GRAND RAPIDS SAFE:i'Y DEPOSIT co. 'II.
SAFE & LOCK CO.
GRAND RAPIDS SAFETY DEPOSIT
Co. et al.
April 23, 1891.)
FalUD-CoLLtl8ION wiTH AGENT-RIGHTS OJ!' PRINCIPAL.
A,corporation which contracts With the agent of another corporation to furnish tbe, vault. for $7,250, but at ,tqe request of tbe agentexpre!lsesthe considerationin the contract to be '13,000. and afterwards gives the agent a stat.emenll ofacc011nt showing a false credit of 15,750 for a payment. purpOrting to hlive beeD.IIllfolle by the agent, is liable to the agent's principal for the amount realized lIy the Ipeans of the fraud.. The facti that the agent Is also a, stockholder in plaintiff corporation does nG1l' sf· to recover for the fraud perpetra.ted.· .
BAME-'RIGIlT OJ!' ACTION.
The f\ICt that. stock In lliaintiff corporation was Issued to tlle.agent for the amount of thefrandulent excess 1D the price of the safety vault, and that this stock Is worth les8tehaniw-Jace'value, dOElIl Dot the uability of defepdant for theface·valUe qf ,the being the
Wilbt/ &WaldandMontgl1meTY Follitt' & for defendants..
Bundy, for "
SAGEIJ. Thelu'gument by counsel for the defendant upon motion for: a ne.w trial omits the consideration of the rulesofJa.w which control the caSEl·.. Goodrich,.the agent of the promoters who subsequently organized the plaintiff corporation, and became its sole original stockholders, ·madea contract with the defenctant company for a safety vault ·for the uses of the corporation. The defendant agreed with him to fumishand put Up the vault for thestlmof $7,250 j but upon his request the consideration expressed,.in the c(.nttact was &13,000, which was the amount paid by the plaintiff company, as follows: $7,250 in cash, and the residue in capita:! stock! issued by; the company at par, to Goodrich, in cdnsideration of hissuppogedpayment of the amount thereof on account of said contract. 'fhecontract shows upon its face that Goodrich was acting fOr the plOmoterscon; behalf bfthe corporation about to be formed. There can be; nQ possible doubt\ either in law or in fset, that the defendants were chargeable with notice that Goodrich was acting as an agent. Now, there is lio proposition of law relating to agency better settled than that the agent must be. loyal to his trust, and that "he, may not deal in the business his agency for his own ,benefit. Whart. Ag. § 231et aeq.; Mechem, Ag. § 454 et 8eq. From this principle results the ot,her rule .that all,})rofrtsmadeandadvantages gained by the agent in the exeQtltion of his agency belong, to the principal. Ringo.v·.BinnB, 10 Pet. 269. Evenif'it be};i:llClWn that the principal was not in fact injured; by
the intervention of the agent in his own behalf the result is the same. Gar.dnet v. Ogden, 22 N. Y. 327. If the agent,dealingwith the subject-matter of his agency, acquire!; .aprofit for himself, the law will compel him to account for and transfer to his principal the profit thus acquired. Mechem, Ag. § 469, and cases cited. This is by reason of a principle which applies as well to trustees, who may to for alI profits realized by their use of the trust funds for their own benefit., In this case the transaction was accomplished by fraud and deceit. It could Ilot have been carried into' effect without the connivance and active co-operation of the defendants. Not only did they insert the false and fraudulent statement of consideration in the contract, but later the defendant company (for this particular incident is not shown to have been participated in by the defendant Halliq.ay) furnished to Goodrich, to be byb.im exhibited to the plaintiff, llJ>tatement of account showing a false creditof$5,750 for a. payment purporting to have beep. made by ,him. It is elementary that all who participate in the perpetration of a fraud are to be regarded as principals. The defendants are therefore liablefor the amount which was realized by Goodrich py reason of 'the fraud. This being so, and the facts not' being. in dispute, the court properly charged the jury to fii:ida-verdiCt in favor of the pfaintiff for $5,750, being the amount realized by Goodrich for his own benefit out of the trans.. ' " . "'. " ,. action. To the argument of cOunsel for the defendant' that, inas1lluch as Goodrich became the holder of $8,000 of the entire issue 0($15,00(j' of the complainant's stock, the recovery in this case will in fact be in the like proportion for his benefit, the answer isplliin. There is no testimony tending to prove that Goodrich is now, Or has been since the institution ofthis suit, the holderiof the stock issued to him. If he were, that'·is not 'a matter in regard- to which the court would concern itself. The law does not recognize 1Jhe right to contribution in· favor of wr<lng-doers. It leaves them to adjust their own affairs between themselves, reflising any aid whatever to any of them; , It is urged, further, that the entire transaction on the part of the defendant company was 'conducted by the defendanj, Halliday, without its knowledge or concurrence. The defendant is a corporation, and Halliday was and is its president and managing officer, through, and ,by whom, it made its contracts and transacted its business, and it is responsible for his acts. Whether, in a proceeding in,equity, the defendant company, upon making a clear showing that it was made liable for this ·fraud by the unauthorized participation of its president therein, in its name, without its knowledge or consent, could' be relieved from payaccrue to the benefit of Goodment of so much of the damages as -rich as a stockholder, or could recoup upon Halliday, are questions not before the court. This is an action at law, and the plaintiff is entitled to damages:irrespectiveof these considerations. ' It is further urged that it appears from the testimony that the stock of the complainant company is worth much less than its face value, and that the damages should be reduced correspondingly. The authorities
GRANT ft. UNION PAC.
cited in favor of this proposition areas follows: Teachout v. Van Hoesen, 76 Iowa, 113,1 holding that where fraudulent representations as to the value of property to be furnished as part or the plant of a corporation to be organized, were made to induce a person to become a therein, he, and not the corporation, is the proper party to maintain an uction for such fraud. But in that case the fraud was against an individual. In this case it is against the corporation. In Nyse:wander v. Lowman, 124 Ind. 584, 24 N. E. Rep. 355, land had been exchanged ior stock in a corporation upon a fraudulent representation as to its value. It was held that the measure of damages was the difference between the actual value of the stock and its value as represented. That holding was no doubt correct. But here is a case, not of the transfer of stock by the stockholder to whom it had been issued by the company, or by his transferee, but of an issue of stock by the corporation itself to one who stood as an original subscriber, and received it as paid-up stock, upon the false and fraudulent statement that he had actually paid the amount in cash for account of the company. The case of Vailv. Reynolds, 118 N. Y. 297,23 N. E. Rep. 301, was also cited, but as it is to the same effect as the case last above it is not necessary to refer to it more particularly. _ The stock issued by the company to Griswold could not lawfully have been issued at less than par, and if by reason of the failure of the tiff to succeed in its business, or fr::>m any other cause, it depreciated in value, that fact cannot avail the defendant in this action. The motion for a new trial will be overruled, and judgment entered for the plaintiff for the amount of the verdict, with costs.
GRANT tI. UNION PAC. (Ofn'cutt Oourt, 8. D. Iowa, W. D. L
March Term, 1891.)
MASTER AND SERVANT-INJURIES TO SERVANT-l!bGLIGENOE. It is not negHgence on the pl;\rt of a railroad company to have
switches without lights on them in its yard, unless it appears that it was the common and uniform practice to have such lights, and that the switchmen had a right to expect them.
Where a switchman is run over while passing from one switch to another in order to turn the latter. the jury must determine whether it was negligence on the part of the company that the foreman, who had turned the switch, so that there was in fact no need for plaintiff to go to it, failed 'to inform plaintiff that the switch had been turned. The jUry must determine whether the engine was negligently run at a high and dangerous rate of speed, and a town ordinance regulating the speed of locomotiveljl within the town is to be considered. together with the rest of the evidence. Where plaintiff is injured while passing along the track the two switches by stumbling on obstructions by the side or the track, as he claims, while defendant claims that he slipped while attempting to get on the pilot of the moving engine, the jury must determine what caused the accident, and if they find that plaillti1f injured while attempting to board the engine he cannot recover. N. W. Rep. 96.