Thackrah v. Haas - 119 U.S. 499 (1886)
U.S. Supreme Court
Thackrah v. Haas, 119 U.S. 499 (1886)
Thackrah v. Haas
Submitted December 9, 1886
Decided December 20, 1886
119 U.S. 499
A transfer of shares in a corporation, procured from the owner while so intoxicated as to be incapable of transacting business, by fraud, with knowledge of his condition, and for a grossly inadequate consideration, will be set aside in equity, and if, without any fault of his, he is unable to restore the consideration, provision for its repayment may be made in the final decree.
This suit was brought on December 16, 1880, by Thackrah against Haas, Godbe, the London Bank of Utah, Limited, and the Royal Mining Company of Utah.
The complaint alleged that on September 17, 1880, the plaintiff was owner of certain interests, property, and rights in the mining company, equal to 80,000 shares of its capital stock, and then of the value of $80,000 (as to 75,000 shares in his own right, and as to the remaining 5,000 as trustee), and for the same was entitled to have 80,000 shares issued to him whenever the stock should be issuable; that on that day, and for two months before and a month afterwards, the plaintiff was continuously in a state of intoxication to such a degree as to have his mental faculties thereby so impaired as to render him not in his right mind, and wholly incapacitated to transact any business or enter into any contract; that all the defendants at the time of the transfer hereinafter mentioned knew that the plaintiff was, and for two months had been, in that condition, that while he was in that condition the bank, through its officers, pursued, harassed, and goaded him as to a debt of his to the bank in order to extort from him a transfer to Haas of his interest in the mining company, and the plaintiff was greatly worried by other creditors, to whom he owed small amounts, and was greatly excited and annoyed by this conduct of the bank and other creditors, as the defendants knew; that while in this condition, the plaintiff was, as he
believes, encouraged in his drunkenness and furnished with intoxicating drinks by the agents of Haas, with the knowledge of the bank; that on September 17, 1880, Haas and the bank, well knowing the plaintiff's condition and his incapacity for business, fraudulently imposed upon and extorted from him, for the grossly inadequate sum of $1,200, a transfer or assignment in writing to Hass of the whole of the plaintiff's interests aforesaid in the mining company; that Godbe and the bank were the real parties in interest for whom the transfer was procured, and that they now held the shares or Haas held the same for them; that of this sum of $1,200, the sum of $750 was retained by the bank, and applied to the payment of the plaintiff's debt to it, and the remaining $450 was applied by his wife in paying his small debts; that the plaintiff, on recovering from his intoxication, gave notice to all the defendants of his intention to bring this suit as soon as he should be able to repay to Haas the sum of $1,200, but that the plaintiff, although he had used every effort to obtain money for that purpose, had been unable to obtain it, and had not now the pecuniary ability to repay that sum; that the only available means to which he could look for raising it were the interests and shares aforesaid in the mining company, fraudulently forced from him by the pretended transfer, and that if the plaintiff were now able to repay the $1,200 to Haas, he could not do so, because Haas had left the territory to reside elsewhere.
The complaint concluded by praying judgment that the transfer to Haas be declared void and be cancelled; that the 80,000 shares of stock and said interests therein be adjudged to be the plaintiff's property; that so much thereof be sold by order of the court as should be sufficient to yield $1,200 and interest from the date of the transfer, and that sum be paid to Haas; that the mining company be directed to issue the rest of those shares and interests to the plaintiff and be restrained from issuing them to any other person, and that the other defendants restore to the plaintiff any certificates thereof in their hands, and be restrained from receiving any more, and account to him for any part that they had disposed of.
The defendants severally demurred to the complaints as stating no cause of action, the demurrers were sustained, and the complaint dismissed by the courts of the territory, and the plaintiff appealed to this Court.