The herald., 1897-10-06
CONTRACT RESCINDED
OPINION OF JUDGE WELLBORN
IN A BUSINESS DEAL
The Suit of Stevenson VS.. j. M. G.
neutrality-suspicious. Over the
Van Vert Transaction

Yesterday Judge Wellborn rendered
an opinion in the case of John S, Steven
SON. jr vs.. ]. M. c. Marble in favor of
the plaintiff. The opinion Is volum-
inous document that is comprehensively
treated and brilliantly handled.
The case was a suit for rescission of
contract, brought by John B. Stevenson,
jr., against John NJ. c. Marble. The
ground alleged in the complaint was
fraud in the procurement, and on one
vital point Judge Wellborn holds that
the contention of the complainant is
we'll taken. The contract in question
was made two years ago and was for the
sale of stock in the Van Vert Electric
Light and Power company of Van Vert,
Ohio. The original electric light plant,
it seems, was established in Van Vert
in 1885, The company then in charge
wound up in 1892 and the property was
disposed of at judicial sale. 1t was pur-
chased in the name of Americus V. Rice,
and the funds were supplied by John M.
c. Marble. His son, G. l.. Marble, seems
to have been, however, the real pur-
chaser and controller of the plant. Rice
conveyed the stock to the electrict light
and power company for the considera-
ton Of $50,000, it's entire capital stock,
and bonds to the amount of 5,000 is
sued in January, 1898. These bonds
were made over to J. NJ. C. Marble, and
We're afterward transferred to several
corporations as security, the main
amount of $4,000 being held by the Van
Vert National bank as collateral for a
note given by G. l.. Marble for $4,000.
In September, 1895, Mr.. Stevenson, the
complainant, met II. M. Lutz in Phila-
delpha and was by him shown certain
written statements and communica-
tions from J. NJ. c. Marble, in which
were set forth the desira bility of form
ing new company liz which the plant of
the electric light and power company
should be combined with the Van Vert
Gas Light company, corporation with
a capital stock of 1000. These papers
also stated that the net earnings of the
electric light and power company had
for years amounted to more than the in
terest on the bonds; that the stockhold
ers were rot personally liable for the
debts of the corporation; that the net
income of the Van Vert Gas Light COM
pany during 1892 amounted to S2524. a.
and was steadily increasing; ard that
the electric company had no outstand-
ing bonds except those secured. by the
first and only mortgage for $4,000 on the
capital stock
Upon this showing Mr. r.Stevenson went
to Van Vert to look at the property. and
then came to Los Angeles to interview
Marble on the subject of buying the
stock and plants of both companies and
consolidating them into new company,
which should have capital stock of
100000 Eighty-four thousand dollars
would be required to do this, and Marble
made the. proposition either to sell the
mortgage to Stevenson or 10 join in the
deal ard carry the principal part of it
until Stevenson should dispose of the
bonds.
With this understanding a contract
was made in which Marble sold Steven
son 255 shares of stock in the Van Vert
Electric Light and Power company,
amounting to $25. 500, and $25 900 of bonds
secured by a first and only mortgage
This for the consideration of $4,000.
Marble promised to be responsible for
all taxes, debts and liabilities TO exceed
the mortgage debt of $4,000. "A cash
payment of $1,000 was made by Stevenson,
notes were executed. for the remainder
and the stock and bonds were made
over.
Afterward a new turn of affairs caused
a suit for the rescission of the contract
Although it had been expressly stated
in the contract that the bonds for $50 009
constituted a first and only mortgage
on the stock, it appeared that the rec
ords at Van Vert gave evidence of a
prior mortgage for $4,000, covering the
plant and franchises Of the Electric
Light company. Stevenson had been
aware of the existence of this mortgage.
but had understood that it had been
taken up and Cancelled by Mable
When it appeared that these bonds were
still outstanding and that they wer4
not taken up until July, 1896, Mr.. Steven.
son found that they constituted a lier.
on the property which clouded the title
and materially decreased its value
Therefore he sued for rescission of the
contract, and for this reason Judge
Wellborn decided in his favor.