict the jury should return; the question being whether the jury should make a finding as to the value of the stock. The court finding on inquiry that all of the stock was in court, ordered the same to be 'impounded and held subject to the finding of the jury,' ruling that no finding of value need be made. Later on, however, the court changed its ruling in this regard, and submitted the question of value to the jury.

On the verdict, and after motions for judgment notwithstanding the verdict and motions for a new trial interposed on behalf of the several appellants had been overruled, the court entered the following judgment (formal parts and recitals omitted):

'It is now therefore, in accordance with said verdict and in consideration of the premises, ordered, adjudged, and decreed that plaintiff is, and at all times has been, the owner of and is entitled to have returned and restored to him the certificates or shares of stock described and referred to in the complaint, to wit:

Certificates No. 13-11 and 12 .. for 100 shares

Certificate No. 4 .............. for 100 shares

Certificate No. 6 .............. for 100 shares

Certificate No. 3 .............. for 100 shares

'It is further ordered, adjudged, and decreed that said shares of stock were on the 11th day of June, 1918, of the value of $33,000.

'It is further ordered, adjudged, and decreed that within ten days from the date hereof the clerk of this court

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