Aldine Manufacturing Co. v. Phillips

Grant, J. (after stating the facts). The dealings between the Aldine Company and the mantel company ■are not void because Mr. Phillips was the agent or manager of both companies and negotiated the buying •and selling. Adams Mining Co. v. Senter, 26 Mich. 73. This is a leading case upon the subject, and has been quoted with approval by this and other courts. No other case need be cited in affirmance of the doctrine. It is sought to distinguish that case and others from this, in that the agent in that case was not shown to have been pecuniarily interested in either corporation, while in this case Mr. Phillips was a stockholder in both, corporations, his interest in the mantel company being greater than in the Aldine Company. This interest, however, does not render the contracts and dealings between the two absolutely void. When the transactions are open, honest, and fair, and known to the officials of both companies, they will be sustained. The courts view with jealousy the transactions of the man who stands in such a capacity, and will hold him to a strict account of his dealings. He must show that he has acted with clean hands, and, when [244] this is-shown, the transactions will be sustained. Booth v. Robinson, 55 Md. 419; Twin Lick Oil Co. v. Marbury, 91 U. S. 587. Counsel for both sides cite many cases bearing upon this important branch of the law. The rule of law is well, settled, and a long citation of authorities is unnecessary. Did Phillips deal honestly and. fairly in these transactions as the agent and manager of the complainant ? Did he buy his stock in the mantel company and purchase mantels from it for the complainant for the purpose of defrauding complainant ? The questions involved are purely those of fact. Proofs were taken in open court, and 34 days occupied in the hearing. Both parties were-represented by very able counsel. Various witnesses upon each side are attacked by the other as unworthy of belief. The circuit judge, who saw the witnesses, and listened to the exhaustive arguments of counsel, after mature deliberation, held that Mr. Phillips had committed •no fraud upon the complainant, but that his dealings with it were fair and honorable. We are satisfied with the-conclusion he reached. All the transactions with the two companies were entered upon the books of the complainant. There was no attempt on the part of Mr. Phillips to conceal his connection with the mantel company. Mr. Adams, a nephew of the president, the bookkeeper of .complainant, knew of Mr. Phillips’ connection with the mantel company from the outset, and testified that he saw no attempt on the part of Mr. Phillips to conceal anything. Soon after Mr. Phillips purchased his first stock in the mantel company, its place of manufacture was moved to a building adjoining that of the complainant. Monthly settlements were made between the twocompaniesi At or before Phillips bought one-t-hird of the stock of the mantel company, he had asked Mr. Rathbone, president of the Aldine Company, to take an interest in it. In July, 1895, Mr. Phillips bought 260 shares of Mr. Annin. The complainant’s directors knew that complainant was buying its mantels of the defendant. An [245] nual reports were made showing these dealings, and the "books were open to their inspection. Both Mr. Rathbone .and Mr. Withey, vice-president and a director, knew of Mr. Phillips’ interest in the defendant company. Mr. Withey testified that Mr. Rathbone was always objecting to Mr. Phillips’ connection with the defendant company, and that the matter was discussed at the directors’ meeting in January, 1896. Complainant’s president testified that he supposed it was expected that complainant would get more or less of the mantels from the clock and mantel company. Ten per cent, was allowed the complainant on ■sales of mantels made by its agents. The record shows that only reasonable profits were made by the mantel company. The claim is made that mantels could have been bought cheaper from other manufacturers. This, however, is disputed, if the mantels of other companies were of the same quality and grade as those manufactured •by the mantel company for the complainant. The testimony on the part of the defendants is very strong that they insisted upon and obtained a better grade of mantels than those which the witnesses for complainant testified could have been bought at cheaper rates. On several occasions complainant was not credited upon the books with the 10 per cent, allowed on sales of mantels. This was a purely clerical error on the part of the bookkeeper. The entire amount is only about $?1, and is more than ■offset by mistakes made against the mantel company. The briefs of counsel have of necessity been very long, containing 624 pages, and they have aided the court very materially in their method of discussion and the citations to the record. Were we to enter into a discussion of the facts, it would necessitate long and laborious work, which would be of no benefit to the profession as a precedent. We are satisfied with the conclusion reached by the circuit judge. The decree is affirmed, with costs. Hooker, C. J., Moore and Montgomery,'-JJ., concurred. Long, J., did not sit.