Southeast Lumber Co. v. Friend

• Decision Date: 16 June 1932
• Citation: 158 Va. 863
• Parties: SOUTHEAST LUMBER EXPORT COMPANY, INCORPORATED v. GALLIE FRIEND.
• Court: Virginia Supreme Court

Page 863

158 Va. 863

SOUTHEAST LUMBER EXPORT COMPANY, INCORPORATED v. GALLIE FRIEND.

Supreme Court of Virginia, Wytheville.

June 16, 1932.

Present, Campbell, C.J., and Holt, Gregory, Hudgins and Browning, JJ.

1. APPEAL AND ERROR — Exhibits — Exhibits Not Embodied in the Record — Dismissal of Appeal — Case at Bar. — Appellee made a motion to dismiss the appeal on the ground that the exhibits filed with the depositions were not embodied in the record. Section 6357 of the Code of 1919 furnishes a complete answer to this contention. That section provides that the original exhibits filed with the evidence instead of being copied into the record may be used at the hearing on appeal with the same effect as in the court below. No motion was made in the Supreme Court of Appeals for the production of any exhibits necessary to a determination of the cause.

2. APPEAL AND ERROR — Foreign Corporations — Failure of Corporation to File Copy of Its Amended Charter with Corporation Commission — Dismissal of Appeal — Case at Bar. — In the instant case appellee made a motion to dismiss the appeal on the ground that appellant being a foreign corporation had failed to file with the Corporation Commission a copy of its amended charter.

Held: That this was no ground for a dismissal of the appeal and the motion to dismiss was overruled.

3. BILL IN EQUITY — General Prayer for Relief. — The rule is well settled that if the bill contains charges putting facts in issue that are material, the plaintiff is entitled to the relief which these facts will sustain under the general prayer.

4. SALES — Sale of Stock — Partial Failure of Consideration — Buyer to Have Position with Corporation — Case at Bar. — In the instant case a bill by the buyer for the rescission of a contract for the sale of stock alleged that complainant, the buyer, had been induced to part with the consideration for the stock, $25,000.00, by a promise by the officers and agents of the seller that he was to be employed by the seller at a salary of $600.00 per month, and his son-in-law was also to be employed by the seller, which employments should continue as long as the $25,000.00 was invested in the enterprise. When complainant was notified of his discharge he immediately demanded a return of the money invested in the enterprise.

Held: That a decree in favor of complainant was without error.

5. RESCISSION, CANCELLATION AND REFORMATION — Substantial Failure of Consideration. — A substantial failure of consideration is a well recognized ground for rescission of a contract and recovery of the money paid.

6. CONTRACTS — Rescission — Termination by One Party Who Retains Benefits and Repudiates His Obligations. — A contract cannot be partially terminated by one party so as to take to himself all the substantial benefits of the contract and at the same time repudiate all of his own obligations to the other party.

Appeal from a decree of the Circuit Court of the city of Norfolk. Decree for complainant. Defendant appeals.

The opinion states the case.

William L. Parker, Charles S. Grant and Henry Bowden, for the appellant.

W. M. Phipps and Burns & Griffith, for the appellee.

CAMPBELL, C.J., delivered the opinion of the court.

The appellant complains of a decree entered against it by the lower court, wherein it is adjudged that appellant is indebted to appellee in the principal sum of $25,000.00.

At the First January rules, 1930, appellee filed his bill of complaint against appellant, Elmer S. Anderson, Henri Isaacsen and others. The material allegations of the bill are, in substance: That appellee is a New York corporation engaged in the manufacture, purchase and sale of timber, logs and lumber, with its principal offices in the city of New York; that, pursuant to the laws of this State, it made application to the State Corporation Commission for, and obtained, a license as a foreign corporation, to engage in business in the State of Virginia; that on or about the first day of October, 1928, Anderson and Isaacsen (officers and agents of the appellant) entered into negotiations with appellee in regard to the purchase by him of certain shares of the capital stock of appellant; that during the pendency of the negotiations Anderson and Isaacsen represented that the capital stock of the corporation consisted of 672 shares of the par value of $100.00 each, and there was invested in the business of the corporation the sum of $67,200.00, represented by lumber, machinery, equipment, notes, accounts, etc.; that the corporation had a contract with the Virginia National Bank of Norfolk, Virginia, for a line of credit in the sum of $25,000.00, and that the business was being operated upon a sound and profitable basis.

The bill further alleges that, as an added inducement for the investment by the appellee of the sum of $25,000.00 in the stock of the corporation, he was to be employed by the corporation as manager and operator of the lumber yard and warehouse in the purchase and sale of lumber, at a salary of $600.00 per month; that his son-in-law, F. H. Stapleton, was to be employed as a bookkeeper at a salary of $250.00 per month, and that the employment would continue so long as the $25,000.00 was invested in the enterprise; that appellee would receive 200 shares of seven per cent preferred stock of the par value of $100.00; that thereupon, fully relying upon the representations made to him, appellee invested the sum of $25,000.00 in the enterprise and entered upon his duties as general manager; that this relationship continued until the 31st of December, 1929, when, without just cause, appellee and Stapleton were summarily discharged; that appellee immediately offered to return the shares of stock held by him and demanded the return of the amount invested by him in the business, which offer and request were finally rejected.

The bill also alleges that the representations made by the officers and agents of appellant in regard to the outstanding shares of stock of the corporation, and, in particular, as to the solvency of the corporation at the date of the purchase agreement and employment, were untrue. The specific grounds on which appellee sought relief were, that the contract of purchase was secured by fraudulent representations, and that the sale of the stock to him was in violation of the commonly called "blue sky law" Code 1930, section 3848(47) et seq..

In addition to the...