Court Opinion

ID: 9832440
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:54:56.904293+00
Date Added: 2024-06-11T07:43:45.591263
License: Public Domain

On Motion for Rehearing.
In his motion for rehearing, appel-lee insists that we have placed the burden upon him to show the amount, if any he has damaged appellants. Such is not the import of our .opinion. Because of his fiduciary relationship to the appellants, it was Kasch’s affirmative duty, as stated, to make full disclosures of material facts to the stockholders, whose property he was bargaining for; and, in addition, to pay therefor an adequate price. If failure to make full disclosure of material facts induced the stockholders to agree to a dissolution which they would not otherwise have agreed to, such conduct would constitute in effect, as stated by Judge Williams in Teni-son v. Patton, supra, a fraud upon the corporation, irrespective of the adequacy of the price he paid for the assets after dissolution. If, on the other hand, he did make full disclosure of the material facts prior to the agreement to dissolve the corporation, but thereafter took advantage of the trust reposed in him in faking over and evaluating its assets, and paid an inadequate price therefor, he would still be guilty of the same charge. In either case he must affirmatively show fair dealing with the corporation and with the stockholders. His failure to do so would make a prima facie case of constructive fraud against him, entitling the appellants to damages. The general burden of proof as to the amount of such damages appellants could recover would continue to rest upon them throughout the case. Their right to recover after showing the fiduciary relationship of Kasch to them and to the corporation would be prima facie established in the one instance under a burden of evidence resting upon Kasch. The amount of such recovery would still be under the general burden of proof resting upon the appellants.
The judgment of the trial court being that appellants take nothing against appellee, and all the elements of damage being so closely related to the main issue in the case, that is, that of a constructive fraud charged against Kasch, we deem it improper to undertake to separate and affirm the case as to questions submitted to the jury relating to particular assets taken over by Kasch.
We are also of the opinion that as to the Aldridge contract, dated October 30, 1922, the bill of sale from Kasch and Conrads to the corporation, dated September 13, 1922, and the contract between Kasch and the corporation, dated September 14,1922, the defenses of limitation as to all appellants were established as a matter of law; that is, any right of appellants to rescind such contracts or to damages flowing from the contracts themselves. These items should therefore be eliminated upon another trial.
But limitation would not as a matter of law apply to the items of the expense to the corporation of procuring the Aldridge contract, nor to the division between Kasch and Stuffleheme of the commissions on the seed sold to Aldridge. Kasch denied both of these items, and it may therefore be assumed that the books did not show them. If such' items were paid improperly by the corporation, and that matter concealed from its directors, these facts would be admissible on the issues of fair dealing and full disclosure; and limitation would not run against their recovery until same were discovered or should have been discovered.
Motion overruled.