Schroeder v. Carroll

The following opinion was filed February 8, 1927: Vinje, C. J. Counsel for appellant earnestly contend that the vital question for decision in this case is whether an officer of a corporation who has given an option on his stock must disclose that fact in a negotiation by him for the pur [463] chase of stock from another stockholder. We do not think the question for decision lies in that narrow field. The jury found upon evidence which sustains the finding that to the knowledge of the defendant but unknown to plaintiffs negotiations were pending for the sale of the entire holdings of the company, either by a purchase of its corporate assets, its stock, or of such a majority interest therein that the purchaser could control it. The whole stock was in fact bought by the power company. Under such circumstances, upon specific inquiry being made by a stockholder to an officer of the corporation as to the value of the stock the latter must make a truthful disclosure of the facts within his knowledge. McMynn v. Peterson, 186 Wis. 442, 201 N. W. 272; Bray v. Jones, 190 Wis. 578, 209 N. W. 675. The verdict discloses the issues litigated, and we do not deem it necessary to set out or discuss the evidence sustaining the answers oh the fraud issue further than to state that they are sustained by the evidence. That being so, the case as to fraud is ruled by the case of McMynn v. Peterson, supra. The latter case and the Bray Case so fully discuss the questions of fraud under the same or similar circumstances that we consider it unnecessary to now rediscuss them. The court properly changed the answer to question number 8 from “Yes” to “No.” The case is barren of evidence showing that plaintiffs could, by the most diligent inquiry, have discovered the falsity of the statements made by the defendant. Besides, they had a right to rely upon their truthfulness. If the manager and secretary of the company did not know of any fact affecting the value of the stock, who would know ? The finding as to the book value of the stock, where the actual value is found, cannot affect the latter finding If there is evidence to sustain it. In the present case it was shown that defendant, a short time before the purchase of the stock, [464] was of the opinion that it was worth $150 per share. There was also other evidence disclosed by the books of the company and otherwise tending to sustain the value of the stock found by the jury. It was sold about a month later to the power company for $143 per share. By the Court. — Judgment affirmed. A motion for a rehearing was denied, with $25 costs, on April 5, 1927.