Greene-Grieb-Sherman Co. v. John C. Quinlen Co.

Mr. Justice Chytraus delivered the opinion of the court. It is perfectly clear that here there were two contracts, each for the sale of 2,000 shares of stock. Plaintiff in error claims error in the judgment because both parties are corporations and were not, therefore, authorized to purchase and own corporate stock, and, consequently, the whole transaction was illegitimate. That is rather an unconscionable defense ; yet, if supported by law and evidence, the court would be obliged to sustain it. But here it appears, with reference to the 2,000 shares first sold, that both corporations were merely acting as brokers or agents in buying and selling. They acted for undisclosed principals. There was no intent or purpose on the part of either party to become the owner of corporate stock; hence, the rule of law invoked is not here applicable. As to the 2,000 shares sold first it must be conceded that, upon the record, the evidence is sufficient to prevent our disturbing the verdict of the jury for including in their verdict the difference between the purchase price of 17 1/2 cents and the price of 10 cents at which those shares were sold. The point that there is a lack or insufficiency of competent evidence in respect to proof of damage is not well taken. The stock involved was unlisted stock which has no recognized value upon any general stock market or exchange but, therefore, the plaintiff in a suit upon a broken contract of purchase is not without remedy. Prima facie, at least, the fair cash value thereof can be established by testimony of one dealing in such stocks and who qualifies himself as Grieb, the witness herein, qualified himself. Plaintiff in error made no effort to show that the fair cash value was other or different from what Grieb testified it was, and the plaintiff in error had a full and fair opportunity of so doing. By his testimony, in this respect, Grieb covered the time from the return of the stock until the day of sale, October 9, 1907. With reference to the 2,000 shares additional, the evidence does not show the defendant in error to have lost 17 1/2 cents per share. The defendant in error cannot, as a mere broker in the transaction, justify a verdict for the difference between the purchase price of the plaintiff in error, viz.: 17 1/2 cents, and the price of 10 cents at which the other shares were sold to Petrie. According to the evidence the defendant in error was not acting as a broker in this transaction but was seeking to “scalp” a profit by itself making a purchase of Eubly, the owner, who was willing to sell at 16 cents and then selling to plaintiff in error, who was willing to buy at 17 1/2 cents. This we hold the defendant in error, as a corporation, could not do ; for we understand the law to be that a corporation may not exist for the purpose of buying and selling corporate stock for its own use. The ordinary rule is that a corporation cannot become a stockholder in another corporation unless such power is given by its charter. Dunbar v. American Telegram Company, 224 Ill. 9. In the case at bar defendant in error did not show itself to possess such charter power. The law of this state prohibits defendant in error from making or availing itself of the transaction with reference to the 2,000 additional shares and plaintiff in error is not and never was obligated to aid or enable defendant in error to carry it out. The instruction of the trial court first quoted above is erroneous, because the two transactions of sale and purchase were independent, not interdependent. The question whether or not they were so, being a question of construction or interpretation of a contract, was a question for the court and not for the jury. Gettys v. Marsh, 145 Ill. App. 291. The instruction last above quoted, relating to the 2,000 additional shares, is also erroneous. It practically amounts to a direction of a verdict in favor of defendant in error, except in amount, so far as those shares are concerned. What has already been said disposes of the counterclaim made for damages because defendant in error did not deliver stock purchased. The judgment of the Municipal Court is reversed and the cause remanded. Reversed and remanded.