Court Opinion

ID: 6993372
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:28:54.223226+00
Date Added: 2024-06-11T16:09:41.303363
License: Public Domain

Watermae, P. J. It is strenuously urged that it was .not necessary to make any tender of the §40,000 received by appellant other than that contained in the amended bill. A sale induced by fraud is not absolutely void; if it were each party might disregard it. Such sale is valid and binding if the innocent party, upon whom the fraud was perpetrated, sees fit to affirm the transaction. Changed conditions may, before he discovers the fraud, 'have made the dealing advantageous to him, and it be for his interest to maintain it; whether this be so or not, he and he alone can avoid the sale. It being therefore voidable only, if the defrauded party dis-affirms the transaction, he must do so in totb and must offer to restore the statu quo. Bowen v. Schuler, 41 Ill. 192; Lovingston v. Short, 77 Ill. 587; Preston v. Spaulding, 120 Ill. 208-227. If by the conduct of the party guilty of the fraud it has been rendered impossible for the statu quo to be restored, a court of ecpiity would not deny to the innocent party the right of rescission because of such impossibility. Preston v. Spaulding, supra. In the present case, appellant, without 'showing that it is impossible for appellee to give to him or deposit with Aid is in trust the stock and bonds appellant claims, makes only a conditional offer to pay back the §40,000 he has received. He alleges that in case he is restored to his right under his contract there will be due to him from appellee cash, stocks and bonds far in excess of the sum of §40,000, and out of this he offers to restore the §40,000. What the amount of cash, stocks or bonds respectively will be, is not stated; and the allegation that the value of all is far in excess of §40,000 is a mere conjectural opinion. Ho facts-are stated from which any conclusion can be reached as to-what amount of stocks or bonds complainant will be .entitled' to, nor'is there any allegation as to what the value of either the bonds or stocks of said transit company now is. If upon a hearing the value of the cash, bonds and stocks going to complainant should be only $30,000, then the offer is merely to restore $30,000. Appellant, when he filed his bill, was in possession of the facts, concealed, as he alleges, from him when he assigned his contract; he could then have confirmed his assignment or rescinded it, but if he rescinded he must do so in toto. Instead of this he offers to give back an amount equal to the value of what shall be restored to him. If he had offered to restore the $-10,000 upon a return to him of what he was entitled under his contract, appellee might at once have accepted such offer; and appellant might have found that his stock and bonds were of far less value than $40,000; he seems to have been afraid of such contingency and carefully avoided a tender which might have led to such result. It does not clearly appear from the bill that appellant has ever became entitled to receive from appellee either stock or bonds. True, he says that he was and is, but that is a mere conclusion; facts showing him to be so entitled should have been set forth. The contract was that appellee should make a contract for the construction of a railroad under which he, appellee, would receive over"$14,000,000 in stock and bonds, and of these appellant was to have a definite portion. There is no allegation that appellee ever made or was able to make any such contract. It is argued that as appellee held a large majority of the stock of the company, he could make or have made for the company, the contract with himself he agreed with appellant should be made; and that if he neglected to have made with himself such contract he failed to discharge his obligations to appellant, and a court of equity will treat - the matter as if he had done what he agreed to. It may be the case that the controlling majority of stockholders of corporations do often direct contracts to be made on its behalf with themselves, but they do not so do under the sanction of courts of equity. Such contracts courts of equity treat as of no avail; the party acting thereunder becomes entitled to receive, not the sum stipulated, but merely a fair compensation for what he has done. Redfield on Railways, Sec. 140; Morawetz on Corporations, Sec. 516, 517, 518, 519; Wardell v. Union Pac. R. R., 103 U. S. 651, 658; Hoyle v. Platsburgh R. R., 54 N. Y. 314-328; Bliss v. Matteson, 45 N. Y. 22-26; Gardner v. Butter, 30 N. J. 702, 721, 724. It is true that appellee held all but a very few shares, but the right of one stockholder that all the agents of the corporation shall act, not in their own interest or in the interests merely of those stockholders by whose favor they hold their places, but with an eye single to the interests of the corporation, is as great as that of all the stockholders. Appellant’s contract with appellee was not one which a court of equity would or could compel a specific performance of. The demurrer was properly sustained and the decree of the Superior Court dismissing the bill must be affirmed. Decree affirmed,