Court Opinion

ID: 7278013
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:02:31.805047+00
Date Added: 2024-06-11T16:18:57.003798
License: Public Domain

Upon a motion for rehearing by the appellants,
Mr. Chief Justice Shepard
delivered the opinion of the court:
It is unnecessary to consider but one ground of the motion. It is contended that the court was in error in finding that the members of the syndicate of eight—called herein the old syndicate for convenience—made a profit of $18,500 in the sale of the land to the new syndicate. Admitting that there would have *124been such a profit had they succeeded in their attempt to secure new cash subscribers for the entire fifty-seven shares, their contention is that, because only ten new subscribers were secured at $500 each, and the members of the old syndicate were compelled in consequence to take the remaining shares themselves, the actual profit made in the sale of the land was only $5,000.
There is no reasonable foundation for this contention.
The sale was made by the old syndicate to the new, of land costing $21,600, at a valuation of $40,100, and the shai’es of the syndicate were fixed at $500 each. The new subscribers, ten in number, paid $500 each, receiving ten shares. The old syndicate members, having failed to procure subscribers to the remaining forty-seven shares, were compelled to take those themselves, or else abandon their scheme. Preferring not to abandon the scheme, they divided the shares equally, appropriating to themselves also the $5,000 obtained on the ten new subscriptions.
Land costing them $21,600 was thus capitalized at $40,100, making the profit in the sale of the land amount to $18,500. Having failed to obtain the remaining sum of $13,500 from new subscribers as expected, they took it in shares on the basis of the new capitalization. The memorandum of the transaction furnished to each member of the old syndicate, but kept from the knowledge of the new subscribers, shows that they so understood it. Had there been a rescission of the cash subscriptions-of the ten new members, on account of misrepresentations, the old syndicate would have the land back, charged only with the $5,-000 and interest. In other words, all of the parties would have been put in statu quo. But this was not the scheme of the bill. The new subscribers elected to hold their shares, and sued to compel the old syndicate members to account for the unlawful profit. The new syndicate remains undissolved, and the title to the land, is still in it.
The members of the old syndicate, having made this illegal profit, are decreed to make restitution. This restitution made, the interest in the land remains as before,—ten fifty sevenths in the new subscribers, and fourth-seven fifty sevenths in the *125eight members of the old syndicate. They -will share in the final distribution of the proceeds of the land in those proportions. This is the effect of the opinion reforming the decree and directing the accounting and distribution. As but three members of the old syndicate were parties to the bill, there is a decree against them for their proportion of the profit divided. Those who were not parties are made to account for their respective shares of the profit, as a condition of sharing in the final distribution. If the land shall have increased in value during these years of litigation, they may yet realize on their actual investment; what they will and ought to lose is the unlawful profit made in the sale to the new syndicate. The motion for rehearing is denied.
In consideration of the delay of the plaintiffs in asserting ■*heir rights, the court has concluded that it will be equitable to charge the defendants with interest on the recovery against them only from June 1, 1909, the date of filing the bill, instead of from the date of conveyance as directed in the former opinion; and the interest ordered to be charged by the auditor in the accounting directed in paragraph (b) will also be charged from June 1, 1909.
In these respects the former opinion is amended, and the court below in entering the decree ordered will be governed thereby.