Wann v. Scullin

• Decision Date: 18 February 1908
• Parties: WANN v. SCULLIN et al.
• Court: Missouri Supreme Court

109 S.W. 688

210 Mo. 429

WANN v. SCULLIN et al.

Supreme Court of Missouri, Division No. 2.

February 18, 1908.

Rehearing Denied March 17, 1908.

1. PRINCIPAL AND AGENT—DUTIES OF AGENT — INCONSISTENT INTERESTS — VALIDITY OF TRANSACTION.

An agent owes his principal the perfect good faith and loyalty, and may not take upon himself the character of an agent where, because of his relations to others or his own personal interest, he would be compelled to assume inconsistent duties and obligations, and as a general rule the contracts procured by an agent who has an interest in the subject-matter of the agency which is undisclosed to his principal are voidable in an action for that purpose, but the rule is not an arbitrary one, and has not been rigid in all cases.

2. CANCELLATION OF INSTRUMENTS—FRAUD—EVIDENCE—SUFFICIENCY—LAW AND EQUITY ACTIONS.

In a suit in equity to avoid a transaction, much less is required to sustain the charge of fraud than in an action at law for fraud and deceit.

3. CORPORATIONS—STOCKHOLDERS — RIGHT TO REPRESENT THIRD PARTY IN DEALINGS WITH CORPORATION.

The mere fact that one is a stockholder in a corporation will not entirely disable him from representing a third party in a business transaction with the corporation, but merely affords a ground for subjecting the transactions to the closest scrutiny by the courts when challenged by one entitled to raise the question.

4. SAME—OFFICERS—FRAUD.

In an action for fraud and deceit, where it appeared that a defendant, the president of the ferry company in which plaintiff held stock, was also a stockholder in a railroad corporation which was planning to secure control of the ferry stock, and that defendant wrote plaintiff that he was offered $500 per share for a majority of all of the ferry stock, and had agreed to sell his holdings, and recommended plaintiff to do likewise, and asked her to send him her stock immediately if she would sell, and, if a majority of the stockholders agreed to sell, he would send her $500 per share for her holdings, the fact that defendant had a pecuniary interest in the company intending to buy the stock which he did not disclose to plaintiff was not in law a fraud upon plaintiff, and did not disqualify him from receiving her stock and delivering it to an agent of the purchaser.

5. TRIAL—INSTRUCTIONS—MATTERS NOT SUPPORTED BY EVIDENCE.

It is error to instruct as to matters on which there is no evidence.

6. FRAUD — LIABILITY — MATERIALITY — RELIANCE ON NONEXISTENCE OF FACTS CONCEALED.

To warrant a finding of fraud in failing to disclose a certain matter, it must be shown that the failure to disclose the facts in question were material inducements to plaintiff's act, that plaintiff relied upon the nonexistence of the facts withheld and would not have acted in the same way had the facts been known.

7. CORPORATIONS—SALE OF STOCK—FRAUDULENT INTENT—EVIDENCE—SUFFICIENCY.

Evidence held insufficient to establish a fraudulent intent to deceive plaintiff into parting with certain stock.

Appeal from St. Louis Circuit Court; Horatio D. Wood, Judge.

Action by Carrie V. C. Wann against John Scullin and others. From an order granting defendants a new trial, plaintiff appeals. Affirmed.

John A. Gilliam and Luther Ely Smith, for appellant. Klein & Hough, Rowell & Zumbalen, and Joseph S. Laurie, for respondents.

GANTT, J.

This action was commenced in the circuit court for the city of St. Louis on May 15, 1902, and contained but one count, charging the defendants with having converted to their use 50 shares of stock in the Wiggins Ferry Company, which belonged to the plaintiff. Thereafter, on December 1, 1902, plaintiff filed an amended petition in one count against each. The defendants filed a motion to strike out certain portions thereof as irrelevant and redundant, which motion was sustained by the court. On June 2, 1903, plaintiff filed her second amended petition containing three counts. The first count being for fraud and deceit, the second count containing all the allegations of the first with additional averments concerning the defendant Scullin's agency for plaintiff and his consequent duties and liabilities. The third count was for conversion of plaintiff's said stock. Before proceeding to trial the defendants filed their motion to require the plaintiff to elect whether she would stand upon the first and second counts or the third count, on the ground that the latter was inconsistent with the first and second. The one being an affirmance of the sale, and the other disavowing the sale. This motion was sustained and plaintiff elected to proceed to trial upon the first and second counts of the second amended petition, and, after the evidence for the plaintiff had been heard, the court required the plaintiff to elect upon which of the two counts she would ask the verdict of the jury, for the reason that they both were for the same cause of action in different forms, and plaintiff elected to stand on the second count. The cause was submitted to the jury under the instructions of the court, and on March 7, 1904, the jury returned a verdict for the plaintiff against all of the defendants, assessing plaintiff's damages at the sum of $50,000. In due time the defendants filed their motion for a new trial, and this motion for new trial was sustained by the court on the ground that the second instruction given for the plaintiff should have been refused. Defendants also filed a motion in arrest of judgment, which was by the court overruled and exceptions duly saved. From the judgment and order of the court granting a new trial, the plaintiff prosecutes this appeal. The second count of the petition in this cause covers thirteen pages of printed matter. In substance plaintiff states that on the 1st day of April, 1902, she was the owner of 50 shares of stock in the Wiggins Ferry Company, and was a member of a voting trust which included a majority of the stock of the said Wiggins Ferry Company, the entire stock being 10,000 shares of the par value of $100 each, and the trustees of such voting trust were John Scullin and Festus Wade and Alonzo C. Church; that said Scullin was president of the Wiggins Ferry Company and also a director and an owner of a large amount of stock in the Mercantile Trust Company, and was an old and valued friend of Frederick A. Wann, the husband of the plaintiff; that Festus J. Wade was a director in the Wiggins Ferry Company, president of the Mercantile Trust Company and owned a large amount of stock therein and was a friend and business adviser of plaintiff; that said Scullin was a large owner of the stock and bonds of the St. Louis, Kansas City & Colorado Railroad Company, and believing that he was about to make a sale of the said railroad company and said Wiggins Ferry Company to the Chicago, Rock Island & Pacific Railway Company, which would enhance the price of the Wiggins Ferry Company stock, he conspired with Festus J. Wade to reduce its earnings temporarily by lowering its charge for carrying goods, the two concealed the expected sale to the Rock Island Company, and both then tried to purchase the stock of the Wiggins Ferry Company at the reduced price caused by their reduction of charges, and, among others, Festus J. Wade applied to plaintiff to buy her stock; that about April 19, 1902, said Scullin succeeded in selling the St. Louis & Colorado Railway to the Rock Island Company, and, by such sale, said Scullin became personally interested in the stocks and bonds of the Rock Island Company to the extent of about $2,000,000, and it became to his interest as the owner of said stocks and bonds of the Rock Island Company to buy for it the stock of the Wiggins Ferry Company at the lowest prices that he could get the same, and pledged himself to the officials of the Rock Island Company to use all his influence to buy for said railway company all or a majority of the stock of the Wiggins Ferry Company at $500 per share; that Festus J. Wade and the Mercantile Trust Company, knowing the interest of said Scullin in the Rock Island Company, and in the Mercantile Trust Company, on or about the 21st day of April, 1902, conspired with said Scullin to buy the stock of the Wiggins Ferry Company, including the stock owned by plaintiff at the lowest possible price, the said Mercantile Trust Company to get 2½ per cent. on such stock as it bought, the said trust company knowing the fiduciary relations held by said Scullin and Wade to the Wiggins Ferry Company, and the fiduciary relations existing between said Scullin and Wade and the members of the voting trust in the said Wiggins Ferry stock; that, in pursuance of such conspiracy, the defendants in order to cheat and defraud plaintiff out of a great part of the value of her Wiggins Ferry stock, and with intent to lull plaintiff and keep her from taking action to protect her interest, and to keep her from advising with other persons, and with intent to fraudulently get possession of her said stock, sent her on April 24, 1902, the following telegram: "St. Louis, Mo., April 24th, 1902. Mrs. Carrie V. C. Wann, care F. A. Wann, 4731 Ellis Ave., Chicago. I am offered five hundred dollars per share for a majority or all of the stock of the Wiggins Ferry Company. Have agreed to sell all of my holdings and strongly recommend you do likewise. If you concur in my recommendation, send me your stock by mail immediately, and if the owners of a majority of stock agree to sell, I will forward to you five hundred dollars per share for your holdings on or before May fifth next. Please regard this as strictly confidential. Wire reply immediately. John Scullin, Pres. Wiggins Ferry Company." And said Wade in furtherance of said conspiracy, wired plaintiff's husband as follows: "St. Louis, Mo., April 24th, 1902. F. A. Wann, 4731 Ellis Ave., Chicago. John Scullin's telegram to your wife explains why I did not reply to your letter. Festus J. Wade." That, upon the receipt of said...