The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1885-03-25
Aaiuaiiait 6azettE.
WEDNESDAY, MAncH q lsss
srrrrr, court or che Hawaiian Islands--
In Equity
WrEooxa vs. "a e, ELLIS.
~ 49,. ), Als.l....

This is a bill to declare fraudulent and voiu
, sale made by defendant to plaintiff oil sixty
,ha+es Of the capital stock Of the Honolulu ice
M CORPORATION under Hawaiian law-M
80 per share, and also for an injunction 10
restrain defendant from taking out an e1ecn-
ion upou Judgment for 81 200 obtained 10y
he defendant against the plaintiff at the last
July term of this Court, for the purchase
money of this stock.
The bill charges that the fraud was accom-
pIished by MISREPRESENTATION and by, lhe con-
pealu,ent Of material facts Tiie mla esenta-
tion Is Charged 10 be statements @mAde by
defendant that the stock was good, marketable
stock and first rate investment at the price
offered, aud that the President Of the ice Com
pany, s. G. Wilder. who was the principal
owner of its stock, held it at par (sloO) and
refused to sell for less.
The coDcealment is charged TO be OF the TACT
that the stock was unsaleable, and was by
reason Of an expected competition IN the ice
business, Of greatly less value than par.
Taking M first The second point, think IT
is proved BY the evidence, that at the time Of
the sale Of the stock, April 10, 1881, Ellis
knew that the new ice company was about 10
be formed. This is clear from the evidence al
Mr.. Sass, the protector Of the company, who
SAYS he told Ellis all about il just previous 10
his going to San Francisco, about The last oi
March. Also that Wilcox did not know OF 1t
until he heard OF it from Mr.. W. o. Smith, on
April 10, Immediately after his purchase OF
the stock.
Was Ellis under any legal obliga-
ton to disclose this information TO Wilcox
By the authorities he was not. Chancellor
Kent's statement OF the law in this regard Is
as favorable to the plaintiff as any. He says:
''When, however, the means Of information
relative TO facts and circumstances affecting
the value of the commodity, be equally Access
lille to both parties and neither OF them does
or SAYS anything tending TO impose upon the
other, the disclosure of any superior knowl-
edge which one party may have over the other,
as to those facts and circumstances, is not
necessary to the validity Of the contract There
is no breach of any implied confidence that
one party will profit by bis superior knowl-
edge, us to facts and circumstances open to
the observation Of both parties, or equally
within the reach of their ordinary diligence;
because neither party reposes in any such con-
fidenoe, unless il be specially rendered or re-
qnired Each one, In ordinary cases, judges
for himself, and relies confidently. and per-
haps, presumptnously upon tile suficiepcy Of
his own knowledge, skill and diligence. The
common law affords to every one reasonable
protection against fraud in dealing; but it does
moi 90 TO the romantic length of giving inden-
Hity against the conseQne Dces OF Incidence and
Jolly, or careless indifference TO the ordinary
aud accessible means Of information. Kent
Com. 4si.
The possibility of competition in the busi-
ness Of ice making is one OF the chances TO
which all business ventures are subject. Mr..
Sass had caused to be published in the Daily
Bulletin of 81 March, an extended account Of
il, ending with the statement: ''Mr. Sass
leaves by the stnnsdd to purchase the neces-
sary machinery.
Pomeroy says, (See 9Oi POmeray Eq.
Jur.) that broader duty TO disclose material
facts rest upon the vendor than on the vcndce.
'lu ordinary contracts 81 sale where to iidu
ciary rotation exists, At d where ne confidence,
express OF implied, growing out OF, or cOu-
necied witllAhe very uransactio ~ itself, Is re-
posed on the vendor and the parties are deal
Ing with each other al arms length, and the
purchaser is presumed to have as many rea-
sonahle opportunities for asceriaining oll the
facts as auy other person in his place would
have had, then the general doctrine above
stated applies; no duty 70 disclose maleria
facts known to himself rests upon the vendor
his failure to disclose is not fraudulent con.
cealment."
There was no fduciary relation existing be.
tween Ellis and Wilcox. Nor is there any
evidence that Wilcox expressly reposed conf
dence in Ellis in this transaction. So far from
this being the case, Wilcox says he was boret
by Ellis importantly and that he made th,
offer to get rid Of him, not expecting that j
would he taken. The parties were at arm't
length. Wilcox was not seeking investment
and was, so to speak, surprised into the sale
Mr.. Justice Story q Story's Eq. Jur., Sec
204) in speaking of undue coneealment or sup
presto re1-, cit is not every ooncealmen
even of facts material TO the interests Of {
party which will eutitle him TO the iuterposi
ton Of Court of Equity. The case mus
amount TO the suppression of facts which on
party, under the circumstances, is bound il
conscience and duty to disclose to the othe
party, and in respect to which he cannot limo
Gently be silent" And in Section 205, 9Th
question is not whether an advantage has bee
taken, which in point of morals is wrong, o
which man of delicacy would not have taken
But it is essentially necessary, in order TO sc
I aside the transaction, not only that grea
advantage should he taken, but, also, tina
there should be some obligation on the part
to make the discovery" Section 207. 9Th
true definition, then, of undue concealment
which amounts to fraud in the sense of a CouT
Of Equity, and for which il will grant RELIEF
is the non disclosure Of those facts and cir
cumstances which one party is under som
legal or equitable obligation TO commuDicat
TO the other; and which the latter has rigl
not merely IN fore ooHscieIatig but jsuis Il d
I 5sre to know"
And 1 gather from all the authorities that
sale of goods is not rendered invalid if tn
vendor has actual knowledge from privat
sources of facts or events-which are Gale
1 extriusic ACKNOWLEDGEMENTS known TO Ii
other party, which materially affect the priC
| the goods. Story says where the Intelligent
is not equally acoessibleto both parties, equit
will not relieve, if it is not case of mutui
confidence, Id. Sec. I4e See Ldidi1sr z
0iyIR, Wheaton LIS, and Mati.,rs rs. Bis
% Pick. a. @ ga
The rule as have expressed it is subject
qualification; for if there be any fraudulei
suggestion or representation, then the transat
ton becomes tainted with fraud.
On the ground Of undue concealment, Their,
fore, l think the bill fails.
I In regard TO the statements by Ellis, that
was good, marketable stock, ETC., should So
that this was mere matter of opinion and ;
such is not relievable in equity, where as
this case, the parties were dealing with ear
other upon equal terms.
pass now TO the principal allegation upC
which relief is asked for.
Wilcox testified that Ellis after expatiatir
or the value Of the stock said that Wilder CO,
sidered 1t first rate investment and wou
not sell at less than par. He spoke Of him
being President (of the Coz and holding mo
OF the stock. He said also that be would n
have risked the offer he made Of $50 per sha
if be had known that Wilder's reason for T
iuslng to sell at par was that he would n
cause others 10 lcse by him.
Mr.. Wilder testified that he had frequent
stated that any stocks he was holding that we
good he should keep and il he knew sto,
was not good he would not stick his frient
with it, and this applied to the stock in Il
Honolulu Ice Go.
Mr.. Ellis in his answer deuies that he sa
70 Mr.. Wilcox that Wilder held his stock
par and refused 10 sell for less-but saws tb
he answered Wilcox's enquiry as TO whose 4
shares we're, that they we're Fosters and wi
cur asked: care you not selling for Wilde
aud do you not think l could buy Of Wilder +
lees than SS5y" Ellis replied that he Offered
sell for Wilder but that Wilder was unwillir
10 sell for less than par.
Mr.. Wilder says further that he never offer,
TO sell any Of bis shares in this Co. "Dor
remember il Ellis offered to sell any for N
dc may have asked me If l had any for sal
have never sold any or offered any for sale
l. seems TO me that the inference from N
Wilder's testimony is not that he would n
sell for less than par because the stock w