Wilt v. Crim

• Decision Date: 01 February 1921
• Docket Number: (No. 3705.)
• Court: West Virginia Supreme Court
• Parties: WILT et al. v. CRIM.

105 S.E. 812

WILT et al.

v.CRIM.

(No. 3705.)

Supreme Court of Appeals of West Virginia.

Feb. 1, 1921.

(Syllabus by the Court.)

Appeal from Circuit Court, Barbour County.

Suit by Albert Wilt and others against E. H. Crim. Decree for plaintiffs, and defendant appeals. Reversed, and bill dismissed.

Arthur S. Dayton, of Philippi, and Jno. A. Howard, of Wheeling, for appellant.

A. M. Cunningham, of Parsons, for appellees.

RITZ, P. This appeal brings up for review a decree of the circuit court of Barbour county, in favor of the plaintiffs, for the amount paid by them for stock which they purchased in the Hales Mining & Milling Company, at the solicitation of the defendant.

It appears that in the month of September, 1911, the defendant, being interested in the Hales Mining & Milling Company, a corporation of the state of Colorado, engaged in the development of a silver and lead mine in that state, approached the plaintiffs, or one of them, with a view of selling stock in said company. The plaintiffs did become stockholders in the company, buying $1,500 of such stock on each of two occasions. The bill alleges that the inducement to purchase said stock was certain representations and warranties made to them by the defendant at and before said purchase. They contend that the defendant represented to them that the corporation whose stock he was offering for sale was the owner of a valuable silver mine at Lake City, Colo., with a mortgage thereon for the sum of $125,000; that the mine was worth very much more than this sum, for which reason the mortgage was not an excessive amount to carry; that the ore was very rich, being worth from $40 to $42 a ton, and that there was a large amount of such ore in the mine; that money was needed for the further development of the mine, and that the stock which he was offering was the stock of the company, and the money derived from its sale was to be used for the purpose of further development in the way of erecting a dam, milling plant, tramways, and other necessary improvements; that at and before the. purchase by the plaintiffs of said stock, the defendant contracted and agreed with them that because of his large interest in the company he would personally see that the indebtedness of $125,000 was paid off when the same became due, so that the company would not, on that account, lose its properties. The bill then alleges that in fact and in truth the company did not own any mine in Colorado, but had a lease covering a mine, with an option to purchase the same for the sum of $125,000; that the stock which the defendant was selling was not the treasury stock of the company, but was stock which had been issued to him as a promoter of the company, and that the money derived from its sale was not used for the development of the mine, but was appropriated by the defendant to his own use; that the defendant did not, in accordance with his promise, pay the amount necessary to prevent the company from losing its property, but allowed the same to become in default, and the rights of the company in the mine to be forfeited for failure upon its part to comply with the terms of the option; that this was a part of the defendant's scheme from the beginning, it being his intention to sell as much stock as possible in this company, and then allow the rights of the company to be forfeited for nonfulfillment of its contract, and thereafter purchase the same from the original owner for himself and his associates, and exclude the plaintiffs from participation in the benefits. The bill prayed for a decree against the defendant for the amount paid by them for the stock which they purchased. The bill does not even ask that the contract be canceled, but it does tender back to the defendant the certificates representing the stock purchased by the plaintiffs, with the exception of one of such certificates for 500 shares, which had been theretofore sold. The defendant's answer to the bill denies all of the material allegations.

The parties to the suit testify at great length, and some evidence is introduced from other witnesses. The plaintiffs did not attempt to prove the allegation in their bill that the stock which they bought was not the treasury stock of the company, but was promotion stock which had been issued to the defendant, and that the money derived from the sale of this stock was appropriated by the defendant to his own use, and not to the benefit of the company as he represented to them it would be. On the other hand, the proof is conclusive that this stock was the stock of the corporation, and that the money derived from the sale went into the treasury of the corporation and was used by it in the development of the mine. The court below found that the defendant had a fraudulent purpose from the beginning to induce plaintif...