Cole v. Bacon

Per Curiam. The instrument of the 14th day of April, 1871, signed by all of the subscribers to the capital stock of the “Terminal Railroad Company,” except the defendant Bacon, operated to transfer to Stanford, Huntington and Hopkins all of the stock of such subscribers. If it be admitted that the relations of the defendant Bacon and the other subscribers are not to be ascertained by reference to the resolutions of the directors of the corporation, but [573] depended upon subsequent contracts between him and the stockholders, the plaintiffs acquired rights against him from their actual contracts with him, as evidenced by the writing and otherwise. If the sale was by each of the plaintiffs to defendant Bacon of his portion of the shares of the stock, and the instrument was executed to Stanford, Huntington and Hopkins, as a matter of convenience, and to avoid the necessity of a transfer first to Bacon and then by him to Ms vendees, the mere form of the transaction did not change its real character. But the persons who subscribed the instrument of the 14th of April, 1871, had the right to pool their stock, and to dispose of it in the aggregate, and the instrument purports to be a bill of sale or assignment of all their stock, executed by them jointly. That defendant negotiated the sale to Stanford, Huntington and Hopkins, in some capacity, is admitted. There is evidence in the transcript that he acted for them, as their agent or broker, and not for himself. Assuming the testimony of plaintiffs to be true—and in view of the judgment of the court below we must assume their testimony to be true—to the effect that they individually signed the instrument, with the understanding that it should take effect only in case the other subscribers to the stock should sign it, and the others did sign it, the instrument (so far as plaintiffs and Bacon are concerned) constitutes a joint sale to Stanford, Huntington and Hopkins, whatever private arrangements might have been entered into between defendant Bacon and others of the subscribers to the instrument. As between the plaintiffs and defendant Bacon, the court may have found that the latter was the agent for them, and of the other subscribers, authorized to make joint sale of the stock of the corporation held by them and the other subscribers, and that he did in fact make such sale, because there was evidence tending to prove that he induced plaintiffs to believe such was the actual relation between them. The question is not whether plaintiffs could assert, as against the other subscribers to the instrument, that there was a joint sale, but whether they can assert this against the defendant Bacon. He — assuming plaintiffs’ testimony to be true —had no understanding with plaintiffs, severally, that they should sell their stock to Mm. On the contrary it was distinctly understood that they, with the other [574] parties in interest, should sell all their stock for a named sum to Stanford, Huntington and Hopkins; such sale to be evidenced by the signatures of all to the instrument so often referred to. There was nothing in the writing itself to indicate a different arrangement; on the contrary it purported to be a sale by all to the three persons mentioned Under the circumstances the contract between plaintiffs and tne defendant Bacon must be construed to have been what the former understood it to be, and what he must have known they understood it to be. They could not be deprived of their rights under it by means of agreements, unknown to them, between Bacon and others of those who executed the agreement of April 14th, which was executed by the others as it was agreed by plaintiffs and Bacon it should be executed. As between plaintiffs and Bacon, the legal effect of the arrangement was that he, as agent for them, and the others, for whom he asserted he had, or would, secure authority to act, should make a joint sale of the stock. The sale made was made under such power, and, like every other similar agent, he was liable to account to his principals for the proceeds of the sale. If the other parties chose to waive their rights, or, rather, by reason of separate private agreements, lost the power to assert any rights as joint vendors, this did not operate to deprive the plaintiffs of the benefits of the only contracts they entered into. Of course, the foregoing is based upon the assumption of the existence of facts such as are necessarily implied by the general findings and judgment of the Superior Court, since there was at least a substantial conflict in the evidence. Judgment and order affirmed. Hearing in Bank denied.