Witherbee v. Bowles

142 A.D. 407, 126 N.Y.S. 954, 1911 N.Y. App. Div. LEXIS 319
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 20, 1911
StatusPublished
Cited by1 cases

This text of 142 A.D. 407 (Witherbee v. Bowles) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Witherbee v. Bowles, 142 A.D. 407, 126 N.Y.S. 954, 1911 N.Y. App. Div. LEXIS 319 (N.Y. Ct. App. 1911).

Opinions

Clarke, J.:

The complaint alleges that the defendant San Toy Mining Company was incorporated under the laws of Maine in December, 1901, with a total authorized capital of $2,500,000, consisting of 2,500,000 shares at $1' each; that it purchased certain valuable mining properties, mentioning them, in Mexico, and in payment duly issued substantially its entire capital stock as full paid and non-assessable, the said property so acquired being fully worth the amount of stock so paid therefor at par. That shortly thereafter the company acquired another property known as the Bustillios Mine.; that thereafter it entered into possession and began the • transaction of business and the development of said mines;-that prior to January 3, 1903, the plaintiffs had become and were the lawful owners of 1,324,9204J shares; that prior to January 3, 1903, the defendants Bowles, Owings, W. B. Wright, John C. Wright, Lewis,,. Hadley and Paxton, hereinafter called the minority stockholders, had become and were the owners of 775,66741 shares; that on said day the minority stockholders entered into an agreement with plaintiffs whereby they jointly sold to the plaintiffs their said shares for $96,406.15 with six per cent interest thereon until paid, payable $5,000 at the ..execution of the agreement, $5,000 on July 1, 1903, and the balance on or before January-1, 1904. It was further agreed that the certificates for all of said stock (that is the minority stockholders’ and the plaintiffs’ shares) should be deposited with the Milwaukee Trust Company with the agreement that should the aforesaid purchase price not be paid fully by the plaintiffs on or before January 1,1904, the trust company might sell all of the stock then in its hands, or so much thereof as might be necessary to make the [409]*409amount due thereunder to the said minority stockholders, said sale to be at private or public sale upon giving five days’ notice in the Milwaukee Sentinel and mailing such notice to each of the parties to the agreement, and out of the proceeds the trust company should pay first the expenses of the trust and then the amount that might be due under the agreement and should render the surplus, if any, to the plaintiffs.

That thereupon the certificates were duly deposited and the plaintiffs paid to the minority stockholders $5,000 in cash at the execution of the agreement, and thereafter likewise duly paid to the minority stockholders the second sum of $5,000, payable July 1, 1903, and also paid various other sums of money on- account of the purchase price of said stock and under said agreement; that thereafter for a valuable consideration, by mutual agreement, the time for the consummation of the said sale was extended to and included April 15, 1905. That shortly after the" incorporation plaintiffs engaged defendant Hutchinson as their-agent to aid in effecting sales of blocks of the stock owned by the plaintiffs in defendant company, which plaintiffs contributed to procure funds for the use of said company and to make advances to the said defendant company of said funds realized from sales of plaintiffs’ stock, and of: other moneys contributed by the plaintiffs for the purpose, and to protect plaintiffs’ interests in the said company and its properties; and the' said defendant accepted said employment and acted thereunder and received of the plaintiffs large sums of money to be advanced to the defendant company.

That in order to assist in effecting sales of stock to procure funds in aid of defendant company and to assist in procuring funds for themselves to aid in making up the amount to be paid to the minority stockholders for their stock under the agreement, plaintiffs retained defendant Sloan as their agent to negotiate sales of stock of said company owned or controlled by plaintiffs, and plaintiffs agreed to 'compensate him for his services, and said defendant accepted said employment and thereupon became the agent of the plaintiffs; that Joseph Morris, now deceased, and the defendants ¡Richard ¡R. Brown and James E. Brown were copartners under the name of Morris, Brown & Co., and defendant Ward, during a portion of such time, was either a copartner or financially interested [410]*410in said firm and was a brother-in-law of the. defendant Schwab; that plaintiffs’ said agent Sloan, at, divers times, approached the said firm of Morris, Brown & Co., and the said defendants Brown, members thereof,, and the defendants Ward, Gillies,, Carnegie, Dil worth, ■ Beggs, Mitchell and Schwab, and'disclosing to them the facts of his agency for the plaintiffs, and as plaintiffs’ agent, presented to said-defendants various propositions whereunder said last-named defendants should .acquire various blocks of stock so owned or controlled by plaintiffs in defendant company; that the said defendants were interested and willing to entertain said propositions and to acquire portions of said stock, but that Sloan in violation- of his agency and duties to the plaintiffs, as their agent, formulated a scheme or conspiracy only just discovered by these plaintiffs, and hereinafter more fully set out, to cheat and defraud the plaintiffs and unlawfully to deprive them of their said stock in the defendant company and of said stock purchased by plaintiff of said-minority stockholders ; and the defendant Hutchinson advised, connived and participated in 'said conspiracy, and the other defendants, well knowing the premises, either connived with,, dr acquiesced in, or participated' in the fruits of the said conspiracy, and hence in law, as plaintiffs are informed and believe, became parties thereto and accountable and responsible to the plaintiffs for the injuries resulting to the plaintiffs therefrom; that in furtherance of the objects- of said conspiracy defendant Sloan untruthfully reported to the plaintiffs that none of the aforementioned defendants "and no one whom they could procure cared to interest himself.in the said defendant.company or cared to purchase any of said stock; and notwithstanding the fact that the said minority stockholders had drily extended until April 15, 1905, the time for the final performance of the said agreement, said defendants Sloan and Hutchinson connived, with the special aid of the defendant Beilis, and the said minority stockholders, in the interests of themselves and of said defendants, and in the interest and with the knowledge or consent of the other defendants") and under the agreement to divide the fruits of the conspiracy among all the defendants (except the company), to induce and procure the said Milwaukee Trust Company, as agent of said minority stockholders, nevertheless, to attempt to make earlier sale of said stock, and finally on April 14, 1905, in the absence of and' without [411]*411due notice to the plaintiffs, and under the claim that there was due from the plaintiffs to said minority stockholders for the balance of the purchase price the sum of $81,851.66 and interest from September 8, 1903, unlawfully to sell at a pretended public sale all of the stock then held under said agreement and aggregating 2,030,735 shares for the pretended consideration of $75,000 bid by or on behalf of said minority stockholders by their agents, the defendants Owings and John C. Wright.

Plaintiffs are informed and believe that said sale was unconscionable, collusive and void; that it was not advertised in the Milwaukee Sentinel,

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Related

Witherbee v. Bowles
133 N.Y.S. 1151 (Appellate Division of the Supreme Court of New York, 1912)

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Bluebook (online)
142 A.D. 407, 126 N.Y.S. 954, 1911 N.Y. App. Div. LEXIS 319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/witherbee-v-bowles-nyappdiv-1911.