Manley v. Stayner

Headnote

Liability of agent to party paying money for account of principal, for failure so to pay over.

Appeal by plaintiffs from judgment dismissing the complaint upon the merits entered upon the report of a referee.

Action to recover the sum of $5,000, directed by the plaintiffs to be paid to the Plata Verde Silver Mining Company, on a purchase, directed and understood by the plaintiffs to have been made by the plaintiffs from that company, of certain shares of its treasury stock, which sum plaintiffs claimed the defendant omitted to pay to the company, and, therefore, in law, applied to his own use.

The referee’s opinion was as follows :—“ Hamilton Cole, Referee.—In the year 1880 the plaintiffs made, through one A. H. Lazare, a broker, certain inquiries

concerning the Plata Verde Silver Mining Company, of Hiram P. Crosby, a director in said company. Lazare was informed, and communicated to plaintiffs the information obtained, that the company was capitalized at $10,000,000, that there were ten thousand shares of treasury stock as a working capital, of which eight thousand had been sold at $10 per share.

“The plaintiffs sent their check for $5,000 payable to George H. Stayner, treasurer, and received in return five hundred shares of the stock of the company. Manley testifies that he intended to purchase five hundred shares of the two thousand shares of stock left in the treasury, but it is doubtful whether such was the agreement in fact made with the company through Lazare. The check sent by plaintiffs was received by John E. Lowther, the secretary of the company, and was by him delivered to' the defendant. He indorsed the check as treasurer, and also individually, and deposited the same in his private bank account January 31, 1880. On February 4, 1880, he paid out the same, upon the request of John E. Lowther, secretary of the company, to Hilborn & Lawrence, upon their draft drawn upon said company. The claim of Hilborn & Lawrence was as follows : Eobinson & Junkin claimed to own the mine. The agreement between them and the defendant and his associates, was that Eobinson & Jun-kin were to sell Stayner and his associates three-fourths of the mine for $750,000. The mine owners wanted money, not stock. In order to make the stock full-paid stock, all of it was issued in exchange for the property,' then seventy-five thousand shares were set apart for Eobinson & Junkin for their interest in the mine, but this stock was put in the hands of John E. Lowther, trustee,' who was to sell the same for $10 per share, and pay proceeds to Eobinson & Junkin. Eobinson & Junkin guaranteed their title to the mine. Hilborn & Lawrence made claim upon it, which the company settled by agreement to pay $50,000, which was done. The $5,000 paid by Stayner, February 4, 1880, was a part of the $50,000

agreed to be paid by the company to Hilborn & Lawrence for the release of their claims upon the mine. And the five hundred shares of stock received by the plaintiffs were a portion of the seventy-five thousand shares held by Lowther as trustee, and originally set apart for Robinson & Junkin. Whatever may have been the arrangement made between Crosby and the plaintiffs in regard to the five hundred shares of stock taken by them, it is not claimed that any information in regard to such arrangement was communicated to the defendant. So far as he was concerned, he received a check as officer of the company, deposited it in his private account, and paid out the proceeds upon an obligation of the company, without notice of any kind that the check was for any particular purpose. The complaint proceeded upon the theory that Stayner had sold to the plaintiff his own stock. It is not claimed that this is established. Upon the facts proved, I do not see that any individual liability on the part of the defendant is made out.”