stock of an insolvent corporation would be to put it in the control of those who might be willing to finance it or to reorganize it if they were in control of it. But it is said there was no danger of a receivership. To so hold we would have to say that the effect of the MacGinniss contract was to make the company solvent. Just how it can be so held is not made clear by counsel. The parties who bought the stock paid above the market, but that was their own concern. The sale to the Securities Company did not add a dollar to the assets of the Consolidated Company A purchase of stock at a fancy price for the purpose of gaining control of a corporation will not fix a market price. 2 Cook, Corporations (7th Ed.) § 581. 32 Wash. 528, 73 Pac. 692. The court adopted the text of 21 Am. & Eng. Enc. Law (2d Ed.) § 898: "The doctrine that officers and directors are trustees of the stockholders applies only in rebusiness of the corporation. It does not exspect to their acts relating to the property or tend to their private dealings with stockholders or others, though in such dealings they take advantage of knowledge gained through their official position." This is the holding of all the courts. Cook, Corporations (7th Ed.) § 320; Beach, Corporations, §§ 246, 614. It would seem then, if we grant that defendant was bound to disclose anything that might affect the corporation, that he was under no duty to reveal a contract and a market that was the result of a personal venture. There is nothing in the law that will prevent a stockholder, although he be an officer, from dealing in the shares of a corporation. He may find a market and buy stock to fill it. If his purchaser is willing to pay more than the stock is worth to get control of the company or for any ulterior purpose it is of no concern to the seller. Neither does the testimony show that such market price as the stock of the Consolidated Company had was in any way enhanced. There is nothing to show that it became suddenly more valuable. Indeed, so far as the record shows, there was nothing to excite the interest of the plaintiffs until the sale of the stock to the Securities Company was If the purchaser is under personal condisclosed in the government suit. It would seem therefore upon principle that the rep-bound to disclose his market. If it is for the tract to deliver to a third party, he is not resentation that the company would be put into the hands of a receiver unless plaintiffs sold their stock would not be actionable, unless it involved an actual misrepresentation as to the value of the stock or possibly a showing that the stock became more valuable because of existing facts which the vendee, being an officer of the company, was bound to disclose. In any event, if plaintiffs' theory be sound, they, having knowledge that the Consolidated Company did not go into the hands of a receiver, should have been diligent in the assertion of their rights. We do not comprehend why they should sell their stock under a representation that it would prevent a receivership and afterwards insist that the representation was deceitful, relying upon the fact that the very thing that was in the minds of the parties came about. [3] Passing these questions, it remains only to inquire: (1) Whether there was a market to which plaintiffs were entitled, and (2) if so, was it the duty of defendant to disclose it, either (a) because he was an officer of the Consolidated Company, or (b) because it was his duty to disclose the market and the terms of his contract when asked if the sale was for the benefit of the Bell Company? These several questions may be best discussed in a general way. It must be borne in mind that the transaction was a sale of stock from one stockholder to another; the purchaser being an officer of the company. Was there a legal duty upon the defendant to disclose his market? The duty of a stockholder, he being an officer, when purchasing stock from another stockholder, has been benefit of the corporation he is. In this distinction is to be found the dividing line between actionable and nonactionable fraud and deceit. In all of the cases relied on by counsel will be found a duty, whether it The parties were not dealing at arm's length, rest in agency, partnership, or joint venture. but the one was bound to act for the other or for all having a like interest. The only case to which we shall refer is Strong v. Repide, 213 U. S. 419, 29 Sup. Ct. 521, 53 L Ed. 853. It is said by counsel to be parallel in facts and conclusive of this case, but we do not so regard it. In that case there was an inactive corporation. It was no more than a name. It owned large bodies of land. "The company had no other property of any substantial value than these lands. They were its one valuable asset." We take it from the report of the case that the lands were not kept up in any way by the owners, but were held pending a possible purchase by the United States government. There was nothing left of the corporation when the sale was concluded. The parties were to all intents and purposes partners, with interests proportionate to their holdings of stock. The principal owner because of his large controlling interest had been consulted and knew that the lands might be sold for a price to be agreed upon; that a large sum of money had already been offered by the government. He did not go to the complaining stockholder or to her agent, although he knew him. He had an office in the same building. He purchased the stock through the intervention of a relative, who in turn employed a broker to approach the ery effort was made to conceal the prospec-1 der the authority of our own decision in tive sale of the lands, and the immediate pur- O'Neile v. Ternes, supra, he was not bound to chaser of the stock; * * perfect silence disclose his market and is consequently entiwas kept." Suspicion was anticipated and tled to the advantage of his trade. avoided. "The agent of the plaintiff had no knowledge or suspicion that the defendant was the one seeking to purchase the shares." The value of the stock by reason of the sale of the lands increased from $16,000 to $76,256 in two months and a half. If MacGinniss had not delivered under the contract or the Bell Company had compelled a restitution from its agents, the loss would have fallen upon him and him alone. It is insisted that there is no testimony to sustain a finding that defendant profited by the deal. We think there is no direct evidence of this. fact. Plaintiffs as stockholders have lost nothing that the law will compensate in damages. They have no cause of action. The only party legally injured in so far as the record goes is the Bell Telephone company, which seems to have suffered by. reason of the activities of its agents and servants in their own behalf and at its expense. It is not now com In the case at bar the sale was entirely independent of the corporation. It did not involve its tangible assets in any way or affect their value. The parties dealt face to face. Plaintiff's knew that defendant had been purchasing stock and wanted theirs. They were suspicious of him and voiced their suspicions. They had access to the books of the company. They knew that the company was subject to a receivership if it passed its interest payments. They no doubt entertained a nat-plaining. ural belief that others were seeking the prop- Reversed on the appeal of defendant, and erty for their own advantage and benefit. remanded, with directions to dismiss. Taking their suspicions at their full worth they amounted to no more that this, they were apprehensive that the sale was for the benefit of some one with means to rejuvenate the Consolidated Company. But that was not enough to defeat a sale if they got a fair price. They accordingly capitalized their suspicions in money and tock $5 per share in one instance $11-above the price at which it was selling among the brokers in Spokane. Then too this case is to be distinguished from the Strong Case in that the record shows no marked increase in the market value of the stock. MORRIS, C. J., and FULLERTON, ELLIS, and MOUNT, JJ., concur. (97 Kan. 174) (No. 19583.) Feb. 12, 1916.) Rehearing de PARIS v. GOLDEN et al. MASON, J. A petition for a rehearing, containing a forcible presentation of the argument for the appellee, has been fully considered, but the court adheres to the view already expressed. A contention is pressed that a correct interpretation has not been placed upon the language of the petition in the action for specific performance, with regard to the kind of title the plaintiff was willing to accept. The sentence in question reads: In discussing the Strong Case it is not out of place to refer to one of the contentions made by plaintiffs; that is, if they had been informed of the contract with the Securities Company they might have sold to that company. We do not so read the record. It is true that Smith said they were willing to take the stock from any one who had it, but he also said that they would not have purchased it from any one, except through MacGinniss. It is evident to us that this must be true for the whole negotiations between the Securities Company and MacGinniss and the defendant were kept secret until they were disclosed in the government suit. At that time the transactions between the parties had ended. The Consolidated Company and its affairs had not attracted the attention of plaintiffs or any one until they learned through the newspapers that although they sold their stock at above its actual worth, granting that it had a The contention is made that this means market value, they had not been privileged that the plaintiff was willing either (1) tổ to share in the exploitation of the Bell Com-accept a warranty deed conveying the title pany by its own agents, and officers of its the defendant had on March 1, 1906; or (2 subsidiary, the Mountain States Telephone to accept (without qualification as to the Company. "The plaintiff further alleges that on the said 1st day of March, A. D. 1906, he was ready, able, and willing, and has ever since been and still is able, ready, and willing to perform all of the terms and conditions of said contract of sale upon his part and pay the full purchase price of said lands and accept a warranty deed conveying the title to the said lands and tenements of which the said defendant was seised on the 1st day of March, 1906, or such title as the defendant had in said above-described premises at the time of the commencement of this action." character of deed to be given) such title a In the case at bar the defendant was not an the defendant had when the action was be agent, but a buyer. He bought on the market gun. Such a reading may be consistent with at the seller's price. The parties dealt at the rules of grammar, but we do not think arm's length. The law will presume that the language quoted, considered as a whole, defendant bought for an advantage, and un- is fairly to be given that construction. To It is agreed between the parties that the only question involved relates "to the legality and sufficiency of the description of the amount of the bonds to be issued under the ordinance, election proclamation, and ballot recited in the plaintiff's petition." us the obvious meaning seems to be that the auditor of state to register certain bonds the plaintiff was willing to accept a war- of that city to provide payment for the exranty deed to such title as the defendant tension and improvement of its municipal had, either on March 1, 1906, or when the water plant. action was begun. It indicated that in case the defendant should prove unable to make a perfect title the plaintiff elected to accept such as he had, notwithstanding any defects, rather than avail himself of his alternative right to treat the contract as broken, and ask damages for its breach, allowing the defendant to retain the land. It did not imply that the plaintiff voluntarily relieved the defendant from any of his legal obligations under his agreement. Upon grounds set out in the original opinion we regard the case as not falling within the rule against splitting a cause of action, applied in Naugle v. Naugle, 89 Kan. 622, 132 Pac. 164. The present action is in effect upon a breach of warranty. If the defendant had paid his personal debt to Paris, or if for any reason it had not been enforced against the land, the plaintiff would have had no claim against him. The pertinent statute in part reads: "Whenever the city council of any such city shall desire to procure authority for the issuance of bonds under the terms of this act, they shall pass an ordinance directing the calling of an election for the submission of the question to the electors thereof. Notice for such election shall state the amount of bonds proposed the polling-place or places at which the elec to be issued, the purpose of the issue, and state tion will be held. * Gen. Stat. 1909, § 745. In the ordinance adopted by the city pursuant to this statute it was provided: "Sec. 2. That an election is hereby directed to be held at the usual place of voting in the several wards of said city, within thirty days from the taking effect of this ordinance, at The petition for a rehearing is denied. which the following proposition shall be submitAll the Justices concurring. (97 Kan. 371) ted to the electors of said city, to wit: 'Shall the mayor and councilmen of the city of Oswego, Kansas, issue the bonds of said city in a sum not exceeding thirty thousand dollars, bearing CITY OF OSWEGO v. DAVIS, State Auditor. 5% per annum interest, payable semiannually, (No. 20584.) (Supreme Court of Kansas. Feb. 23, 1916.) (Syllabus by the Court.) MUNICIPAL CORPORATIONS 918-BONDS ELECTION-VALIDITY. Under a statute authorizing the issue of bonds for the extension and improvement of a municipal water plant, which provided that the notice of the election and the election ballot shall state the amount of bonds proposed to be issued, a city ordinance calling the election, the election notice, and the election ballot stated the proposition thus: "Shall the mayor and councilmen of the city of Oswego, Kansas, issue the bonds of said city in a sum not exceeding thirty thousand dollars, bearing 5% per annum interest, payable semiannually, payable within twenty years from their date, in such manner as the mayor and councilmen may determine, for the purpose of improving the water supply plant and system of said city." Held, that this slight departure from the precision of statement required by the statute touching the amount of bonds to be issued does not render the proposed issue illegal nor preclude their registration. [Ed. Note.-For other cases, see Municipal Corporations, Cent. Dig. §§ 1919-1923; Dec. Dig. 918.] Original petition for writ of mandamus by the City of Oswego, Kan., against W. E. Davis, as Auditor of the State of Kansas. Writ allowed. Nelson Case, of Oswego, for plaintiff. M. Brewster, Atty. Gen., for defendant. payable within twenty years from their date, in such manner as the mayor and councilmen may determine, for the purpose of improving the water supply plant and system of said city.'" The notice by the mayor and the city clerk proclaiming the election followed the language of the ordinance, and the proposition submitted at the election was approved by a lawful and sufficient majority of the voters. It will be noted that the statute provides that the notice for the election shall state the amount of bonds proposed to be issued. The statute gives a form of ballot to be used and directs that the ballot shall conform substantially thereto. A literal compliance with this provision would require that the proposition be thus stated: "Proposition to issue bonds of the city of Oswego to the amount of $30,000 for the purpose," etc. Gen. Stat. 1909, § 746. The proposition presented by the notice and on the ballots was: "Shall the mayor and councilmen of the city of Oswego issue the bonds of said city in a sum not exceeding thirty thousand dollars," etc. It is conceded by the litigants that no exact precedent can be found in our own decisions. We have examined a large number of cases which have arisen in other jurisdicS. tions, and the following support the contention of the plaintiff that the proposition was stated with sufficient accuracy: Chicago, B. DAWSON, J. The city of Oswego invokes & Q. R. Co. v. Village of Wilber, 63 Neb. 624, the original jurisdiction of this court in a 88 N. W. 660; Fishblatt v. Atlantic City, 78 petition for a writ of mandamus directing N. J. Law, 134, 73 Atl. 125; Village of Bronx ville v. Seymour, 122 App. Div. 377, 106 N. Y. | 728, 54 Pac. 924, an issue of bonds which Supp. 834; Lumbertson v. Nuveen, 144 N. C. was required by the statute to state on its 303, 56 S. E. 940; Elyria Gas & Water Co. face to whom issued was held to be suffiv. City of Elyria et al., 7 Ohio Cir. Dec. 527; ciently complied with by a recital that the Knight et al. v. Town West Union et al., 45 bonds were payable "to - or bearer." W. Va. 194, 32 S. E. 163. It is urged against the issuance of the Tending to support the position taken by writ that the city officials and those interestthe auditor of state that the proposition was ed in the success of the bond election might not stated with sufficient accuracy are the mislead the voters as to the actual amount following: Hillsborough Co. et al. v. Hender- of bonds which the city government would son et al., 45 Fla. 356, 33 South. 997; Smith issue where the sum is not positively and v. Dublin, 113 Ga. 833, 39 S. E. 327; Crooke exactly specified in the bond proposition. v. Board of Commissioners of Davies County, But this objection is no more true as to a 36 Ind. 320; Cincinnati, Wabash & Michi-bond election than to any other election. In gan Railroad Co. et al. v. Wills et al., 39 any free government the wise and the foolish, Ind. 539; State ex rel. Lexington & St. Louis the vain and the venal, the radical and the R. R. Co. v. Saline County Court, 45 Mo. 242; conservative, may and do exercise the liberStern v. City of Fargo et al., 18 N. D. 289,ty of persuading their fellows to adopt their 122 N. W. 403, 26 L. R. A. (N. S.) 665. In some of the cases just cited the issue arose touching the definiteness of the proposition relating to the amount of bonds proposed to be issued, and in some instances relating to the definiteness with which the rate of interest was specified. Nor can it be said that in every case the language of the various statutes under consideration was precisely like ours. But in the main the cases turn upon the liberality or the rigidity of the courts in construing the proceedings of the various municipalities under the statutes authorizing such bond issues. Some help may be drawn from an examination of our own cases. views; and all sorts of reasons, logical and illogical, serious, trivial, and absurd, are given by electioneering advocates in their endeavors to win the support of the voters. A bond election in Oswego is no more likely to be illegally affected by the misrepresentations, wheedling, or cajolery of the promoters of the bond issue than are elections elsewhere or on any other proposition submitted for the suffrage of the people. Moreover, it has never been held that, where a positive and exact amount of bonds has been authorized by the electors, the municipality must issue that exact sum. When once the issue has been authorized by the people, every In Turner v. Com'rs of Woodson Co., 27 prudent municipal government strives to keep Kan. 314, an injunction was sought to re- the expenditures well below the maximum strain an issue of $27,000 of the bonds of amount authorized by the electors; and the Center township, Woodson county. The max- proposition submitted to the Oswego voters imum amount which could be lawfully is- was simply a request for authority to issue sued was $26,385.55. The amount voted by $30,000 in bonds if that amount was necesthe electors was $27,000. The court held, in sary, and the people gave their sanction to effect, that all the proceedings were valid, such issue, and pursuant thereto the municiand the bond issue was valid up to the law-pality now seeks to register and issue that ful maximum, and held the issue void only as amount. It seems in accord with the libto the excess. eral construction always given by this court in scrutinizing the official action of public officers and boards to hold that in the proceedings leading up to the issue of the bonds in question the departure from the exact directions of the statute is not so serious as to prevent their registration. An analogous case to the one before us was State v. School District, 34 Kan. 237, 8 Pac. 208. It concerned the validity of an issue of school bonds in which the statute provided that the bonds "shall specify on their face the date, amount, for which purpose issued, to whom, the time they run, and the rate of It should be added, however, that in so iminterest." The bonds did not in terms speci- portant a matter as the issue of municipal fy for what purpose they were issued, except bonds the statutes authorizing them should by a general recital that they were "issued be carefully studied and closely followed in in pursuance of an act of the Legislature of all the proceedings leading up to their registhe state of Kansas entitled 'An act to en-tration. It ought to be the pleasure and able school districts in the state of Kansas pride of municipal officers that in matters to issue bonds,' approved February 26, 1866" (Laws 1866, c. 19), and acts amendatory and supplemental thereto. The court held, in effect, that this was sufficient to show that the purpose of the issue was to provide a schoolhouse for the district either by erecting or purchasing the same. In School District v. Cushing, 8 Kan. App. like these their work has been so thorough (97 Kan. 235) (Syllabus by the Court.) 1. MOTION TO DISMISS. A question of practice held not necessary to be decided. 2. COMMERCE 33 - SHIPMENT OF GOODS"INTERSTATE COMMERCE." A shipment of goods consigned to a point in another state constitutes "interstate commerce," notwithstanding an actual delivery is made before a state line is crossed. [Ed. Note.-For other cases, see Commerce, Cent. Dig. §§ 26, 81; Dec. Dig. 33. increase of the amount in controversy carried it beyond the jurisdiction of the court in an appeal from a justice of the peace. The motion was denied, and that ruling is complainFeb. 12, 1916.) ed of, on the authority of a series of cases, culminating in Thompson v. Stone, 63 Kan. 881, 64 Pac. 9691. Affidavits have been presented here for the purpose of showing that prior to the judgment an oral statement was made by the plaintiff's attorney to the effect that the right to recover more than $175 and interest was waived. The proceedings of the trial court cannot be brought upon the record in this manner. Mason v. Harlow, 92 Kan. 1042, 142 Pac. 243. It is at least doubtful, however, if the assignment of error referred to is available. The judgment was rendered February 17, 1914; a motion for a new trial was overruled May 5, 1914; and the appeal was taken October 27, 1914, more than six months after the judgment, although less than six months after the overruling of the motion for a new trial. The ruling on the motion to dismiss is not reviewable unless it is such a trial error as to be the basis of a motion for a new trial, and it is said not 29 Cyc. 760; 4 Enc. L. to fall in that class. & P. 333, 334; Galey v. Mason, 174 Ind. 158, 91 N. E. 561, Ann. Cas. 1912C, 1290. The question suggested need not be determined, by reason of the view taken of another feature of the case. For other definitions, see Words and Phrases, First and Second Series, Interstate Commerce.] 8. CARRIERS 1962-ACTION BY SHIPPEREXPENSES-GRAIN DOORS-PROOF. In an action against a carrier for the expense incurred by a shipper in furnishing grain doors to box cars, the plaintiff cannot prevail by showing merely the total cost of all the doors he had furnished, including an unascertained number of items for which no charge could be made because they accrued in interstate shipments, after the Interstate Commerce Commission had forbidden the reimbursement of such expenses unless provided in the tariff, and before any tariff provision had been made in that regard. [Ed. Note.-For other cases, see Carriers, Cent. Dig. §§ 888-890; Dec. Dig. 1961⁄2.] (Additional Syllabus by Editorial Staff.) 4. APPEAL AND ERROR 715-PRESENTATION FOR REVIEW-AFFIDAVITS. The fact that, prior to the judgment, plaintiff's attorney had orally stated that the right to recover more than a certain amount was waived, could not be brought upon the record by affidavits. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 2964, 2965, 3273; Dec. Dig. ~715.] Appeal from District Court, Rooks County. Action by the Stockton Elevator & Shipping Association against the Missouri Pacific Railway Company. From judgment for plaintiff, defendant appeals. Reversed and remanded for new trial. W. P. Waggener and W. E. Brown, both of Atchison, and O. O. Osborn, of Stockton, for appellant. S. N. Hawkes, Asst. Atty. Gen., for appellee. & MASON, J. The Stockton Elevator Shipping Association sued the Missouri Pacific Railway Company before a justice of the peace, on account of material it had furnished for the repair of cars in which it had shipped grain between August 5, 1908, and November 25, 1908. The case was taken on appeal to the district court, where a judgment for $231.60 was rendered against the defendant, which appeals. [1, 4] 1. The record shows that at one stage of the proceedings the plaintiff amended its bill of particulars so that a recovery was asked for more than $300. The defendant moved to dismiss the cause because the [2] 2. The plaintiff's claim was based largely upon the furnishing of lumber for grain doors. It was conceded that the material had been furnished, and that the total cost was correctly stated by the plaintiff ; but it was not shown what part of the expense was incurred for shipments within the state, or in interstate commerce after November 16, 1908. This is important because by rule 78 of the Interstate Commerce Commission, made June 1, 1908, interstate carriers are forbidden to reimburse shippers for such expenses unless expressly provided in their tariffs (Interstate Commerce Commission, Conference Rulings Bulletin No. 6, p. 21), and it was shown that no such tariff provision had been made prior to the date named. The evidence in behalf of the plaintiff was that most of the cars for which the doors were furnished were consigned from Stockton, Kan., to Kansas City, Mo., although the majority of them were actually unloaded at Kansas City, Kan. Shipments of goods consigned to a point in another state constitute "interstate commerce," notwithstanding an actual delivery is made before a state line is crossed. Horse & Mule Co. v. Railway Co., 95 Kan. 681, 149 Pac. 436; Enright v. Railway Co., 96 Kan. 546, 152 Pac. 629. In the case last cited it was contended that, because cattle shipped from a Kansas station were unloaded at the Kansas City stockyards on For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |