Spalding v. Citizens' Bank

78 Mo. App. 374, 1899 Mo. App. LEXIS 62
Missouri Court of Appeals·Decided January 24, 1899·Published·Cited by 8 cases

Opinion

BLAND, P. J.

This is a suit in equity by plaintiff asking for the rescission of a contract of purchase of ten shares of the capital stock of defendant bank; to recover $900 paid on the purchase of the stock, and for the surrender and cancellation of a $200 note given the bank by plaintiff for the balance on the contract price of the stock; on the ground that the defendants, other than Dempsey, as directors and cashier of the bank, falsely and fraudulently represented to plaintiff that the bank was in good condition; was solvent; had a surplus and was paying annual dividends; and averred that plaintiff relied on these representations as true and purchased the stock.

The answer was a general denial and a plea of estoppel by conduct.

The evidence makes it quite clear that as far back as August, 1895, when the bank was examined by a State bank examiner, it was insolvent and not a dividend paying institution, its president, cashier and assistant cashier being indebted to it by notes and overdrafts for more than double the amount of its capital stock ($25,000); a considerable portion of which indebtedness proved a loss to the bank, on account of the insolvency of the president and cashier. The ten shares of stock purchased by the plaintiff had been received by the bank as collateral security for a portion of the indebtedness of Phillips, the indebted cashier, and the bank had become the owner of the shares on account of Phillips’ inability to redeem them. Phillips died about-, 1896, and R. L. Pollard was appointed cashier. Defendants Joseph H. Tapley, Joseph B. Purnell, Marion E. Motley and William B. [378]*378McPike, iii April, 1896, and prior and subsequent thereto, were stockholders and directors of the bank. On the thirty-first day of March, 1897, the secretary of state took charge of the bank on the ground of insolvency and impairment of its capital stock and for various violations of the law governing banking corporations, and defendant Isham O. Dempsey was subsequently appointed receiver by the Pike county circuit court and as such had charge of the assets of the bank when this suit was brought. Some time in March, 1896, the plaintiff having learned that the bank had ten shares of its capital stock for sale, went to Pollard, its cashier, and made inquiry about the bank and the stock, and wanted to know for what sum the stock could be purchased. Pollard told him the bank was doing nicely, was making money, and was in good condition; that the stock was for sale; but that he would have to see the discount committee (composed of the directors), about buying the stock. In April, 1896, plaintiff appeared at a directors’ meeting, when all the directors, except Motley, were present, and purchased the ten shares of stock of the par value of .$1,000 for $1,100. What took place at this meeting is in dispute. The plaintiff testified substantially'that he made the purchase of the board of'directors present at the April meeting; that they represented the bank to be in a good solvent condition and had a surplus represented by dollars, and that the bank had paid regular annual dividends and was on a dividend paying basis ;• that he relied on these representations believing them to be true; that he had no other means of gaining information of the condition of the bank, and that he agreed to take the stock at $1,100, the bank to have the year’s dividend on the stock; that he had paid $900 in cash on his purchase, and that the bank held his note for the balance of $200 and the shares of stock as security for payment thereof. In the main he is corroborated by J. B. Purnell; the other directors, however. [379]*379deny making the sale or making any representations to plaintiff as to the condition of the bank; they claim the sale was made by Bollard, the cashier, and not by them. Pollard denies that he made the sale, says he referred the plaintiff to the directors to make the purchase, and that they sold the stock to plaintiff; but admits that he did conceal the true condition of the bank from plaintiff, when plaintiff made the inquiry of him; that he thought it was Ms duty to the bank to do so. He also testified that he told plaintiff that the bank was doing nicely. The plaintiff’s stock was voted by him at the annual election, March, 1897, held by the stockholders to elect officers of the bank. After close of the bank he attended the meetings of the directors for the purpose of devising ways and means to reopen the bank. Some of the witnesses testify that when a proposition was made that each stockholder pay into the bank fifty per cent of his stock for the purpose of reopening, that plaintiff favored the measure and offered to pay his part at once; this he emphatically denies, and says that at that meeting he insisted on a settlement of his claim against the bank. The plaintiff also signed a petition to the circuit judge asking for the appointment of Dempsey as receiver of the bank after the secretary of state had taken charge of it; but at this time plaintiff was a depositor of the bank. The evidence was heard by the court and a jury, at the close of which the court submitted to the jury the following issues of fact, viz.:

“1st. Did the officers and agents of the bank in negotiating the sale to plaintiff, represent to plaintiff that the bank was in a solvent condition ?
“2nd. Did said officers and agents then and there represent said bank as doing a good paying business ?
“3rd. Did said officers and agents then and there represent to plaintiff that said bank was paying regular annual dividends ?

[380]*3804th. Did said officers and agents then and there represent to plaintiff that there was a surplus on hand ?

“If the jury find any of the above issues in the affirmative then the jury will answer these two questions:

“5th. Did said officers and agents then and there know said representations to be false?
“6th. Did plaintiff in making said purchase rely on said statements and representations?” To which the jury responded by their verdict as follows:
“We the jury find the issues of fact as follows:
“1st. We find the first issue in the affirmative.
“2nd. We find the second issue in the affirmative negative.
“3rd. We the jury find the third issue in the affirmative. ^
“4th. We the jury find the fourth issue in the affirmative negative.
“5th. We the jury find the fifth issue in the affirmative.
“6th. We the jury find the sixth issue in the affirmative negative.”

The verdict was rendered on November 24, 1897; on the twenty-seventh day of same month defendants filed their motion for a new trial and in arrest of judgment. On the sixth day of December, 1897, the court rendered judgment for plaintiff against all of the defendants, except Pollard and Motley, for or against whom no finding was made or judgment rendered. On the second day of the term thereafter defendants renewed or filed their second motions for new trial and in arrest of judgment; none of said motions called the attention of the court to its failure to render judgment for or against Pollard and Motley; these motions were on the eighth day of December, 1897, by.the court overruled; on the seventh of January following and during the same term of court the defendant filed the following motion:

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Spalding v. Citizens' Bank, 78 Mo. App. 374, 1899 Mo. App. LEXIS 62 (Mo. Ct. App. 1899).

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