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United States Supreme Court sell her shares and that Repide fraudulently concealed the

STRONG v. REPIDE, (1909) facts affecting their value.


No. 110
Argued: Decided: May 3, 1909 ISSUE:
Was there fraud in effecting the purchase of
FACTS: Strongs shares?

Among the lands comprising the friar lands are the


RULING:
Dominican lands, the only valuable asset owned by the
Yes. With the factual circumstances of this case, it
corporation Philippine Sugar Estates Development Company
became the duty of Repide, acting in good faith, to state the
Limited (Philippine Sugar Estates). Francisco Gutierrez
facts before making the purchase of Strongs shares. That
Repide (Repide), defendant, was the majority stockholder
Repide was one of the directors of Philippine Sugar Estates
and one of the five directors of Philippine Sugar Estates. He
was but one of the facts upon which liability is asserted. He
was likewise elected by the board as the agent and
was not only a director, but he owned three-fourths of the
administrator general of such company.
shares of its stock, and was, at the time of the purchase of
the stock, administrator general of the company with large
The factual backdrop being during US occupation, powers and engaged in the negotiations which finally led to
the US Government wanted to secure title over the friar the sale of the companys lands at a price which greatly
lands. To accomplish this objective, Governor for the enhanced the value of the stock. He was the negotiator for
Philippines entered into negotiations for the purchase of the the sale of the Dominican lands and was acting substantially
Dominican lands, during which Repide represented as the agent of the shareholders of Philippine Sugar Estates
Philippine Sugar Estates. The first offer of the Governor was by reason of his ownership of the shares in the company.
to purchase the subject lands in the amount of Because of such ownership and agency, no one knew as
$6,043,219.47. As the majority stockholder of Philippine well as he does about the exact condition of the
Sugar Estates and without prior consultation with the other negotiations. He was the only one who knew of the
stockholders, Repide rejected the offer. For the second offer, probability of the sale of the Dominican lands to the
the purchase price was increased to $7,535,000. government and of the probable purchase price. Under
these circumstances, Repide employed an agent to
purchase the stock of Strong, concealed his own identity and
While negotiations for the second offer were
his knowledge of the state of negotiations and their probable
ongoing and while still holding out for a higher price of the
result. The concealment of his identity while procuring the
Dominican lands, Repide took steps to purchase the 800
purchase of the stock, by his agent, was in itself strong
shares of stock of Philippine Sugar Estates. These shares
evidence of fraud on the part of Repide. By such means, the
were owned by Mrs. Eleanor Strong (Strong) which were
more easily was he able to avoid questions relative to the
then in the possession of her agent, F. Stuart Jones (Jones).
negotiations for the sale of Dominican lands and actual
Repide, instead of seeing Jones, employed Kauffman who
misrepresentations regarding that subject. He kept up the
later on employed Sloan, a broker, to purchase the shares of
concealment as long as he could by giving the check of a
Strong. Jones sold the 800 shares of Strong for 16,000
third person Rueda Ramos, for the purchase money. This
Mexican currency. For this sale transaction a check of one
move of Repide was a studied and intentional omission to be
Rueda Ramos was issued.
characterized as part of the deceitful machinations to obtain
the purchase without giving any information whatever as to
Later on, the negotiations for the purchase of the the state and probable result of the negotiations and to
Dominican lands were concluded and a contract of sale was obtain a lower price for the shares of Strong. After the
subsequently executed. This sale transaction increased the purchase of stock, he continued negotiations for the sale of
value of the shares of stocks originally owned by Strong from the Dominican lands as the administrator general and
16,000 Mexican currency to 76,256 US currency. During the eventually entered into a contract of sale. The whole
negotiations regarding the purchase of the shares of stock of transaction gives conclusive evidence of the overwhelming
Strong, not one word of the facts affecting the value of this influence Repide had in the negotiations and it is clear that
stock was made known to her nor her agent, Jones. After the the final consummation was in his hands at all times.
sale of Dominican lands and after the purchase of the 800
shares of Strong, Repide became the owner of 30,400 out of OBITER DICTUM:
the 42,030 shares of Philippine Sugar Estates. The directors are declared to be mandatories of
the society and that they are prohibited from acquiring by
purchase, even at public or judicial auction, the property the
Strong filed a complaint for the recovery of her 800
administration or sale of which, may have been entrusted to
shares. She argued that her agent Jones had no authority to
them, and that this is the extent of the prohibition.