Schroeder v. Carroll

• Decision Date: 08 February 1927
• Citation: 192 Wis. 460,212 N.W. 299
• Parties: SCHROEDER ET AL. v. CARROLL.
• Court: Wisconsin Supreme Court

192 Wis. 460

212 N.W. 299

SCHROEDER ET AL.

v.CARROLL.

Supreme Court of Wisconsin.

Feb. 8, 1927.

Appeal from Circuit Court, Juneau County; Emery W. Crosby, Judge.

Action by Herman F. Schroeder and others, copartners, doing business as Schroeder Bros., against Jerry E. Carroll. Judgment for plaintiffs, and defendant appeals. Affirmed.--[By Editorial Staff.]

Action to recover damages sustained by plaintiffs because of the fraudulent representations alleged to have been made by the defendant in the purchase from them of 37 1/2 shares of common stock held by them in the Mauston Electric Service Company, a corporation, hereinafter called the company, having outstanding 1,055 shares of common stock held by eleven persons. The defendant had for some time been the secretary, manager, and a director of the company and held 255 shares of common stock. Troy and Winsor, two of the other directors, had respectively 155 and 255 shares of common stock. Curran Bros., one of whom was a director, had 255 shares.

Plaintiffs claim that the defendant knew at the time he bought their stock that negotiations for the sale of the company to the Wisconsin Power & Light Company, hereinafter called the power company, were pending at a price of $145 per share, and that he fraudulently withheld that fact from them and purchased their stock at $93 per share and a short time thereafter sold it to the power company for $143 per share.

The issues were submitted to a jury, who entered this verdict:

“Q. 1. Did the defendant, Jerry Carroll, state to the board of directors of the Mauston Electric Service Company on the 13th day of January, 1925, that he had been to Madison some time prior to that and in a conversation with some of the officers of the Wisconsin Power & Light Company they had asked him if this company would sell their holdings to the Wisconsin Power & Light Company, as they were in the market to buy? A. Yes.

Q. 2. Did Jerry Carroll, on the 13th day of January, 1925, say that the Wisconsin Power & Light Company was desirous of buying the concern, meaning the Mauston Electric Service Company? A. Yes.

Q. 3. Was it agreed between the members of the board of directors present at the meeting of January 13, 1925, while Mr. Carroll was present, that we will stick together and not one of us sell out unless the entire stock was taken? A. Yes.

Q. 4. Did the plaintiffs, or either of them, on the 18th day of February, 1925, the day that Carroll purchased their stock, say to Carroll, ‘We have had this stock 20 years and 10 years it has paid us no dividends. If there is anything in sight where the stockholders will receive a benefit in any way, shape, or manner, we are entitled to as much as any of them; you are on the inside and know these things,’ or words of similar import? A. Yes.

Q. 5. If you answer question No. 4 ‘Yes,’ then answer this question: Did Carroll reply to said inquiry, ‘There is absolutely nothing,’ or words of similar import? A. Yes.

Q. 6. If you answer question No. 5 ‘Yes,’ then answer this question: Were the plaintiffs induced to transfer their stock to the defendant because of their belief in and reliance upon the truth of such statement? A. Yes.

Q. 7. If you answer question No. 5 ‘Yes,’ then answer this question: Was such statement false? A. Yes.

Q. 8. If you answer question No. 7 ‘Yes,’ then answer this question: Ought the plaintiffs, in the exercise of such care as is ordinarily exercised by persons of their education, intelligence, and experience, have discovered the falsity of such statement before making the transfer? A. Yes.

Q. 9. Did the defendant, Carroll, buy the stock of the plaintiffs for the purpose of getting a controlling interest of the stock for his own personal interest that he might get control of the stock as an individual? A. No.

Q. 10. What was the book value of the stock in the Mauston Electric Service Company on the 18th day of February, 1925, the day plaintiffs' stock was sold? A. $84.185.

Q. 11. What was the actual value of the stock in the Mauston Electric Service Company on the 18th day of February, 1925? A. $143.”

The court changed the answer to question 8 from “yes” to “no” and entered judgment for plaintiffs for $1,862.50, with interest and costs. The defendant appealed.

Grady, Farnsworth & Walker, of Portage, for appellant.

McFarlane & Loomis, of Mauston, for respondents.

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