Potter v. United States National Bank

Headnote

Bill of particulars — Conspiracy.

The complaint in this action alleged that plaintiff’s assignors were the holders of a large majority of the stock of a telegraph company; that they procured a loan from the defendant bank for which they pledged a portion of said stock and other stocks sufficient to secure said loan; that the defendants agreed, colluded and combined together to impair the value of the stock of said company, with intent to impair and destroy the credit . and business of said assignors and impair the market value of said stock, embarrassing the business and causing the destruction of said company; that in pursuance thereof said bank made an unwarranted call for said loan, and caused said stock to be sold at auction for less than its fair value; that the effect thereof was to impair and destroy the credit and business of_ plaintiff’s assignors and the credit and business of said company and to xuin said assignors; and demanded judgment for the difference between the market value of the stock and the loan, and for four million dollars damage sustained by reason of such fraudulent acts. Held, that in view of the allegations of the complaint a bill of particulars giving the nature and facts of the alleged collusion and conspiracy and how the sale of the securities caused the loss claimed was properly ordered.

Appeal from order granting motion by defendant Logan C. Murray for a bill of particulars showing the alleged market value of each of the securities sold by the defendant bank at the time they were sold, the nature and facts of the alleged collusion and conspiracy and how the sale by said bank of securities of the par value of $65,000 eáused the alleged loss and damage of $4,000,000 to plaintiff’s assignors. The complaint alleged as follows:

“ That on and before the 15th day of May, A. D. 1884, Anthony W. Dimock and Arthur Y. Dimock were copartners doing business as bankers and brokers at Mo. 2 Wall street, in the city of Mew York, under the firm name of A. W. Dimock & Co. That at the time aforesaid the said Anthony W. Dimock was the president, and said firm of A. W. Dimock & Co. was the principal stockholder of the Bankers’ & Merchants’ Telegraph Company, a corporation created and existing under the law of the state of Mew York, having a capital stock of $3,000,000, with auxiliary companies in the states of Massachusetts, Rhode Island, Connecticut, Mew Jersey, Pennsylvania, Maryland, Ohio, Indiana and Michigan, and also in the District of Columbia and elsewhere. That said Bankers’ & Merchants’ Telegraph Company had prior to said date expended in constructing its line of telegraph, in purchasing franchises and leases, in obtaining contracts, and in maintaining and improving its lines of telegraph, over $4,000,000, and had built up an extensive and prosperous telegr-aph business throughout the territory mentioned, and had become a powerful rival and competitor of the other telegraph companies of the country. That the said A. W. Dimock & Co. had invested in the stock and bonds of said Bankers’ & Merchants’ Telegraph Company over $3,000,000, and on said 15th day of May, A. D. 1884, were the owners and holders of 22,030 shares of said capital stock, of the par value of $100 per share, and of 970 of the bonds of said company of the denomination of $1,000 each; on which day the market price of said stock was about $119 per share, and the market price of said bonds about $800 each. That, owing to the relation between said Anthony W. Dimock and said firm of A. W. Dimock & Co. and said Bankers’ & Merchants’ Telegraph Company, any serious impairment of the financial condition and credit of said firm or of said A. W. Dimock individually, would almost necessarily correspondingly affect the credit and condition of said Bankers’ & Merchants’- Telegraph Company; that on and immediately prior to said 15th day of May, A. D. 1884, there existed a feverish and excited state of the market for stock, bonds and other securities in the city of Mew York, and of the public mind in regard to business, men, corporations and enterprises, by reason of which any circumstance calculated in any manner to affect injuriously the standing and credit of any person, firm or corporation was peculiarly likely and almost certain to have a disastrous effect upon such person or corporation ; that on the 15th day of April, 1884, said firm of A. W. Dimock & Go. had, in the ordinary course of its business, obtained from the defendant, the United

States National Bank, a loan of $50,000, which, by its terms, fell due August 18, 1884, to secure which it had originally pledged to said bank 200 shares of the stock of said Bankers’ & Merchants’ Telegraph Company; 200 shares of the stock of the Delaware, Lackawanna & Western Bailroad Company; 200 shares of the stock of the Missouri Pacific Bailroad Company, and $15,000 of Central Iowa Bailroad Company, Illinois Division, first mortgage bonds; but afterwards, and before said 15th day of May, A. D. 1884, had, with the consent of said bank, substituted in place of said 200 shares of Missouri Pacific Bailroad stock $20,000 of the first mortgage bonds of the Ohio Southern Bail-road Company, so that on said last mentioned date said bank held as security as aforesaid all of said securities originally pledged except said Missouri Pacific Bailroad stock, together with said Ohio Southern Bailroad Company’s bonds, the market price and value of which stock and bonds so held was such on said last mentioned day that they constituted and were ample security for said loan of $50,000, and there was no ground or warrant whatever for the call or termination of said loan, or the appropriation or sale by said bank of said stocks or bonds, or any of them, pledged to said bank as aforesaid ; that all the facts and circumstances hereinbefore stated and set forth were well known to all of the said defendants, the said United States National Bank, Logan C. Murray, Evan C. Sherman, and John J. McCook, on and before said 15th day of May, A. D. 1884. That, nevertheless, the said defendants, the United States National Bank, Logan C. Murray, Evan Gr. Sherman, and John J. McCook, on or about said last mentioned date, well knowing all the facts aforesaid, and especially well knowing the probable effect of a forced and public sale of said stocks and bonds so pledged as security for said loan upon the credit, standing and business of said firm of A. W. Dimock & Co., and of said Bankers’ & Merchants’ Telegraph Company, and with the intent and for the purpose of impairing and destroying the credit, standing and business of said firm, and of impairing the market value of the stock and bonds of said Bankers’ & Merchants’ Telegraph Company, of embarrassing its business operations, and of causing its final destruction, maliciously and illegally agreed, colluded and combined with each other and with certain other persons, whose names the plaintiff cannot at present ascertain, to cause, under pretext of an unwarranted call and demand of payment of said loan of fifty thousand dollars by said bank, the public sale and sacrifice of said stocks and bonds so held by said bank, the depreciation of the market value of the same and of the stock and bonds of said Bankers’ & Merchants’ Telegraph Company, the embarrassment of its operation and final destruction and the financial ruin of said firm of A. W. Dimock & Co. That in fact, in pursuance of said malicious and illegal agreement and combination, the said bank did, on or about said last mentioned date, call and demand payment of said loan of fifty thousand dollars, and threatened to sell said stock and bonds of said firm, and did, under the false, unfounded and fraudulent pretext aforesaid, cause said stocks and bonds to be publicly sold

at auction, thereby causing said stocks and bonds to be sacrificed for less than their fair value, and impairing the market value of the stocks and bonds of said Bankers’ & Merchants’ Telegraph Company. That the effect of said wrongful, illegal and fraudulent acts of said defendants has, in fact, been not only to cause loss and damage to said firm of A. W. Dimock & Co., by the sacrifice of said stocks and bonds so pledged as security for said loan, but to impair and finally destroy its credit and business, and the credit and business of said Bankers’ & Merchants' Telegraph Company, and the market value of the stock and bonds of the latter, and to ruin said firm of A.-W. Dimock & Co., and cause the permanent suspension of its business. That the fair market value of said stocks and bonds so pledged to said bank was, at the time when they were so sold, not less than $63,800, and said firm of A. W. Dimock & Co. were and are entitled to an accounting by said bank for the difference between that sum and the amount of said loan of $50,000, while the loss of said firm by reason of the impairment, in the manner and by the means aforesaid, of the market value of the stock and bonds of said Bankers’ & Merchants’ Telegraph Company was not less than $3,688,360, and the total loss and damage of said firm caused by the wrongful acts of said defendants was not less than $4,000,000. The said wrongful, illegal and fraudulent agreement, combination and conspiracy between said defendants and others was wholly unknown to said firm, and to each member thereof, on said 15th day of May, A. D., 1884, and was not discovered by either of them until on or about the 28th day of June, A. D. 1890. That on or about the 4th day of June, A. D. 1891, the said Arthur Y. Dimock, by an instrument in writing under seal, and for a valuable and sufficient consideration, duly assigned and transferred all his claim and right of action growing out of the matters hereinbefore set forth to said Anthony W. Dimoclc, and afterwards, and on the same day, said Anthony W. Dimock, by an instrument in writing under seal, and for valuable consideration, assigned all the claim and right of action then held by him, said Anthony W. Dimock, to the plaintiff in this action, who is now the lawful owner and holder thereof. Wherefore the said plaintiff prays that said defendants, and each of them, be required to answer specifically, explicitly, and in detail, all and singular the allegations of this complaint, setting forth the part taken by each of them in each and every of the acts and transactions therein set forth, described or mentioned ; that the facts in regard to each and every of said acts and transactions, and the loss and damage sustained by said assignors of the said plaintiff by reason thereof, be inquired of and ascertained by a referee to be appointed by the court, or by such other means as the court may direct; that said United States ISTational Bank be required to account to the plaintiff for the difference between' the market value of said stocks and bonds so pledged to it as security for said loan, being the sum of $13,800, together with interest thereon from said 15th day of May, A. D. 1884; and that plaintiff have judgment against said defendants for $4,000,000, the amount of the loss and damage sustained by said assignors by

reason of the wrongful, illegal, and fraudulent acts and doings of said defendants hereinbefore set forth and complained of, with such other relief as may be just and proper in the premises, including the costs of this action.”