Cranney v. McAlister

101 P. 985, 35 Utah 550, 1909 Utah LEXIS 46

• Court: Utah Supreme Court
• Decided: May 4, 1909
• Docket: No. 1959
• Status: Published

Opinion

McCARTY, J.,

(after stating the facts as above.)

It is not claimed, nor does the evidence show, that the respondents, or any of them, were induced to take stock in the Zenoli Silver-Copper Mining Company (which proved to be a profitable investment for each of them) because of any misrepresentation or false statement made by McAlister. Cran-ney, plaintiffs’ principal witness, testified, “Finally we got double what we contemplated for our money.” And the trial court found, which finding is supported by the undisputed evidence, that the stock which cost Cranney only twenty cents per share, and the balance of the plaintiffs not to exceed forty cents per share, was, at the time of the trial, “of the value of eighty cents per share.” The theory upon which respondents base their alleged right to recover is set forth in their printed brief as follows: “The facts in this ease . . . constituted appellant the constructive trustee of respondents, . . . and that he became charged as trustee for the whole amount of the bonus stock (twelve thousand shares) and was accountable to respondents therefor, regardless of whether such stock was retained by him or delivered over to Wilson, or to anybody else.” Again they say: “He had constituted himself the agent of his associates in the deal by taking their money into his possession.” The respondents have not appealed from the judgment, nor have they filed an assignment of cross-errors. Therefore the only stock involved in this appeal is the block of five thousand shares of the bonus stock that was issued to appellant.

We are decidedly of the opinion that the record in this •case does not uphold the contention of respondents that appellant, in bis deal witb Wilson and tbe promoters of tbe Zen-oli Silver-Copper Mining Company acted as tbe agent or trustee of respondents. Wben appellant 1 came to Salt Lake City and demanded tbe return of tbe money wbicb be and tbe two Tbatcbers bad paid Wilson for an interest in tbe property covered by tbe oral option wbicb Wilson claimed to bave on tbe property, be was not authorized to act, nor did be assume to act, for any one except bimself and tbe Tbatcbers; and, wben bis money was returned to bim, bis relations witb Wilson and respondents Were completely severed, and' there was absolutely no community of interests between them. He owed respondents no legal duty whatever to look after and protect tbe interests they may bave acquired in their deal witb Wilson,, and the mere fact that appellant, after be bad withdrawn bis money and that of tbe Tbatcbers from tbe fund held by Wilson, undertook to, and did negotiate a settlement of tbe difference existing between Wilson and tbe promoters of tbe said mining company, did not make bim tbe agent nor trustee of tbe respondents, for tbe record affirmatively shows that in negotiating and bringing about this settlement be neither acted nor assumed to act as tbe agent or trustee of respondents. He received tbe funds frbm Wilson under tbe contract wbicb be bad entered into witb Wilson, on tbe one band, and tbe promoters of tbe Zenoli Silver-Oop*-per Mining Company, on tbe other, and be bad no1 alternative but to deposit tbe money witb tbe bank in accordance witb tbe terms of tbe contract. In other words, appellant did not receive tbe money from Wilson witb tbe understanding that it should be turned over to respondents or invested exclusively for their benefit, but, on tbe contrary, as we bave stated, be received it for tbe specific purpose of depositing it witb tbe bank under and in accordance witb tbe terms of bis contract witb Wilson and tbe promoters of tbe mining Company. This is shown by tbe following testimony given by McAlister, which is not denied. “Q. State what, if anything, in tbe way of instructions, were given by Mr. Wilson as to what you should do witb tbe $3500. A It was simply to be turned over to these people. Q. In consideration of what? A. For the settlement.” Wilson, by turning this money over to appellant, did not, as respondents seem to contend, relinquish his interest in or claim to the fund. The record shows that, at the time that Lippman offered to return to plaintiffs their money, provided they would' take all and draw out of the deal, Wilson went to' Lippman and said to him: “D'on’t you take my money out of there. . . . The money that I put in McAlister’s hands, that stays. Don’t you dare take it out. I don’t want it back.”

The promoters of the Zenoli Silver-Copper Mining Company had the right to give Wilson the twelve thousand shares of the stock, or, for that matter, any amount that they might feel disposed to give him, in settlement of his 2 claims against them and as a bonus for his services in raising the funds contributed by respondents, appellant, and the two Thatchers. That the promoters had this right we do not think can be successfully controverted. When Wilson, acting through appellant, deposited the funds held by him in Walker Bros.’ Bank, and the respondents were advised of the deposit and the terms and conditions upon, which it was made, and were given the opportunity to either ratify what had been done and accept a specified number of shares of the capital stock of the proposed corporation when organized, or have their money returned to them, and they thereupon decided to take stock and stay in the deal, his (Wilson’s) right to the bonus stock was as complete as it would have been had he, with his oto money, purchased it direct from the company; and appellant had the same legal right to accept a block of this stock in payment of the services which he rendered Wilson in negotiating a settlement of the differences existing between him (Wilson.) and the Zenoli people, .as the plaintiffs had to trade and traffic in this particular block of stock. Respondents, however, claim that the bonus stock was, in effect, purchased with 3 their money which, they insist, was held in trust by appellant and Wilson, and that the alleged forbearance of Wilson in not pressing bis claims and suing tbe promoters of tbe Zenoli Silver-Copper Mining Company was not, as a matter of fact, a part of tbe consideration for tbe bonus stock and did not at all enter into tbe deal; but tbe court found that it was a part of tbe consideration, and tbe evidence, without conflict, supports tbe finding. Tbe finding made by the court on tbis point, so far as material to tbe questions involved, is as follows: “That said Wantland, Lippman, Cobb, and Delmas were willing to give twelve thousand shares of stock of tbe Zenoli Silver-Copper Mining Company to be thereafter organized, for tbe purpose, first, to prevent a lawsuit by said Wilson, and, second, to. obtain tbe said five thousand dollar fund, part of which was then in tbe bands of said Wilson, but that tbe said Wantland, Lippman, Cobb, and Delmas declined to bave any dealings direct witb said Wilson.” Tbe court further found: “That thereupon tbe defendant and said Wilson entered into an agreement between themselves that bis negotiations witb said Wantland, Lippman, Cobb, and Delmas would be carried on in tbe name of tbe defendant, and that bonus stock to tbe amount of twelve thousand shares, which they intended to obtain from tbe capital stock of tbe Zenoli Silver-Copper Mining Company, to be thereafter organized, should be divided between defendant and Wilson, by said Wilson receiving and retaining seven thousand shares of tbe same and tbe defendant receiving and retaining tbe other five thousand shares, and that tbe said Wilson and tbe defendant, acting in tbe name of defendant, entered into a contract witb said Wantland, Lippman, Cobb, and Delmas, whereby it was agreed that tbe funds contributed as aforesaid and under tbe control of said Wilson would be increased by other funds to be raised by said defendant and Wilson to tbe aggregate amount of one thousand and five hundred dollars, and that tbe said five thousand dollars should be delivered to tbe said mining company to be organized for its use and benefit, and that said defendant should receive for said fund of $5000, twelve thousand five hundred shares of tbe capital stock of tbe said Zenoli Silver-Copper Mining Company for tbe contributors to the fund and twelve thousand shares of the capital stock of the said company as a bonus for the said Wilson and the defendant.”

The case as presented by this appeal, may be summarized as follows: Plaintiffs, under their original contract with Wilson, were to receive for each one thousand dollars paid in by them a one-hundredth interest in the mining claims upon which he claimed to have an option of purchase. The purchase price, under the Wilson option, was seventy-five thousand dollars, of which fifteen thousand dollars was to be raised within a short time. A corporation was to be organized with a capital stock of one hundred thousand shares of the par value of one dollar per share, and Wilson was to receive twenty-five thousand shares for his services in promoting the corporation. Furthermore, the record shows that Wilson was a transient, a man without means and financially irresponsible. Cranney, in explanation as to why the five hundred dollars he paid Wilson was not turned over to appellant with the balance of the fund, testified: “He (Wilson) said he had turned it over to McAllister except five hundred dollars of mine, and that, if I would let the matter stand that way, he would give me stock for it in a while. . . . To tell the truth, I believe that he had squandered the money.” Whereas, under the arrangement made by Wilson through appellant with the promoters of the Zenoli Silver-Copper Mining Company, the respondents were to receive, and did receive, the same interest in the identical mining claims covered by Wilson’s oral option, and, instead of paying seventy-five thousand dollars for these' claims, it became necessary to pay only fifteen thousand dollars for such claims and additional mining claims, and Wilson was to receive, through appellant, twelve thousand, instead of twenty-five thousand shares of the capital stock for his services. That is, Wilson, under the last arrangement, was to receive for his services a little less than one-twentieth interest in the corporation, instead of the fourth interest provided for in his original contract with respondents.

Respondents were duly advised that Wilson was to receive twelve thousand shares of the stock for his services and in full settlement of the interest which he claimed to have in the Zenoli property by virtue of his oral 4 contract to purchase the same) and they thereafter ratified the entire transaction.

We are therefore of the opinion that the judgment should be, and the same is hereby, reversed, and the case is remanded to the court below, with directions to dismiss it. Costs to appellant.

STRAUP, C. J., and FRICK, J., concur.