Sautter v. Fulmer

• Decision Date: 05 January 1932
• Citation: 179 N.E. 310,258 N.Y. 107
• Court: New York Court of Appeals Court of Appeals
• Parties: SAUTTER et al. v. FULMER et al. CLOHER et al. v. FULMER et al. TABER v. FULMER et al. FERRIS v. FULMER et al. GAMMEL v. FULMER et al. FIRST BANK & TRUST COMPANY OF UTICA v. FULMER et al. SHERMAN v. FULMER et al. In re ANGE'S WILL.

258 N.Y. 107

179 N.E. 310

SAUTTER et al.

v.FULMER et al.

CLOHER et al.

v.FULMER et al.

TABER

v.FULMER et al.

FERRIS

v.FULMER et al.

GAMMEL

v.FULMER et al.

FIRST BANK & TRUST COMPANY OF UTICA

v.FULMER et al.

SHERMAN

v.FULMER et al.

In re ANGE'S WILL.

Court of Appeals of New York.

Jan. 5, 1932.

Seven actions brought by Christian Sautter, Jr., by W. Strong Cloher and others as executors of William H. Cloher, deceased, by William I. Taber, by T. Harvey Ferris, by George W. Gammel, by the First Bank & Trust Company of Utica, as executor of John H. Siemers, deceased, and by Carrie B. Sherman against John C. Fulmer and others as executors and trustees under the will of Jacob Ange, deceased. From interlocutory judgments (231 App. Div. 795, 796,245 N. Y. S. 893, 894, 896, 900, 902), affirming interlocutory judgments of the Special Term in favor of plaintiffs and directing an accounting, defendants appeal. In each action the following questions were certified: (1) Are the defendants entitled either on the trial of the action or on reference ordered under the interlocutory judgment to prove the value of their special contracts entered into and to have such value excluded from any sums for which they are liable to account to the plaintiff? (2) Is there any evidence to sustain the essential findings of fact against the defendants found by the trial court? (3) Do the findings in this case as a whole, so far as sustained by the evidence, sustain the judgment against the defendants? (4) As a matter of law, did the brokers in whose name the options were taken for the sale of the plaintiff's stock represent the ultimate purchasers of the stock then negotiating therefor instead of the defendants?

Judgments affirmed, and certified questions answered.Appeal from Supreme Court, Appellate Division, Fourth Department.

Frank H. Hiscock, of Syracuse, and Arthur J. Foley, of Utica, for appellants.

Thayer Burgess and Sherrill Babcock, both of Utica, for respondents.

O'BRIEN, J.

The Utica Sunday Tribune Company has an authorized capital of $60,000 divided into six hundred shares. These seven plaintiffs together with one other stockholder, owned a minority interest of two hundred and ninety-three shares. Defendants owned the ma jority interest, consisting of three hundred and seven shares. All the capital stock was purchased by Erwin R. Davenport, Frank E. Gannett, and Woodford J. Copeland. The complaint in each action alleges that defendant Fulmer, prior to the sale, dominated the management of the corporation, that, as the principal negotiator of the sale, he fraudulently represented to plaintiffs that an opportunity was present to sell the stock at $300 a share, and that, in reliance upon that fraudulent representation, they sold their holdings at that price, whereas defendant Fulmer sold his own stock and that of his majority associates for $1,098 a share. All the essential allegations of the complaints were found as facts, and the interlocutory judgments order that defendants account, in the ratio of each plaintiff's holdings to the entire stock, for the property received by defendants from the proceeds of the sale of the entire stock. The judgments also direct a referee to take and state the accounts.

We have carefully considered all the evidence in the case, and, without reciting it in detail, we find ample support for the essential findings, and hold that such findings against one occupying a fiduciary position sustain the judgments. Falk v. Hoffman, 233 N. Y. 199, 135 N. E. 243;Meinhard v. Salmon, 249 N. Y. 458, 164 N. E. 545, 62 A. L. R. 1;Stappenbeck v. Fulmer, 223 App. Div. 810, 227 N. Y. S. 909, affirmed 249 N. Y. 594, 164 N. E. 597.

The principal issue arises from the first question certified. We are asked to decide whether defendants are entitled to exclude from the sums, for which they are liable, the value of certain special contracts into which they entered with the purchasers at the time they sold their majority stock and subsequent to the time of the sale of the minority interest. Prior to the sale of the majority stock, Fulmer and his attorney, by payment made with the attorney's personal check from funds procured by a loan to the attorney which was secured by collateral supplied by Fulmer, purchased the two hundred and ninety-three shares of the minority stock for $87,900, or $300 per share, delivered it to the purchasers, and received from them the sum of $87,900. Subsequently, on April 6, 1922, the purchasers in writing agreed with the majority stockholders to buy their ‘three hundred and seven shares of the capital stock of said corporation for the sum of $337,100.’ This purchase, standing by itself, would be at the rate of $1,098 per share. The agreement, however, recites that the consideration for the purchase at this price is the sellers' covenants thereinbefore stated. Those covenants are as follows: The sale and delivery, without mention of price, of three hundred and seven shares of the capital stock, indemnification of the corporation from any libel suits growing out of any act committed by the corporation during the time that it was under...