Court Opinion

ID: 6595195
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:01:54.292441+00
Date Added: 2024-06-11T15:57:48.579516
License: Public Domain

Dent, Judge
(concurring):
The conclusion reached by the majority of the court on re-argument being in accordance with the true principles of equity, as I understand them, I feel in duty bound to change my dissent from their determination to a concurrence therewith, for the following reasons:
By a decision of this Court in the cases of Fidelity Insur*642ance, Trust & Safe-Deposit Co. v. Shenandoah Val. R. Co., and Crumlish v. Same (delivered March 20, 1890) 33 W. Va. 761 (11 S. E. Rep. 58) the paid-up capital stock of the Central Improvement Company was ascertained and fixed at one hundred and thirty eight thousand dollars, as a basis of recovery against the Shenandoah Yalley Railroad Company. By the present decision it is ascertained and fixed at one hundred and sixty four thousand dollars for the purposes of distribution. The commissioner’s last report on the subject shows it to be not 1 ess than one hundred and seventy thousand dollars. The difference between the two decisions of the Court amounts t:o twenty six thousand dollars, which, according to the basis fixed for recovery in the first decree would, if it had been before the court at that time, increase the recovery by the sum of seventy thousand seven hundred and eighty eight dollars, being double the said twenty six thousand dollars, with interest added to a certain fixed date. This sum was entirely lost to the stockholders of the Central Improvement Company because of the ascertainment, of the wrong amount by the court on insufficient data. It can never be corrected, but is finally lost, as the opinion of the Court holds that the question of recovery is res adjudicata. Who, then, should bear this loss? The law of estoppel is: “Where a party fails io make his rights known, where fairness and good conscience require that he should do so, to protect the interest of others, he can not be heard as against them to assert such rights.” Herm. Estop. § 787. Also, Id. 760: “Nobody ought to be estopped from averring the troth or asserting a just demand unless, by his acts or words or neglect, his now averring the truth or asserting the demand would work some wrong to some other person, who has been induced to do something, or to abstain from doing something, by reason of what he had said or done or omitfed to say or do.” And the converse is true. A person who has rights which he omits to assert at the proper time and place will not be permitted afterwards to assert them if by so doing he will cause an injury or loss to another person which could have been avoided had he exercised that due diligence which a court of equity requires of all persons seeking its as*643sistance. Admitting tliat the basis of one hundred and thirty eight thousand dollars is wrong, yet those who by their failure to assert their claims occasioned the establishment of this wrong basis are forever precluded from disputing its truth. And it matters not whether their quiescence, neglect or silence mislead the court or other persons in interest; the result of their failure to act is the same, and they, and not those who have been attentive and active, must bear the consequences of their own negligence. “Whenever one of two innocent parties must suffer by the acts of-a third, he who has enabled such third person to occasion the loss must "sustain it.’* Applying these recognized principles of equity, fair dealing, and good conscience to this case, what is the result?
In December, 1882, H. H. Crumlish, a stockholder in the ■Central Improvement Company, brought a chancery suit for and on behalf of himself and all other stockholders who would aid in prosecuting the suit, to compel the Shenandoah Valley Kailroad Company to account for and pay over the assets of the Central Improvement Company, in its control. Immediately stockholders representing nearly one hundred ■and thirty thousand dollars became active and vigilant with their time, labor and means in prosecuting said suit, and have continued so during the whole of this litigation. They promptly made known the amount of stock held by each, and did everything within their power to get at the truth of the whole matter, and secure a prompt adjustment thereof. These appellants and those they represent, on the other hand, so far as any slock was owned or claimed by them, were in a state of absolute nonentity, isio information could be obtained from them or about their ownership of stock.
Mr. C. W. McKeehan, who was a stockholder and became secretary of the Central Improvement Company in 1877, and continued as such until 1884, the books not showing, undertook, in the interest of the stockholders, to find out who were the actual stockholders in the company, and what amounts of stock each held. This was about the year 1884, and was done in view of the pending litigation. He called ■on the son and executor of Thomas A. Scott, deceased, and *644Re informed Rim that Re knew notRing about his father Raring any stock, and Rad no evidence thereof. He saw Mr. R. D. Barclay, the former president of the company, and business manager of Thomas Scott’s private affairs, and also-Mr.”John P. Green, formerly secretary' and treasurer of the Central Improvement Company, and representative in some capacity of said Scott, and they both informed him that they knew notRing about it. It Rad been so long ago^ These two men, who, as they afterwards testify, held the offices of president, secretary and treasurer of the Central Improvement Company from and including the year 1870, to and including the year 1874, by virtue of the stock they subscribed for Thomas Scott in their names, could not remember that Re ever Rad any stock in the company. And Re therefore concluded that Mr. Scott owned no stock. As to Judge Jew-ett’s owning any stock, Re never knew anything, neither from the books nor outside claims. He wrote several letters to the appellant McPadden, to know whether he had any stock, and if so, the amount thereof, and could get no response from • him. The books and papers of the company which had been kept by Mr. John P. Green contained no information as to any of these parties holding any stock. On the 26th day of June, 1889, the deposiüon of this same John P. Green, sec-setary and treasurer as aforesaid, was taken for the third time during the progress of this litigation, for the purpose of ascertaining and fixing the amount of the paid-up stock of the Central Improvement Company, and he testifies that it was at least one hundred and twenty eight thousand dollars, and he thinks it was one hundred and thirty eight thous- and dollars. Indeed, he is positive it was the last named sum. Acting on this information, this Court, as heretofore-mentioned, definitely determined, irrevocably, this paid-up stock to be the latter amount. This sum, so ascertained, exceeded by several thousand dollars the amount of stock actively engaged in the prosecution of this suit. Such being the case, the holders of this stock were satisfied with this amount and were utterly without suspicion that it could -be any greater sum, as they had not the least information that such stock could in any possible way exceed this sum. On the *645contrary, their information was, if anything, that it was less than this sum, and that they represented almost the entire amount. Therefore, they had no reason to, and made no effort to increase the finding, either in the Circuit Court or the Court of Appeals, but, feeling safe, allowed it to become a matter of final adjudication.
After, on this basis, a recovery was had against the Shenandoah Valley Railroad Company, amounting to nearly eight hundred thousand dollars, the known stockholders actively engaged in this litigation called a meeting in the Drexel Ruilding in the city of Philadelphia, which had been the principal place of business of said company, after having given notice thereof in a newspaper, as required by the by-laws of said company, and after doing everything they were able to do to get all the stockholders present on the 25th day of April, 1S!)0, for the purpose of taking the necessary steps to realize on their large, but doubtful recovery aforesaid, which was regarded almost as a hopeless undertaking. These appellants and those they represent had not yet discovered their ownership of any stock. With the exception of James P. Scott they did not yet put in appearance, although from their subsequent conduct, it is not a violent presumption to hold that they or those they represent were fully aware of and had an opportunity of attending or being represented at the meeting; but they purposely abstained from so doing, because the fruit was not yet ripe for the plucking. These stockholders, believing that they had the right so to do, as the owners and representatives of all the known stock, and that they were acting in the interest of all, through the committee then appointed by them, without any objection from any source, pledged one hundred and sixty thousand dollars of this doubtful recovery for the purpose of securing the residue of six hundred and forty thousand dollars; and, as the evidence shows, they did through this pledge, beyond dispute, secure this last amount for the payment of expenses, debts .and distribution among stockholders. The evidence shows indisputably that this expenditure turned what was otherwise a doubtful recovery, without market value, into a tangible fund, under the control of the court. Then, for the first *646time, to wit, in February, 1891, tírese dormant claimants begin to show active life, and take a personal interest in this-litigation. Tbe memories of Barclay and Green, which have been heretofore so blank, are suddenly refreshed, and they can now so easily remember that Thomas A. Scott, deceased, subscribed for four hundred shares of stock in their names, and that he paid for it to said Green, through said Barclay; that Judge Jewett subscribed for one hundred shares of stock, and paid for it to said Green; and that Charles Me* Fadden had a like subscription paid for in a like manner. This evidence, if true, was in the knowledge and under the control of these appellants, or those they represent, at the beginning of this litigation; yet they continually denied any knowledge of having any stock, or led the other, stockholders by their silence to believe that such was the case. The certificate book is produced in evidence, and the stubs thereof, in the handwriting of John P. Green, show the issue of one hundred and thirty thousand dollars of stock toi various parties, but none to Thomas A. Scott, Judge Jewett or Charles McFadden. This is a very significant silence. These certificates were signed by Green, as secretary and Barclay as president, both in the employ, of Thomas A. Scott, although the stock was subscribed for in their names, and by reason thereof they were enabled to hold the offices and control the management of the company until its funds were all received and expended. In addition to the above, A. K. McClure paid five thousand dollars on stock, for which he received no certificate, and Joseph L. Morton paid five thousand dollars, for which he received no certificate, making a total of paid-up subscriptions, counting that claimed by appellants, of one hundred and seventy thousand dollars. But Mr. Green swears to and accounts for only one hundred and thirty eight thousand dollars. Y>That became of the other thirty two thousand dollars? It will not do to say it was paid in labor, because the evidence does not justify it. There has been either a defalcation in the funds or an over-issue of stock, and to take the most charitable view of the matter is that while this stock was paid for by Scott and Jewett, it was after-wards transferred to and issued to some one else, the money *647going back to Scott and Jewett; and Barclay and Creen, who were in Scott’s employ all the time, after the stock was so issued and’ the money returned to Scott, his two servants, no longer being stockholders, resigned their positions, because their employer had no longer any interest in said company. This is certainly a reasonable conclusion, considering the conduct of these parties during the whole progress of this litigation. But in my opinon, this matter as to whether these parties had or had not stock has nothing to do with the just determination o-f this case. It is very evident, with the present state oí the proofs before it, that this Court, instead of fixing the paid up stock of the Central Improvement Company at one hundred and thirty eight thousand dollars, would fix it at one hundred1 and sixty four thousand dollars. This change has been brought about by the testimony of Green and Barclay, 'and the present activity of these appellants, seeking to profit at the expense and labor' of others; and it is just as evident that it was in the power of these appellants to have ascertained and made known this proof before the court immutably fixed the amount of the paid-up stock on which the recovery was based; and it is their culpable negligence in not asserting their claim to stock at the proper time — that is, right at the inception of the litigation — that occasioned to the stockholders the loss of the seventy thousand seven hundred and eighty eight dollars, as before stated. On whom then, should this loss fall? The equitable law of estoppel says, as herein quoted, on him whose failure to act occasioned it; in this case, the appellants. A surety is released from payment of debt for indulgence to his principal and indorser for want of notice; and a bona fide purchaser for value, for neglect to record his deed, loses his land. The slight oversight of one person may result in the loss of thousands of dollars to entirely innocent parties, whom the policy of the law holds liable for his negligence.
Equity ever favors those who are prompt and diligent in the assertion of their rights, and frowns with displeasure on those who listlessly stand by during the heat of battle, and, after the smoke has rolled away, come bravely forward, and seek to deprive others of the well deserved rewards of their *648vigilant efforts. As Judge Holt says in the case of Clark v. Figgins, 31 W. Va. 15 (5 S. E. Rep. 643): “ ‘Vigilcmtibus non ■dorm/imtibus jura suhvoniunt.’ There would be no reward to the vigilant if these parties were now compelled to step aside, •and let those who stood by and did nothing take the fruits of their labor and expense, or were compelled to divide it with them.” It would be paying a premium to idleness. “To the victors belong the spoils,” is not an inequitable doctrine, but underneath it lies the strongest principles of reciprocity and justice. Not only did these appellants or those they represent stand idly by for almost ten years of a hard fought legal battle, but, when importuned by those whom they should have been mutually aiding and supporting, they either denied all knowledge of personal interest, or treated with contemptuous silence such importunities; and now that fortune has crowned years of labor with success, in the face of every discouragement, these laggards in the contest come bravely to the front, and demand, not alone a participation in the results, but repudiate any responsibility in the necessary expenditures byr which they were achieved. Partners they would be in the profits, but not in the labor, expense, or losses. Justice and equity both require that before they' share in the distribution, they should make good the loss occasioned by their culpable inertia and inequitable silence. This loss, to wit, seventy thousand seven hundred and eighty eight dollars, exceeds any share they can possibly receive, in the fund, distributable, after deducting therefrom the reasonable and legitimate expense of creating it, and therefore precludes them from1 any share in the distribution. The finding of the commissioner and the decree of the Circuit Court, in my humble opinon, are founded on the true principles of equitable participation, and should therefore be affirmed, except as modified in the opinion of Judge Holt, in which I now concur.