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Sweeney v. Douglas Copper Co.

Supreme Court of New York, Appellate Division

March 15, 1912

WILLIAM J. SWEENEY, Respondent,
v.
DOUGLAS COPPER COMPANY, Appellant.

Page 569

APPEAL by the defendant, the Douglas Copper Company, from an order of the Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on the 19th day of May, 1911, affirming a judgment of the City Court of the city of New York, and an order denying a motion for a new trial; and also from said judgment and order of the City Court.

COUNSEL

Martin L. Stover of counsel [Eaton, Lewis & Rowe, attorneys], for the appellant.

Archibald Douglas of counsel [Paul Armitage with him on the brief], Douglas & Armitage, attorneys, for the respondent.

CLARKE, J.:

One M. L. Eldridge, sixty-five years of age, a resident of Davenport, Ia., saw a copy of King's Financial Bulletin, published at Boston, and bearing date November 23, 1907, in which appeared a broadside entitled 'Douglas Copper Company bonds may be secured at 110 for one week longer, but price will increase December 1.'

The article was signed by C. F. King. It stated, inter alia, 'this is the first allotment of $100,000 of these bonds, and the company in giving me the exclusive right to offer them to the public is recognizing the fact that my office reaches more solid investors of America than any other financial house in the country. * * * These bonds are issued in three denominations, $100, $500 and $1,000, and bear interest semi-annually. * * * Holders of them will enjoy a fixed income of 6 per cent as long as they hold them, and in the year 1909 will also have the privilege of converting them into stock of the company at $10 a share. * * *'

Upon the faith of said article Eldridge wrote to King on November 26, 1907, and by December second had sent to him $1,081.33 'in full for one $1,000 Douglas Copper Co. bond.' On January 7, 1908, King wrote to Eldridge that he found by reference to his books that he had placed an order for one six

Page 570

per cent convertible bond. 'Delivery of this bond has been delayed for the reason that I have been engaged in negotiations for the purchase of a number of the original Series A bonds of the Douglas Copper Company at a price which would enable me to sell them on the basis of $152 for each $100 bond. As these original bonds are convertible into stock of the company at par $5 per share at any time between this date and December 31, 1909, at the option of the holder, they are easily worth more than double the price of the second series for which you have subscribed and which are only convertible into stock during the year 1909 at the rate of $10 per share. I find that I shall be able to fill a limited number of orders for these original Series A bonds of the Douglas Copper Company at the rate of $152 for each $100 bond, and if you desire to avail yourself of the privilege of subscribing for one of these original bonds in lieu of the second series bond for which you have already subscribed, I shall be glad to credit you with the amount already paid, $1,081.33, and on receipt of the difference, $438.67, will forward you one of the original Series A bonds, denomination $1,000, which is convertible at your option into 200 shares stock of the company at any time from this date until December 31, 1909.'

Eldridge on January ninth accepted this suggestion and sent to King a draft for $438.67, which, added to the amount theretofore forwarded, amounted to $1,520, 'in full payment for one of the 6% convertible bonds of the Douglas Copper Company, denomination $1,000 of the original Series A, convertible at my option into 200 Shares stock of the company at Five dollars per share at any time from this date until Dec. 31, 1909.'

Eldridge never received the bond for which he had subscribed, nor anything else, except some worthless promissory notes, long after the event. King became a bankrupt and was subsequently indicted and convicted. In April, 1908, Eldridge filed a claim in bankruptcy against him, which was allowed. He has not received any dividend, nor is he likely to. Long after the filing of this claim in bankruptcy against King he was advised by a firm of attorneys at Boston that he probably had a claim against the Douglas Copper Company and thereupon, at the suggestion of these attorneys, and on March 13,

Page 571

1909, Eldridge executed an assignment of his claim to one Charles H. Ryan. On April 22, 1909, said Ryan executed an assignment to 'William Sweeney of New York in the County and State of New York' of 'all the claims, demands and rights of action which, under and by virtue of an assignment to me by M. L. ...


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