HORACE WHITE and Others, as Executors, etc., of HENRY VILLARD, Deceased, Appellants,
WILLIAM MOORE ROBINSON and Others, Defendants, Impleaded with WILLIAM L. STOW and Others, Respondents.
APPEAL by the plaintiffs, Horace White and others, as executors, etc., from a judgment of the Supreme Court in favor of certain of the defendants, entered in the office of the clerk of the county of New York on the 12th day of December, 1908, upon the report of a referee dismissing the complaint upon the merits, except so much of said judgment as dismisses the complaint as to the defendant Camille Weidenfeld.
George H. Engelhard, for the appellants.
Julius F. Workum of counsel [Seney Plummer with him on the brief], Simpson, Thacher & Bartlett, attorneys, for the respondent Dickerman.
Lockwood & Hill, attorneys for the respondents Benedict and Tag.
Lorenzo Semple, attorney for the respondent Fuller.
Dixon & Holmes, attorneys for the respondent Stow.
This action was brought against twenty-six defendants, eight only of whom were served or appeared, of whom two died during the pendency of the case, the action not being revived against their representatives. The complaint was dismissed at the close of the plaintiffs' case by consent as to the defendant
Weidenfeld, and upon the ground that sufficient facts had not been shown to constitute a cause of action as against the defendants Fuller, Benedict, Tag, Stow and Dickerman. Plaintiffs appeal from so much of the judgment as dismisses the complaint against the five defendants last above named.
Plaintiffs are the executors and executrix of the last will and testament of Henry Villard, deceased, who died on November 12, 1900. The complaint alleges, 'Upon information and belief, that prior to the 8th day of May, 1899, the defendants entered into an agreement, hereinafter called the underwriting agreement, with one another and with one Ottmar Kern, whereby it was agreed that a company should be incorporated under the laws of the State of New Jersey to be called the Kern Incandescent Gas Light Company,' and reciting the terms thereof; 'that thereafter, viz., on or about the 8th day of May, 1899, said company was duly incorporated. * * * That * * * on or about the 23rd day of June, 1899, said defendants offered to one Henry Villard to sell to him at par all or any part of $3,500,000 seven per cent cumulative preferred stock of said company, offering him also one share of common stock for every two shares of preferred stock purchased by him; that at the same time and as an inducement to the acceptance of said offer, they stated to said Henry Villard, among other matters of inducement, that leading financial men in New York and elsewhere had underwritten the said company, agreeing to purchase from said company and pay for the entire capital stock of said company, and that by means of said underwriting said patents had been purchased and ample working capital provided for said company; * * * that said Henry Villard, relying upon said statements of said defendants, and being thereby induced to accept their said offer, did, on or about the first day of July, 1899, purchase from said defendants 250 shares of first preferred and 125 shares of common stock of said company and paid therefor to said defendants the sum of $25,000 according to the terms of their said offer; * * * that at various times prior to the month of July, 1900, said defendants in pursuance of said underwriting agreement paid to said Kern for account of the company and in part
payment of its obligations to said Kern, various sums aggregating $400,000, but that in the month of July, 1900, said defendants refused to pay to said company any further sums on account of said underwriting agreement and agreed among each other and with said Kern to cancel said underwriting agreement and caused said company to release them from all their obligations to it under said agreement, and that neither they nor anyone else on their behalf ever paid any further sum whatsoever to said company or for its account under said underwriting agreement or for its capital stock then remaining unpaid; that by reason of the failure and refusal of the defendants to perform and carry out their said underwriting agreement, and by reason of the cancellation of the same, said company was not provided with any working capital and was totally unable to carry on its business; * * * that on or about January 23rd, 1903, said plaintiffs duly tendered to said defendants due assignments and transfers of said shares of stock and the certificates therefor, and on or about February 26th, 1903, demanded repayment of said sum of $25,000 paid by said Henry Villard for said shares of stock as hereinbefore alleged, but that said defendants have refused to repay said sum to said plaintiffs; that ever since said plaintiffs have been and now are ready and willing at any time to deliver to said defendants due assignments and transfers of said shares of stock and the certificates therefor,' and they demanded judgment for $25,000, with interest from the 1st day of July, 1899.
It will be noted that the plaintiffs allege that all of the twenty-six defendants sold the stock to Villard; that there is no allegation of fraud, conspiracy or false representations, nor mutual mistake or failure of considertion; that the alleged tender back of the stock and the demand for the amount paid therefor was three and a half years after the purchase. It is conceded that the statement alleged to have been made by the defendants that leading financial men in New York and elsewhere had underwritten the said company, agreeing to purchase from said company and pay for the entire capital stock of said company, and that by means of said underwriting said patents had been purchased and ample working capital provided
for said company, was true at the time said statement is alleged to have been made.
The plaintiffs' claim is that the defendants having entered into the underwriting agreement set up in the complaint, and having made the statement alleged, and Villard having relied upon said statement in making his purchase, the defendants thereby entered into an implied agreement with Villard that they would do nothing to change the situation as represented; and when, instead of fully carrying out their underwriting agreement, they subsequently between themselves and Kern agreed to cancel and did cancel the sale, Villard and plaintiffs as his personal representatives had the right to rescind the purchase and to sue and recover from the defendants the amount paid for the stock as money had and received.
It is to be emphasized that there is no evidence, and no claim made upon the trial or now, of any fraud, false statements or misrepresentations; there is no proof that at the time of the purchase by Villard he had ever seen one of the underwriting agreements, knew the names of any of the subscribers thereto, or ever had ...