Court Opinion

ID: 5225598
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:44:05.459953+00
Date Added: 2024-06-11T08:27:24.083299
License: Public Domain

McLennan, P. J. (dissenting):
Of course, if there is evidence sustaining the finding that the plaintiffs entered into a conspiracy with Lang and Tadt to defraud the Canadaway Fertilizer. Company and such conspif-. acy was carried out to the detriment of the Canadaway Fertilizer Company, resulting in the giving of the mortgage in question, there can be no doubt but that the mortgage given and which is sought to be foreclosed in this action, was tainted by such fraud and is not enforcible. So that it becomes important at the outset to inquire whether or not there was any evidence supporting the conclusion of the trial judge that such conspiracy existed. As I read the evidence it is to the effect that the plaintiffs were the owners of a certain plant and property in the city of Dunkirk, N. Y., which was theretofore operated as a brewery plant; that the plaintiffs were desirous of selling and disposing of ’ such property and to that end they *397entered into negotiations with Lang and Tadt looking to the sale of such property by the plaintiffs. As a result of such negotiations an option was given to Lang and Tadt to buy the brewery property at the sum of $16,000 and at the same time there was delivered to Lang and Tadt by the plaintiffs a contemporaneous agreement to the effect that if the property of the plaintiffs should be purchased by the fertilizer company, then contemplated to be formed, for the sum of $16,000, the real consideration to be paid by Lang and Tadt should be the sum of $12,000 and for the balance of $4,000 they should procure to be issued and delivered to the plaintiffs capital stock of the corporation to be formed of the par value of $16,000. It was further provided in such agreement that in case a sale of the property should be made to the Lake Shore and Michigan Southern Railway Company, which it appears was being negotiated, Lang and Tadt should pay the plaintiffs the sum of $12,000 for the property, and, in case they received from the railroad company a sum in excess of $16,000, one-half of such excess should be paid to the plaintiffs.
These agreements having been executed and the respective parties having entered upon their performance, the defendant corporation, Canadaway Fertilizer Company, was organized, with a capital stock of $30,000. Lang and Tadt, it must be conceded, were the principal instrumentalities in organizing such corporation. The plaintiffs, or either of them, at no time were stockholders, directors or officers of such corporation, except as they became stockholders by the issuance to them of $1,000 of stock under the agreement above referred to. The corporation thus formed resolved to accept the property of the plaintiffs at the price given by the plaintiffs to Lang and Tadt, to wit, $16,000. In due form a mortgage was authorized to be given and was executed and delivered to the plaintiffs, which the plaintiffs accepted in full payment for the balance of the purchase price of their property which had been transferred to the corporation, $7,000 of the purchase price having been paid in cash, of which the plaintiffs received $3,000, the remainder being retained by Lang and Tadt under the agreement.
The question presented by this appeal is whether or not the purchase-money mortgagé thus issued to the plaintiffs by this *398corporation can be annulled and declared void because of any fraud shown by the evidence to have been perpetrated by the plaintiffs in this case. The only question in this case is whether or not the plaintiffs as a matter of law under the undisputed evidence in this case can be charged with fraud such as to vitiate their purchase-money mortgage, given upon the transfer by them to the Canadaway Fertilizer Company of all the property described in the complaint.
It seems to me that the evidence fails to raise even a question of fact in that regard; that the plaintiffs were owners in their own right of the brewery property described in the complaint; that they had a right to sell it at the best price obtainable and that they had the right to induce Lang and Tadt to act for them •and in their interests to dispose of such property in such manner as they might deem profitable and expedient and to that end had a right to suggest to Lang and Tadt that they should form a corporation to exploit the sale of such property in the interests of the plaintiffs. Under plaintiffs’ arrangement with Lang and Tadt, they, Lang and Tadt, assumed to form a corporation which, among other things, should take over the property of the plaintiffs at a price that was perfectly understood by the corporation when organized. In fact, every member of such corpo" ration was in position to examine the property and determine the value for itself, the stockholders all being residents of the locality in. which the property was located.
My conclusion is that the evidence utterly fails to establish that the plaintiffs or either of them entered into a conspiracy to defraud the corporation in the purchase of the property obtained by it from the plaintiffs, and that the mortgage given by the corporation is in all respects a valid and binding obligation as a purchase-money mortgage, and that the plaintiffs are entitled to foreclose the same in the ordinary way.
I conclude that the judgment appealed from should be reversed upon questions of law and fact, and a new trial granted, with costs to the appellants to abide the event.