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January 23, 1948


The opinion of the court was delivered by: FOLLMER

This case came on for trial before the Court, without a Jury, on April 15, 1947, and the Court having heard the testimony of the respective parties, the argument of Counsel, and being fully advised in the premises, makes the following Findings of Fact and Conclusions of Law:

Findings of Fact.

 1. The plaintiff is a citizen of the State of Rhode Island, residing and having his place of business at 271 Fox Point Boulevard, Providence, Rhode Island.

 3. The matter in controversy, exclusive of interest and costs, exceeds $ 3,000.

 4. This action was brought by Samuel P. Lazarus as plaintiff against Clifford R. W. Bressler as defendant for the recovery of $ 30,000, with interest and costs, representing the purchase price of subscription rights to certain shares of stock in Mahanoy Coal Mining Company purchased by plaintiff from defendant as the result of alleged fraudulent representations by defendant to plaintiff.

 5. Mahanoy Coal Mining Company was incorporated under the laws of Pennsylvania December 1, 1943, with a capitalization of $ 200,000 representing two hundred shares of common stock with a par value of $ 100 per share. The Company was formed for the purpose of mining coal in Pennsylvania. The product of the Company was to be sold through the agency of three broker-stockholders, Woolson, Flick and Bressler (the defendant), each to have the sale of one-third of the coal and each to receive a commission of five per cent. on coal delivered to stockholders to whom they sold stock.

 6. Prior to the incorporation of the Company, plaintiff purchased from Woolson subscription rights for twenty-five shares of stock in the Company for the sum of $ 2,500, taking the same in the name of his wholly owned Petroleum Service Company.

 7. Shortly after the incorporation of the Company its Board of Directors formally adopted a plan for coal allocation among the stockholders whereby each stockholder would receive one car of coal of each size produced by the mine for every twenty-five shares of stock, according to the priority in which the stock subscriptions were made. A letter from the President of the Company dated January 6, 1944, and captioned 'Circular Letter to Stockholders -- Re -- Distribution of Coal' and addressed 'To the Stockholders of Mahanoy Coal Mining Company' was forwarded to all stockholders. The plaintiff received a copy of this letter.

 8. Being desirous of securing more stock against which he could get a larger allocation of coal, plaintiff, on April 13, 1944, solicited defendant to buy from the defendant some of his subscription rights to stock of the Company.

 9. Plaintiff had received his proper allocation on the twenty-five shares of stock that he purchased from Woolson at the time of his negotiations with defendant.

 10. By reason of his long association with the Company, dating from its organization, plaintiff was familiar with all the terms and conditions under which a subscriber was to receive coal from the Company.

 11. The defendant when first approached on April 13, 1944, by the plaintiff was not desirous of disposing of any of his subscription rights but after further solicitation by the plaintiff, on the same day, the defendant advised plaintiff that he would dispose of subscription rights to one hundred fifty shares but that he wanted double the subscription price, or, namely, $ 200 per share, the sale to be for cash. No representation was made by the defendant to the plaintiff as to how much coal plaintiff would receive if he purchased the said subscription rights from defendant.

 12. The plaintiff induced the defendant to sell the stock to him and the defendant did not induce the plaintiff to buy.

 13. On April 14, 1944, the plaintiff accepted the offer of defendant to sell to him subscription rights to one hundred fifty shares of Mahanoy Coal Mining Company stock at the rate of $ 200 per share, and gave to the defendant two checks in payment therefor, both on Lincoln Trust Company, Providence, Rhode Island, one for $ 15,000, payable to the order of Cash and endorsed by the said Samuel P. Lazarus, and the other for $ 7,500, payable to the order of Clifford R. W. Bressler. The defendant deposited the checks, one in his bank account at Hazleton, Pennsylvania, and the other in his bank account at Pine Grove, Pennsylvania. ...

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