Burwash v. Ballou

Mr. Chief Justice Hand delivered the opinion of the court: The International Copper and Gold Company was a de facto corporation, and the appellant having purchased its stock of the appellees, in a proceeding like this, no warranty having been made by the appellees that the corporation issuing said stock was a de jure corporation, the appellant cannot escape the payment of the consideration agreed to be paid by him for said stock, by showing that the International Copper and Gold Company, which issued said stock, was not legally organized, or that its increase of stock, of which that purchased by appellant formed a part, was illegally issued. (Marshall v. Keach, 227 Ill. 35.) In Higgins v. Illinois Trust and Savings Bank, 193 Ill. 394, it was held that the vendor of stock in a corporation impliedly warrants that the stock is genuine and that he is the owner thereof and authorized to transfer title, and that if the assignee desires further protection he must exact a special warranty. See, also, First Nat. Bank of Sterling v. Drew, 191 Ill. 186. The questions whether the appellees fraudulently represented to appellant that the International Copper and Gold Company was possessed of rich and valuable mines and other property which were fully developed, and that the stock which appellants purchased from appellees was held by them, or either of them, in trust for said company, and that the proceeds of the sale of said stock to him would be used to develop the property of the company, were questions of fact. There was a direct conflict between the evidence of appellant and his witnesses and that of the appellees and their witnesses upon those questions, and the rule is too firmly established in this jurisdiction to be shaken, that in such state of case the rulings of the chancellor who tried the case and saw the witnesses and heard them testify upon questions of fact, will not be disturbed unless it is manifest that his rulings are wrong. (Delaney v. Delaney, 175 Ill. 187; Fabrice v. Von der Brelie, 190 id. 460; Arnold v. Northwestern Telephone Co. 199 id. 201.) We have read the testimony of all the witnesses as it appears in the abstract, and are unable to point out wherein the chancellor committed error in his determination of the facts of this case. It would serve no useful purpose, therefore, to incorporate into this opinion a discussion of the complicated state of facts found in this record. In the decision of a case like this it must be borne in mind that “puffing” mining claims or making glowing predictions as to how such claims will “pan out” does not amount to such false representations as will authorize a court of chancery to set aside a sale of stock in a mining company when the parties are compos mentis and deal at arm’s length. Gage v. Lewis, 68 Ill. 604; Tuck v. Downing, 76 id. 71; Brady v. Cole, 164 id. 116. The sale of the stock in question was made on July 15, 1903, and the bill was not filed until August 3, 1904. In the bill of complaint appellant alleges that shortly after the payment of the second note, which fell due September 15, 1903, and which presumably was paid when due, he was put upon inquiry as to the conspiracy and fraudulent agreement entered into between the appellees and others, whereby complainant was induced and persuaded to purchase said seven thousand shares of stock; and again, that about February 1, 1904, complainant was for the first time informed and became aware that some of the representations and statements made to him by appellees were false. The rule is, that a party who desires to rescind a sale for fraud must act promptly; that he cannot be permitted to stand passively by and speculate as to the result of an investment, especially an investment in mining stock, which usually fluctuates in value, and, after the future has disclosed his investment was a mistake, rescind the contract of purchase for fraud and recover back the consideration paid for the stock. Greenwood v. Penn, 136 Ill. 146; Pollett v. Brown, 188 id. 244; Coolidge v. Rhodes, 199 id. 24; Grymes v. Sanders, 93 U. S. 55. Finding no reversible error in this record the judgment of the Appellate Court will be affirmed. Judgment affirmed.