Yoffa v. Nat'l Shawmut Bank of Boston

• Decision Date: 28 November 1934
• Citation: 193 N.E. 22,288 Mass. 422
• Parties: YOFFA v. NATIONAL SHAWMUT BANK OF BOSTON et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

288 Mass. 422

193 N.E. 22

YOFFA

v.NATIONAL SHAWMUT BANK OF BOSTON et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Nov. 28, 1934.

Suit in equity by James I. Yoffa against the National Shawmut Bank of Boston and others. From a final decree dismissing the bill, plaintiff appeals.

Affirmed.Appeal from Superior Court, Suffolk County; Weed, Judge.

J. H. Cinamon, of Boston, for appellant.

W. T. Snow, of Boston, for appellee.

PIERCE, Justice.

This is an appeal from a final decree dismissing the plaintiff's bill for the rescission of stock purchases, and for other relief. $The plaintiff is a practising attorney. The defendants are the National Shawmut Bank of Boston (hereinafter called the bank), the Shawmut Corporation (hereinafter called the corporation), and the Shawmut Association (hereinafter called the association). The testimonywas taken by a stenographer at the request of all parties, and is shown in the record. There were twenty-six exhibits in the case. No exhibit except 7 (circular ‘A’) is printed in the record, nor are any of the eighteen requests of the defendants which were granted by the trial judge so printed. Exhibit 1, ‘Declaration of Trust,’ is before this court in printed pamphlet form. Exhibits 2 to 12 (both inclusive), 15, 18, 19, 25, and 26, are before this court in typewritten form. No objection to the admission in evidence of any of these exhibits is argued by the defendants. The record contains a report of material facts by the trial judge, and an order for a decree ‘dismissing the bill with costs taxed as at law.’ The findings of the trial judge, and also a copy of circular ‘A’ which is annexed to the bill of complaint and contains all alleged false representations, are contained in the record.

The report of material facts, the testimony as such not being referred to by the trial judge, in substance is as follows: The plaintiff, a lawyer, is seeking to rescind the purchase of two hundred and fifteen shares of common stock in the defendant association. The bank through its officers caused the association to be organized by a declaration of trust dated May 21, 1928, which was admitted in evidence. The plaintiff, on February 14, February 15, and November 7, 1929, purchased, upon the solicitation of the assistant manager of the State Street branch of the bank, in his own name and in that of his wife, the stock in question, totalling two hundred and fifteen shares. At the time of the first sale he was given a circular ‘A’ relative to said shares issued by the corporation. On November 21, 1929, he purchased one hundred more shares through the Atlantic National Bank. The plaintiff bases his right to rescission on the allegedly false representations made by the assistant manager of the defendant bank, to the effect that the bank was backing the venture, that it had its money in it, that the bank ‘is watching it,’ that ‘They are going to handle it themselves, the expense is going to be very small, and it is a wonderful thing.’

The plaintiff also relied in making said purchases on the circular, and particularly on what was there said with respect to capitalization and expenses; more specifically, on the statement made therein ‘that no funded debt nor preferred stock were authorized and that only one million common shares was authorized,’ whereas, as he alleged, the trustees had the power to issue such obligations. The plaintiff also relied on the statement in the circular that ‘Its purpose was to provide a competent managing medium for public participation in profit on transactions of sound character,’ which statement was false, as the plaintiff alleged; and on the statement that the enterprise is a ‘Massachusetts Voluntary Association or Trust,’ whereas it could readily be transferred into a corporation or association or other trust which may or may not be organized ‘to provide a competentlymanaged medium for public participation in profit earning transactions of sound character.’ The plaintiff contends that the main purpose was to benefit the bank, which was not the purpose declared in the circular. The plaintiff further relied on the statement in the circular that the paid-in capital was $8,150,000, whereas it actually was $8,230,000. It appears that the discrepancy of $80,000 was paid the corporation by vote of the trustees on June 7, 1928, in payment of all services and expenses pertaining to the actual sale of eighty thousand common shares of the association. It also appears that, subject to cancellation on sixty days' notice, from the bank's one eighth of the net earnings there was to be deducted ‘all ordinary expenses of the Association, except taxes and legal expenses.’ This arrangement was in force when the circular, exhibit ‘A,’ attached to the bill was issued and also when the plaintiff bought his stock. Had the plaintiff examined the declaration of trust he could have discovered the facts which he now alleges were concealed,...