Williams v. Riddlesperger

• Decision Date: 15 December 1927
• Docket Number: 6 Div. 929
• Citation: 114 So. 796,217 Ala. 62
• Parties: WILLIAMS et al. v. RIDDLESPERGER.
• Court: Alabama Supreme Court

114 So. 796

217 Ala. 62

WILLIAMS et al. v. RIDDLESPERGER.

6 Div. 929

Supreme Court of Alabama

December 15, 1927

Appeal from Circuit Court, Walker County; Ernest Lacy, Judge.

Action by Vannah Riddlesperger against V.H. Williams, R.M. Ellis and A.S. Preston. From a judgment for plaintiff, defendants appeal. Reversed and remanded.

Curtis Pennington & Pou, Chas. R. Wiggins, and R.A. Cooner, all of Jasper, for appellants.

L.D Gray, of Jasper, for appellee.

SOMERVILLE J.

In the companion case of Williams et al v. Bedenbaugh, 215 Ala. 200, 110 So. 286, which arose at the same time out of the identical transactions by and between these parties, and was tried on the same pleadings, all the questions of pleading here presented were definitely considered and determined.

Counts identical with count 3, as amended, and counts F and G, herein, were there held as defective and subject to the demurrers interposed. See headnotes 8-12, and 16-18. Counts C and E herein were there held sufficient; and the replication to the plea of the statute of limitations was held defective, and subject to the demurrer.

We are content to reaffirm each of those rulings now, with the result that the judgment must be reversed and the cause remanded for another trial.

With respect to the liability of the defendants Williams and Ellis, the evidence clearly presented a case for the jury; and the general affirmative charges requested were properly refused.

The chief question for consideration on this appeal is whether or not, under all the evidence, the defendant Preston can be held liable for the misrepresentations and concealments charged by the plaintiff directly against Preston's associate stockholders and directors, Williams and Ellis.

There is nothing to show that Preston ever personally made any statements to plaintiff, or had any conversation with her, with respect to the business and financial condition of the Walker Buick Company, or had any personal connection with the sale to plaintiff of the corporation stock purchased by her. It does appear that, as director and treasurer of the company, he was actively cognizant of its affairs, and was well informed as to its financial condition and business prospects when its president, Williams, sold the stock to plaintiff in 1923, and for some time previous. For the fiscal years ending with June, 1922, and June, 1923, no profits had been earned; and surplus assets of $15,000 over corporate indebtedness, reported as of June, 1922, were converted into a deficit of $13,000 by June, 1923.

After Williams and Ellis had made the misrepresentations to plaintiff, as alleged, a meeting of the three directors was held, and Williams reported to them that a sale of the stock could be made to plaintiff. Williams' testimony is:

"We had a meeting (January 5, 1923), and agreed in this meeting that we would sell as much as $10,000 worth of stock, and then Mrs. Riddlesperger's specific proposition came up and was acted on favorably at this meeting."

He further stated that the three directors--these defendants--then agreed to issue to her the stock, and that 25 shares were issued to her on January 8, 1923, and 25 additional shares were issued on January 15, 1923.

"Corporate directors are not individually liable to purchasers of corporate stock who were induced to become purchasers by reason of a false prospectus, where such prospectus was prepared and issued, without their knowledge or consent, by another director. Neither are they liable for the representations of an agent of the corporation, acting as such and not on behalf of the directors." 14A Corpus Juris, 185, § 1962. And the general rule is said to be:

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