Court Opinion

ID: 4730936
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:55:41.414831+00
Date Added: 2024-06-11T08:08:02.624134
License: Public Domain

Gose, J.
(dissenting) — The appellant charges, that the contract set forth in the majority opinion was obtained by the respondent husband and his attorney for the purpose of enabling the respondents to acquire a majority of the stock of the corporation, with intent to cheat and defraud the appellant, by falsely representing that the clause in the contract providing that the appellant should be the manager of the corporation for one year was a valid and enforceable contract; that the appellant believed and relied upon the representation; that respondent husband, in furtherance of his fraudulent purpose, assigned certain shares of stock to his wife and co-respondent, giving to respondents a majority of the capital stock; that on March 30, 1907, the respondents, who were then trustees of the corporation and owners of a majority of its capital stock, removed the appellant as manager, secretary and treasurer, and took possession of all *660the books, money, papers, and effects; that the respondent refused to invest the $5,000 in accordance with the contract; and that the appellant has received no salary since the date of his dismissal from office.
Briefly stated, the testimony offered by the appellant on the question of fraud tends to show that the appellant was-induced to sign the contract by the representations of the respondents’ attorney that it was “all right; perfectly square,” between the parties; that he objected to signing the contract without having his attorney present; that he relied upon the statements of the respondents’ attorney, and that he did not know that the contract was against public policy. It seems to be conceded that the clause providing for the retention of the appellant as manager, secretary and treasurer of the company for the period of one year, is against public policy and void, under the rule announced in Hampton v. Buchanan, 51 Wash. 155, 98 Pac. 374, and West v. Camden, 135 U. S. 507. If the representations of the respondents’ attorney, that the contract was “all right,” “perfectly square” between the parties, induced the appellant to enter into it, and if he was so induced to believe that the clause providing for his employment as manager for the period agreed upon was a valid engagement, he is entitled to recover damages. Sanford v. Royal Ins. Co., 11 Wash. 653, 40 Pac. 609; Kerr, Fraud and Mistake, p. 398. See, also, Bales v. Hunt, 77 Ind. 355; Kinney v. Dodge, 101 Ind. 573; Evants v. Strode, 11 Ohio 480.
The question next presented is, What is the measure of the appellant’s damages, and how shall they be ascertained? We agree with the majority that there is no fraud shown in the sale of the property in the bankruptcy proceedings, and that there is no evidence that the respondents have mismanaged the corporate affairs. Upon this state of facts, we think that the measure of appellant’s damages is the difference between the market value of the one hundred shares of stock at the time the contract was entered into and the sum he re*661ceived for it. Hazelton v. Carolus, 132 Ill. App. 512. To that extent the consideration has failed. The contract for services being invalid, he cannot recover for the breach in that behalf. Moreover, to permit him to do so would give him for his stock more than its market value.
The only cause of action disclosed by the evidence is the misrepresentation as to the validity of the management clause in the contract. If the clause were not against public policy, the appellant would be entitled to have his case submitted to the jury upon the alleged breach as to the nonpayment of his salary. Of course, in that event, the respondents could submit evidence as to the cause of his removal, and mitigate the damages by showing his earnings, if any, for the ensuing seven months following his discharge. The appellant offered no evidence as to the value of the one hundred shares of stock at the date of the execution of the contract, but he did show a right to nominal damages. The court, therefore, committed error in granting the nonsuit. The record discloses that the appellant has been thrice nonsuited. I think the parties should be permitted to recast their pleadings, if they so desire, so as to present the single issue as to whether the respondents made the alleged representation, and if so, the reasonable market value of the one hundred shares of stock on the date of the contract. The other issues should be eliminated. I cannot free my mind from the conviction that the majority have decided questions properly triable to a jury, and therefore dissent.