Court Opinion

ID: 8068530
Source: CourtListenerOpinion
Date Created: 2022-09-09 11:10:10.900103+00
Date Added: 2024-06-11T16:38:13.574377
License: Public Domain

INGRAHAM, J.
I concur with Mr. Justice HATCH, except so far as it seems to be intimated in his opinion that there was evidence which would justify that the defendants were guilty of any false misrepresentations which would justify the plaintiff in repudiating the *705contract of May 8, 1899. The only representation testified to by the plaintiff which he said induced him to agree to the contract of May 8th was the defendant Hyde’s statement that the pool profits amounted to 2,475 shares of stock, and that the plaintiff’s share, under the contract of March 27, 1899, would amount to 361 and a fraction shares. He testified that he told Hyde that he would accept 361 shares upon the representation that 2,475 shares was the only profit that there was belonging to the pool, and Hyde then drew up the contract of May 8th, which was clearly intended as a substitute for the prior contract as to the compensation that plaintiff was to receive. The plaintiff’s action was based upon the contract of March 27th, and he asked for an accounting. In answer to this cause of action the defendants plead that the contract of March 27th was modified by the contract of May 8th, and that under that contract the plaintiff was entitled to receive a certain number of shares of stock which had been tendered to him, and which they still hold for his account. Assuming that the plaintiff was, upon proof by the defendants of the contract of May 8th, entitled to prove that that contract was obtained by fraud, the burden was upon him to prove that the representations were made to him upon which he relied in executing the contract of May 8th, and that those representations were false, and were known to be false by the person making them. I can find no evidence that the representation that Hyde was alleged to have made was false. The representations were that the pool profits were a certain number of shares of stock. There was proof that two days before a contract had been made in relation to the sale of 9.000 shares of the stock at 75 per cent., but it does not appear this 9.000 shares was pool stock. From the statements furnished by defendants it appears that the pool had bought 440 shares of stock at 55, and 5,000 shares at 75, in addition to the 10,100 in which plaintiff was interested, and that at some time 9,000 shares had been sold at 75; but under the contract of March 27th the plaintiff’s interest was confined to the 10,000 shares of stock of the old company that the defendants had purchased at $22.50 a share, and for which there had been substituted stock of the new company. In the contract of March 27th the defendants agreed to set apart for the plaintiff “15 per cent, of whatever net profits estimated on the above basis may be found to have been realized from the sale of the pooled stock after the entire 19,999 shares have been pooled and sold. It is understood, however, that this 15 per cent, interest relates only and applies solely to the 10,000 shares of stock of the new company, and to the net profits, if any, to be derived from the sale thereof on the basis as above stated.” The fact that the members of this pool subsequently bought other shares of stock, which they sold at a profit, has nothing to do with the plaintiff’s right to share in the profits realized from the sale of the 10,000 shares of the stock with the purchase of which he was concerned. The contract between Hyde and Taylor & Co. which was introduced in evidence, provided for the sale of 9.000 shares of stock to Taylor & Co. by Hyde in the event that Taylor & Co.’s examination into the validity of the patents and the efficiency of the machines was satisfactory; this sale being, however, *706conditioned upon such an examination proving satisfactory to Taylor & Co., and the consideration was to be paid for in installments extending to November I, 1899. Hyde agreed to pay to the new company to be organized $374,000 in cash, and to acquire by purchase or exchange 9,000 shares of the capital stock of the new company, which he agreed to sell to Taylor, to perform other obligations provided for in the contract. This contract was made on May 6, 1899, two days before the agreement with the plaintiff was made; and, as the sale of the stock to Taylor was based upon Taylor & Co.’s satisfaction with the examination of the patents and machines, and imposed large obligations upon Hyde, with no money to be received for some time thereafter, it was not proof that at that time there were profits which could be said to have accrued, to any portion of which the plaintiff would be entitled. By the modification of May 8th it was proposed to divide the stock, instead of waiting to sell it and divide the profits; and to this the plaintiff agreed. I think that a finding that there was fraud in procuring this contract of May 8, 1899, would be opposed to the evidence. The court below proceeded upon the construction of the letter of May 8th, which we all agree was not justified, and I quite agree with Mr. Justice HATCH that for that reason the judgment should be reversed; but I do not agree with his statement that there was any basis in the testimony for a. finding that the defendants were guilty of fraud.
I concur, therefore, in the reversal of the judgment.