Schmitt v. Franke

• Citation: 151 N.W. 793,160 Wis. 347
• Parties: SCHMITT v. FRANKE ET AL.
• Decision Date: 23 March 1915
• Court: United States State Supreme Court of Wisconsin

160 Wis. 347

151 N.W. 793

SCHMITT

v.FRANKE ET AL.

Supreme Court of Wisconsin.

March 23, 1915.

Appeal from Circuit Court, Milwaukee County; John C. Ludwig, Judge.

Suit by Conrad Schmitt against E. C. Franke and others for specific performance of a contract to transfer to plaintiff an interest in certain corporate stock. Judgment for defendants, and plaintiff appeals. Affirmed.

This is an action in equity to enforce specific performance of an alleged oral agreement to transfer to plaintiff an undivided one-third interest in 701 shares of corporate stock of the Schmitt Bros. Tobacco Works, and to impress a trust in the plaintiff's favor upon 501 shares thereof now in the hands of the defendants. The relief was denied on the ground that a part of the oral contract for the transfer of the stock was an arrangement to restrict public bidding at a judicial sale of said stock, and that the plaintiff was barred of relief in equity by having become a party to said last-named arrangement.

The facts found by the court were, in substance, as follows: Prior to June, 1907, the plaintiff and his brothers, C. M. Schmitt (one of the respondents here) and Mathias F. Schmitt, were minority stockholders in the Hansen-Schmitt Company, a tobacco manufacturing corporation at Milwaukee; the said C. M. and Mathias being actively engaged in the business. On account of business differences, C. M. and Mathias were forced out of active participation in the business, and they, with the defendant C. W. Walter, organized a new corporation for the manufacture of tobacco, called the Schmitt Bros. Tobacco Works, which became a competitor of the Hansen-Schmitt Company. Both companies were financially embarrassed in June, 1907, and the defendants C. M. Schmitt and Walter and said Mathias Schmitt, desiring to make some arrangement which would end the ruinous competition, either by disposing of the Schmitt Bros. business, or acquiring control of the Hansen-Schmitt business, consulted the plaintiff, as a result of which consultation plaintiff went to New York to effect a sale of the Schmitt Bros. business to the American Tobacco Company, if possible. He did not succeed, but subsequently, pursuant to his advice, an option on 701 shares of the Hansen-Schmitt stock (being a controlling interest) was obtained running to plaintiff and Mathias, which they transferred to the defendant Franke, and at the same time arrangements were made for the purchase of the business and assets of the Hansen-Schmitt Company by the Schmitt Bros. Company, which were afterwards carried out. About June 25, 1907, Franke made a written agreement with plaintiff and Mathias (which was known and consented to by C. M. Schmitt and Walter) by which he agreed to sell and convey to them said 701 shares of stock (which had then become stock of the Schmitt Bros. Company) for $30,300, payable in certain installments, for which the plaintiff, Mathias Schmitt, C. M. Schmitt, and Walter gave their notes; it being further agreed that all dividends declared on the stock should be immediately applied on the purchase price of the stock, and that Franke should be employed to purchase tobacco for the company in any market in which he might have a representative. The first note becoming due and not being paid Franke, by virtue of a provision in the contract, declared the whole sum due, and brought action to foreclose and bar Conrad, Mathias, and C. M. Schmitt and Walter from all rights in the stock, which action went to judgment, under which the stock was sold, and bid in by Franke himself, February 10, 1910, for $31,552.65, which was the exact amount of the debt. After the commencement of the foreclosure action, but before the sale, C. M. Schmitt and Walter represented to the plaintiff that, if he would permit Franke to bid in the stock on the sale without opposition bidding, he (Franke) would purchase the same for the benefit of the plaintiff, C. M. Schmitt, and Walter (less a certain number of shares to be retained by Franke), under an agreement that the shares should be paid for out of dividends on the stock similar to the former agreement. They further represented to the plaintiff that one of the real objects of the...