Court Opinion

ID: 6993007
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:28:19.253112+00
Date Added: 2024-06-11T16:09:40.463653
License: Public Domain

Waterman, J. The bill is in the first instance for a rescission of the contract made by Ilenry Schubart with the Gas Trust Co. The Gas Light & Coke Co. is made a party upon the allegation that it conspired to bring about the contract of exchange and made fraudulent representations to induce it. If the Gas Light & Coke Co. is responsible for the false representations, and they were material, and such as Schubart had a right to, and did rely on, and if he was in consequence thereof defrauded, that is, suffered actual pecuniary damage, as it has never had the stock and never pretended to buy it or exchange for it, the remedy of complainants against it for these false representations would seem to be by way of an action on the case and not in a court of equity. We have been referred to no authority holding that a corporation can be made liable for loss caused by the false representations of its officers concerning a matter which the officers are not shown to have had, and can not be presumed to have had, any authority from the corporation to make any representations or bargains whatsoever. Henry Schubart knew that it was no part of the business of the Chicago Gas Light & Coke Co. to advise or aid him in exchanging his stock with the Gas Trust Co., or selling it to Brown Brothers, or anybody else; that its officers in expressing their opinion as to what the prospects of the company and the gas business were, and what he had better do, could be but giving utterance to their own views; that as a company the corporation had neither information nor opinion upon those matters, because to have and to express opinions upon such subjects was utterly foreign to the purpose of its existence. If all the officers of the corporation had affixed their official signatures to a document giving information as to, and expressing an opinion upon, the value of a mortgage he was about to sell to a third party, and he had thereby been defrauded, the company would not have been liable for his loss, because the giving of such information and opinions is no part of the business of such a company; the individuals who made such false statements, quite likely, would be personally liable, and the individuals who by untruthful utterances misled Mr. Schubart, may have to respond in damages, but not the corporation for whom they presumed to act. True, if the Chicago Gas Light & Coke Co. had, by means of false representations, received and now had this stock, it might be compelled to return it; or if it had received and since parted with the stock, it might be compelled to pay its value, not because the representations were its, but because one can not retain property which he has knowingly obtained through the fraud of another. It does not appear that complainants’ testator, Henry Schubart, was injured by the fraud said to have been practiced upon him. . It is nowhere alleged that the Gas Trust certificates received by him were or are of any less value than the stock by him exchanged therefor, or that the income or profit therefrom is or has been any less than the increase of the stock would have been. The bill is in this regard in the nature of an action quia timet. Complainants set forth fears they have that the stock of the Chicago Gas Light & Coke Co., which was exchanged, may become worthless, and its impairment by an illegal mortgage placed upon the property of that company is apprehended; they also declare that the franchises of the Gas Trust whose stock they hold, may be forfeited by action of the State, and they set forth that the formation of the Gas Trust Co., and other acts of the defendants, have created a dissatisfaction in the public mind, which will likely lead to the establishment of other gas companies in Chicago, and that the acts of the directors of the Gas Light & Coke Co. have heen highly detrimental to the interests of complainants, but in what way or to what extent is not shown, nor whether such acts were done before or after the exchange of the stock of complainants’ testator. To authorize a court of equity to set aside a sale because made upon fraudulent representations, it must appear.that the piarty.was not only misled, but misled to his prejudice or injury; for courts of equity do not, any more than courts of law, sit for the purpose of enforcing moral obligations, or correcting uneonscientious acts which are followed by no loss or damage. Story’s Eq. Juris., Sec. 203; Rogers v. Higgins, 57 Ill. 244; Bartlett v. Blaine, 83 Ill. 25; Marsh v. Cook, 32 N. J. Eq. 262. Complainants’ testator voluntarily exchanged his stock for Gas Trust Co. certificates, with the understanding that the Gas Trust Co. was to be a monopoly, and he is presumed to have had the same knowledge of the illegality of the purposes of the Gas Trust that the complainants now charge. The bill seeks to have returned property knowingly devoted to an unlawful enterprise. The bill charges that by false representations was the testator induced to make (he exchange, but it is nowhere alleged he unwittingly contributed to the creation of a company organized for the purpose of establishing a monopoly. Proceeding upon the theory that the complainants aro entitled to have the stock of the Gas Light & Coke Co., once owned by Henry Schubart, or a like amount of other stock of that company, transferred to them, complainants ask that the mortgage on the property of that company be set aside, its present managers and officers be enjoined from carrying on its business, and from permitting the Gas Trust Co. to be operated as a monopoly with the other gas companies of Chicago, and that a receiver of the Gas Light & Coke Co. be appointed. Upon consideration of the second part of the bill, the question arises as to whether its joinder with the first part does' not make the bill multifarious. The second part may with propriety be termed the condi-" tional part, because the allegations thereof and the relief' thereunder, are entirely conditioned upon the success of the complainants as to the first part. This conditional relief is for the benefit of all the stockholders of the Gas Light & Coke Co., that is, for the benefit of the company itself; and the litigation in this regard is of such a nature that the court might, with great propriety, if the complainants succeeded in establishing their claim, require the Gas Light & Coke Co. to pay the complainants’ necessary expenses in the suit, because such expenditures were entirely for its benefit, and in no sense peculiar to the complainants; but the first part of the bill is a matter in which other stockholders have no interest whatsoever. As to the first branch of the bill, the Gas Light & Coke Co. is a defendant in name and interest; as to the second part, however named, it is in interest a complainant. The bill also asks that if bonds have been sold to dona fide purchasers, the officers who have received unlawful dividends thereof be decreed to pay the same to a receiver for the benefit of the corporation, and makes various persons as officers of the Gas Trust Co. and other gas companies defendants. Some of these persons are not shown to have had any connection with the exchange by Henry Sehubart of his stock, and can not properly be joined as parties in a proceeding to set aside such exchange. Whether or not, for acts said to be ultra vires, a stockholder may bring an action against the corporation without setting forth that it is for the benefit of dll such stockholders as see fit to come in, it would seem that a bill of that nature ought not to be such that no other stockholder can join in its prosecution. In Attorney-General v. St. John’s College, 7 Simons, 24-1, the test applied to determine whether a bill was multifarious, was whether one defense could be made to the whole of it. Manifestly one defense can not be made to this bill. The bill appears to us to be multifarious and wanting in equity. Burnett v. Lester, 58 Ill. 325; Winsor v. Bailey, 55 N. H. 218; Story’s Eq. Pleadings, Sec. 271-275. The decree of the court below will therefore be affirmed. Decree affirmed.