Anderson v. Chicago Trust & Savings Bank

Per Curiam: The complainant in the bill, dissatisfied with the judgment of the Appellate Court, has brought the record for review to this court by writ of error, and assigns for error that the Appellate Court should not have reversed that part of the decree of the circuit court which adjudged that the defendants pay to the complainant the sum of §1647.90, with interest from December 5, 1896. This item was made up of purchase money paid for the five shares of Midland stock and interest, and balance of amount paid that company for its guaranties of notes given by him to the bank. Defendants in error also assign cross-errors. After full consideration of the case we are of the opinion that the judgment of the Appellate Court is correct and should be affirmed for the reasons stated in the opinion of that court, which opinion we hereby adopt. The principal one of the errors assigned, relied on by plaintiff in error, is, that the Appellate Court erred in holding that he had ratified the purchase of the Midland stock after he had learned of the fraud which had been practiced upon him by Tolman, and had elected to retain said stock, and that he could not thereafter rescind such sale. The point made is, that the Midland Company was a mere fraudulent device gotten up by Tolman to cheat and defraud his customers, and that its shares of stock were consequently a mere sham and fraudulent pretense, and that the purchase and sale of such shares could not, therefore, be ratified. In support of this view the plaintiff in error cites Murray v. Tolman, 162 Ill. 417, where, in speaking of the Midland Company, it was said: “The organization of the company was itself a fraudulent device gotten up by Tolman for an unlawful purpose.” We have no doubt, from the evidence in this case, that we were correct in that statement made in the former case. But it does not follow that the certificate of incorporation of the company issued by the State was void or that the shares of stock issued by the company were void. The company had simply been organized by Tolman and used for an unlawful and fraudulent purpose. The object of the corporation, as declared by its charter, was a lawful one, and it might have been organized for and devoted to a lawful business. The charter was not a forgery, neither were the certificates of stock, and we cannot say that they were of no value and could not have lawfully been bought and sold. That being so, it was not wholly immaterial, as counsel seem to contend, who had or retained such shares. The plaintiff could not rescind the sale to him of such shares and still retain them. The law governing the right to rescind for fraud was as applicable to this transaction as to any other, and when, after sufficient knowledge of such fraud, he elected to claim the shares of stock and had Tolman enjoined from disposing of them he waived his right to rescind. When he enjoined Tolman from disposing of them he evidently thought they were of some value to him, and the record shows nothing to the contrary. The judgment as entered up in the Appellate Court is not altogether correct in form, but we do not deem the error in that respect sufficient to justify a reversal, and it will therefore be affirmed. 'judgment affirmed.