JOHN C. SCOTT, SR., AND JOHN C. SCOTT, JR., APPELLANTS,
v.
MATHEW NOVICK, APPELLEE
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In this securities fraud action under Florida law, the court affirmed summary judgment against defendant John C. Scott, Sr. for selling unregistered stock but reversed as to co-defendant John C. Scott, Jr., finding no evidence of his participation, and remanded the damages issue due to conflicting evidence regarding the actual consideration paid for the stock.
Summary judgment on liability against Scott, Sr. was proper and affirmed, but summary judgment against Scott, Jr. was erroneous and reversed because there was no evidence he aided or participated in the sale. The damages judgment was reversed because conflicting evidence existed as to the actual consideration paid, which must be resolved at trial.
“On the other hand, we are just as satisfied that this record reveals no evidence tending to show that appellant John C. Scott, Jr., in any way aided or participated in making the sale so as to impose liability upon him under § 517.21, supra. Therefore, he is, as a matter of law, entitled to a summary judgment in his favor and it was error to deny his motion.”
Establishes that Scott, Jr. cannot be held liable without evidence of his participation in the sale.
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Join FLexlaw to unlock all legal intelligencePlaintiff Novick sued defendants Scott, Sr. and Scott, Jr. for selling unregistered stock worth $11,200, claiming it consisted of a $1,500 equipment p…
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Plaintiff-appellee brought this action under § 517.21, Fla.Stat., F.S.A., seeking in count 1 of his complaint recovery of the sum of $11,200, the aggregate consideration allegedly paid defendants for certain stock of a corporation in which the defendants were officers and directors. In count 2, appellee sought $8,400 in damages resulting from a drop in the price of the stock and $3,000 in salary allegedly due and owing. Pursuant to motions filed by all parties, the trial court, upon the basis of the pleadings, affidavits and depositions, entered summary judgment as to liability in favor of appellee and against both appellants on count 1 of the complaint. Later, in a separate judgment, the court summarily adjudged damages in the sum of $11,200, plus interest, attorney’s fees and costs. It is from these summary judgments that defendants have appealed.
We have reviewed the pleadings, affidavits and depositions on file and conclude that the judgment as to liability against the appellant John C. Scott, Sr., is correct and should be affirmed, but as to the remaining portions of the summary judgments resolving liability against John C. Scott, Jr., and the assessment of damages, attorney’s fees, etc., against both appellants, these are erroneous and should be reversed.
Disposing first of that part of the judgment with which we are in accord, we find that the record discloses no genuine issue as to material facts and appellee is, as a matter of law, entitled to recovery as against appellant John C. Scott, Sr. Appellants’ contention that the stock sale was exempt under § 517.06(4), Fla.Stat., F.S.A., is totally unsupported by the record. On the other hand, we are just as satisfied that this record reveals no evidence tending to show that appellant John C. Scott, Jr., in any way aided or participated in making the sale so as to impose liability upon him under § 517.21, supra. Therefore, he is, as a matter of law, entitled to a summary judgment in his favor and it was error to deny his motion. See Nichols v. Yandre, 151 Fla. 87, 9 So.2d 157, 144 A.L.R. 1351.
On the issue of damages, the record reveals conflicting evidence as to how much consideration appellee actually gave for the stock. The amount appellee claims, $11,-200, may be broken down as follows:
$1.500 — downpayment on certain equipment leased from appellant.
$2,500 — a check paid by appellee for stock.
$7,200 — alleged profit to appellee from a boat selling venture between appellee and appellants.
Appellee claims that all the above amounts were, through subsequent negotiation, applied toward the purchase of 22,400 shares of appellants’ stock. The minutes of a corporation meeting, held October 29, 1962, indicate that $11,200 was to be the consideration for 22,400 shares of stock sold to appellee. However, in his deposition, appellant John C. Scott, Sr., contends that the minutes are incorrect insofar as they relate to the alleged sale price. He further contends that the figure of $1,500 is not part of the stock transfer agreement but is rather the consideration paid pursuant to an unrelated contract. Appellee admits that he holds a promissory note in the sum of $1,700 from a third person covering the $1,500 paid to appellant John C. Scott, Sr. The record discloses conflicting evidence on the question of the amount of the profit derived from the boat selling venture. These matters constitute genuine issues as to the amount of damages and should be resolved only after a full hearing.
The summary judgment insofar as it determines the liability of John C. Scott, Sr., is affirmed, but in all other respects, the summary judgments appealed are reversed. The cause is remanded for further proceedings and for the entry of a summary judgment in favor of John C. Scott, Jr.
Affirmed in part, reversed in part and .remanded with directions.
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Ruden v. Medalie, 294 So. 2d 403 (Fla. 3d DCA 1974)…“some activity” by the one sought to be charged, “in inducing the purchaser to invest.” Nichols v. Yandre, Fla.1942, 151 Fla. 87, 9 So. 2d 157, 144 A.L.R.1351; see also, Sorenson v. Elrod, 286 F. 2d 72 (5th Cir.1960); Scott v. Novick, Fla.App.1965, 172 So. 2d 516; Baraban v. Manatee National Bank of Bradenton, Fla.App.1968, 212 So. 2d 341. Appellant has cited authority from other jurisdictions which does not require fraud in the inducement under statutes reading the same as Section 517.21(1). Young v. Kwock…
Authorities Cited
- Nichols v. Yandre, 151 Fla. 87 (Fla. 1942)