Hardy v. Swigart

Chief Justice Campbell delivered the opinion of the court. The foregoing statement of facts furnishes a complete answer to the contention of the plaintiff in error. It is seldom [142] ¡indeed that a record abounds in so many satisfactory reasons 4or the decision of the trial court, and the embarrassment here •is in the selection of the grounds upon which to affirm the .judgment below. That Hardy’s execution of the stockholders’ agreement of February 1, if untainted with fraud, operated as a payment •and cancellation of his notes, is admitted. The only fraud •charged is that Chaney and Duncan fraudulently procured his signature to that agreement. Whether he has a cause of ¡action against them is not a question here, and we need not 'determine it. In entering into this stockholders’ agreement the stockholders were acting in their individual capacity as ¡stockholders. It is true that the company was a party to the •agreement, though merely a nominal one, and the only thing it had to do was to give its formal consent as a corporation •to the plan of reorganization and to carry out the directions •of the stockholders therein contained. In securing plaintiff’s signature to this agreement Chaney •and Duncan, who were but two of the five directors, were not acting for the board, or the stockholders. They did not pretend so to act, and Hardy knew that they had no such authority to make any promises, or to hold out to him any inducements, other than those contained in the stockholders’ agreement which was signed by the other stockholders of which all were advised. But if Chaney and Duncan could be considered as the representatives of the company, Hardy was just as much its representative as they were. And if it be conceded that they have perpetrated a fraud upon him, he himself is guilty of a fraud upon his other associates in concealing from them, when it was his duty to speak, knowledge of a transaction had between him and two other stockholders. In concealing from Trathen and Manhire, his two former co-owners, and all the stockholders, except Duncan and Chaney, joint wrongdoers, knowledge of this agreement with Duncan and Chaney, one of whose provisions contemplated that he should retain his notes against the coinpany until this separate agreement should be [143] ■delivered to Mm; in falsely stating to Tratlien when he signed 'the stockholders’ agreement that he did not have his notes with Mm, hut would deliver them subsequently to the secretary or attorney of the company, upon the strength of which •statement the others relied and delivered up for cancellation the notes and stock of the company held by them;—he perpetrated a palpable fraud of which he should not now be allowed the advantage. They, would not have delivered their notes and stock had they known of this fraudulent side contract. The cashier of the bank which loaned to the company the money, represented by the note in suit, was a stockholder •of the company, and signed this stockholders’ agreement. He knew of Hardy’s signature thereto, but knew nothing of the separate agreement he had with Duncan and Chaney. Upon the strength of this signature of Hardy, and upon the knowledge of the fact that he acted as a director and participated in the meeting when this loan was authorized, the money was advanced, and plaintiff is now estopped to set up, us against the holder of tMs note, his notes which he agreed to surrender. Whatever may be said as to Hardy’s remedy (if any) against Chaney and Duncan, his equities under his trust deed securing his notes are junior to the equities of all the other stockholders, and to the company, and to the rights of the present holder of this note, who bought it from an innocent holder, in good faith, and for a valuable consideration, and (although after maturity) without any knowledge of the alleged fraud. An additional point is made by plaintiff in error that there is a defect of parties plaintiff in that Solomon Favinger, the beneficiary under tlie trust deed to foreclose which this suit is brought, was not made a party plaintiff. This was the ground of a special demurrer, wMch was overruled; and the ruling cannot now be questioned by Hardy for several reasons : first, Swigart is the trustee of an express trust, and is authorized to maintain tMs action under section 5 of the civil code; were this not so, the fact that, after the demurrer was overruled, defendant Hardy answered and went to trial [144] upon the merits is a waiver of the ground of demurrer, which appeared on the face of the complaint. Bliss on Code Pleading (2d ed.), § 417; Fillmore v. Wells, 10 Colo. 228; Elliott v. Field, 21 Colo. 378; The Sams Automatic Car Coupler Co. v. League, ante, p. 129. Besides, in no event, is this ground of demurrer available to Hardy. If it is to any of the defendants, it is only to the defendant mining company, which made a default; and if it consents that the amount of its indebtedness to Favinger shall be ascertained, without his presence in court, Hardy may not complain. Upon the entire record we are satisfied that the findings and decree of the court below are in all respects right, and the judgment is accordingly affirmed. Affirmed.