Strong v. Repide

213 U.S. 419 (1909)

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Nature of the Case

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Facts

On July 5, 1903, the governor of the Philippine Islands, on behalf of the Philippine Government, made an offer of purchase for the total sum of $6,043,219.47 in gold for all the friar lands, though owned by different owners. For the land that Repide (D) owned, this offer was rejected in his capacity as majority shareholder, without any consultation with the other shareholders. All the land owners countered with a price of $13,700,000 for all of such lands. The governor countered at $7,535,000. D alone held out for a better offer while all the other owners were endeavoring to persuade him to accept the offer of the Government. D owned three-fourths of its shares of the company, The Philippine Sugar Estates Development Company, Limited. The company had no dividends, and only lived on its credit, and could not even pay taxes. The company had no other property of any substantial value than these lands. They were its one valuable asset. With D holding out on an agreement. D took steps, to purchase the 800 shares of stock in his company owned by P, which he knew were in the possession of F. Stuart Jones, as her agent. D decided to obtain these shares by deception. Instead of seeing Jones, who had an office next door, D employed one Kauffman, who had an office some distance away, to purchase the stock for him, and told Sloan that the stock was for a member of his wife's family. Sloan did not know who wanted to buy the shares, nor did Jones. The articles of incorporation, by subdivision twenty, required a resolution of the general meeting of stockholders for the purpose of selling more than one hacienda, and as no such general meeting had been called at the time of the sale of the stock. Jones, without consulting Mrs. Strong, sold the 800 shares of stock for $16,000, Mexican currency, delivering the stock to Kauffman in Sloan's office. D obtained the 800 shares for about one-tenth of the amount they became worth by the sale of the lands between two and three months thereafter. Not one word of the facts affecting the value of this stock was made known P's agent by D. The agent sold because, as he testified, he wanted to invest the money in some kind of property that would pay dividends, and he was expecting nothing from this company, as negotiations for the sale of the lands had gone on so long, and there appeared no prospect of any sale being made. Once D got the stock he sold it to the government which resulted in a 10x increase in the sales price. P sued D in the Philippines and eventually, the Supreme Court granted certiorari.