Willett v. Herrick

Decision Date08 March 1927
PartiesWILLETT et al. v. HERRICK et al.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

OPINION TEXT STARTS HERE

Exceptions from Superior Court, Norfolk County; Callahan, Judge.

Action by George F. Willett and another against Robert F. Herrick and others. On defendants' exceptions after verdict for plaintiffs. Exceptions sustained.

See, also, 136 N. E. 366.S. L. Whipple, B. B. Jones, J. Wiggin, D. E. Hall, E. O. Proctor, and P. N. Jones, all of Boston, for plaintiffs.

G. L. Mayberry and D. E. Mayberry, both of Boston, for defendants F. S. Moseley & Co.

T. Hunt, F. E. Snow, W. A. Gaston, and A. B. Nelson, all of Boston, for defendants Kidder, Peabody & Co.

H. D. McLellan, of Boston, for defendant Herrick.

CARROLL, J.

In this action of tort the defendants are charged with having deprived the plaintiffs of their property and business by means of an unlawful combination or conspiracy. The plaintiffs are George F. Willett and Edmund H. Sears, late copartners under the firm name of Willett, Sears & Co. The defendants are the persons alleged to be copartners in the firm of Kidder, Peabody & Co., the persons alleged to be copartners in the firm of F. S. Moseley & Co., and Robert F. Herrick. The Chase National Bank of New York City was named in the writ as one of the defendants, but it was not served with process and was not a party to the trial. Daniel G. Wing was also named as one of the defendants. At the close of the plaintiffs' evidence a verdict in Wing's favor was directed by the court.

After the original declaration was passed on by this court (Willett v. Herrick, 242 Mass. 471, 136 N. E. 366), several amendments were allowed. The case was tried in the superior court. The trial occupied 185 court days, beginning November 8, 1923. On December 18, 1924, the jury returned a verdict for the plaintiffs in the sum of $10,543,109.07. The case is before us on the defendants' exceptions.

One of the amendments allowed in the superior court, after the decision in the Supreme Judicial Court on the defendants' demurrer to the declaration, so far as material to this discussion, sets out that the defendants, having obtained control of the shares of the American Felt Company (hereinafter called the Felt Company) and the shares of the Daniel Green Felt Shoe Company (hereinafter referred to as the Green Company) by the fraudulent means alleged, in order to coerce the plaintiffs to surrender their right to redeem the same and to surrender additional shares of the Green Company, concealed the existence of the conspiracy from the plaintiffs, and by concealment and false representations procured a release of all claims and demands, and by the wrongful means alleged advised the plaintiffs and their assignees that a compromise settlement should be made with the plaintiffs' creditors; that the plaintiffs, being ignorant of the defendants' selfish motives, and of the conspiracy, were coerced by the defendants to assent to an offer of $125,000 made by the defendants, for the transfer of the shares of the Felt and Green Companies, and the shares of the Green Company held by Kidder, Peabody & Co., under an agreement; that the plaintiffs, misled by the defendants, conveyed to J. Sidney Stone, Frank G. Allen and Charles J. Prescott as alleged trustees' the aforesaid shares and the right to redeem the shares of the Green Company and the Felt Company mentioned in an agreement of July 29, 1918; that the trustees transferred the shares to the defendants, and the right of redemption, and received the sum of $125,000.

It is further alleged that, on the date of the conveyance of the shares by the trustees, the plaintiffs executed a general release of the defendants, a copy of which is annexed; that the plaintiffs were induced to sign the instrument of release by the defendants' concealment of the existence of the conspiracy and by fraudulent misrepresentations, in violation of fiduciary duties set forth; that ‘for the purpose of causing * * * Choate, Allen, Prescott and Stone to strongly exert an influence’ on the plaintiffs to transfer the shares and execute the release, the defendants concealed from Choate, Allen, Prescott and Stone the conspiracy and the wrongful acts of the defendants; that the release was without consideration; that the securing of its delivery was one of the objects of the conspiracy, and a step in carrying it into effect.

This general release recited that Willett and Sears individually and as copartners, in consideration of one dollar and other valuable considerations, ‘remise, release, and forever discharge Kidder, Peabody & Co. and F. S. Moseley & Co., and their associates, * * * of and from all and all manner of actions or causes of action, suits, debts, dues, accounts, covenants, contracts, agreements, judgments, claims and demands whatsoever, direct or indirect, in law or in equity, which against the said Kidder, Peabody & Co. and F. S. Moseley & Co., and their associates, we or either of us, * * * ever had, now have, or * * * can, shall, or may have, arising out of, or which may arise out of, any transactions between us, or either of us, and the said Kidder, Peabody & Co. and F. S. Moseley & Co., and their associates, or any of them, or by reason of any cause, or matter, or thing whatsoever from the beginning of the world to the date of these presents.’ This instrument was under seal and was signed by George F. Willett and Edmund H. Sears. It was dated March 24, 1919.

In June, 1918, the Chase National Bank held two notes of Willett, Sears & Co. for $200,000 each, due July 15, 1918, and October 15, 1918, respectively, which were secured by 12,000 shares of the Felt Company common stock standing in the plaintiffs' names and pledged by them. The Girard National Bank of Philadelphia also held a note of the plaintiffs for $100,000, due in September of that year, and secured by 2,000 shares of the Felt Company's common stock pledged by the plaintiffs. The Green and Felt Companies required a special loan of $3,000,000. Negotiations were carried on for obtaining this loan, meetings of bank officials were held and the plaintiffs were informed they would have to take care of the notes held by the Chase and Girard banks. Finally, it was agreed that the plaintiffs should sell certain shares of stock of the Felt and Green Companies, and on July 31, 1918, the sale was consummated. Willett knew that Herrick was one of the associates in the proceeding.

The writings confirming the undertaking of July 31 were dated July 29, 1918. The details appear in a written communication to Willett, Sears & Co., signed by Kidder, Peabody & Co. and F. S. Moseley & Co., and in substance are as follows:

We have this day, in behalf of ourselves and associates, bought from you 16,500 * * * shares of the American Felt Company common stock and 500 * * * shares common stock of the Daniel Green Felt Shoe Company. * * * In consideration of the foregoing we agree to sell you or your assigns all of the aforesaid shares for the sum of $1,227,000 * * * to be paid on or before July 25, 1920.’

On the same date Willett, Sears & Co. gave to Kidder, Peabody & Co. and F. S. Moseley & Co. a written memorandum which declared:

We have this day sold to you sixteen thousand five hundred * * * shares of the American Felt Company common stock and five hundred * * * shares of Daniel Green Felt Shoe Company common stock for the sum of $500,000, the receipt of which is hereby acknowledged.’

The purchase price was paid by checks of Kidder, Peabody & Co.

On July 31, 1918, the agreement for the $3,000,000 loan to the Felt and Green Companies was perfected. The loan was to be made by four national banks and one trust company in Boston, the Chase National Bank of New York Kidder, Peabody & Co. and F. S. Moseley & Co., in the proportions set out in ‘Schedule B’ annexed to the bankers' circular. This circular stipulated that if the existing indebtedness of $2,500,000 of the companies due to various banks, and $500,000 due to the United States government, as well as outstanding paper placed by brokers, should not be satisfactorily provided for by February 15, 1919, such proceedings were to be taken as appeared wise to liquidate the two companies. On the same date Kidder, Peabody & Co. received 3,751shares of the Green Company's stock to be voted by them until Willett, Sears & Co. availed themselves of the option already referred to. This was done in compliance with a condition in the loan agreement.

After these arrangements had been carried out, on November 29, 1918, one Sydeman brought a suit in equity against Willett, Sears & Co. on a contract, claiming damages in the amount of $300,000, and seeking to reach and apply the Felt and Green stock in the name of Kidder, Peabody & Co., as well as stocks in other companies. Other actions and suits were brought against Willett, and Willett, Sears & Co. There was evidence that Willett requested Charles F. Choate, Jr., Frank G. Allen and J. Sidney Stone to assist in straightening out his affairs. In December, 1918, Willett and Sears gave Allen a written power of attorney.

In January, 1919, according to the testimony of Fessenden, a member of the firm of F. S. Moseley & Co., at an interview between himself, Allen and Stone, Allen suggested that the defendants purchase the Green stock deposited with Kidder, Peabody & Co. and the option to buy the Felt and Green stocks for $125,000, in order that a settlement might be made with the plaintiffs' creditors. On February 1, 1919, Stone wrote Willett, who was then at Pinehurst, N. C., informing him of the offer of $125,000 for the Felt and Green stocks, and requesting authority to act, stating, ‘The only alternative to making this sale is bankruptcy.’ On March 13, 1919, Willett, Sears & Co. assigned to Messrs. Allen, Prescott and Stone all their interest in the Green Company's stock, including their right to repurchase the stock of the Felt and Green Companies. By...

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