Case ID: ohio-cc-dec_18/html/0176-01.html
Source: Caselaw Access Project
Author: {"author": "\n      HENRY, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CORPORATIONS — EVIDENCE—FRAUD—TRIAL.
    [Summit (8th) Circuit Court,
    September 30, 1905.]
    Marvin, Winch and Henry, JJ.
    Anson H. Russell v. John A. Weiler.
    1. COURT MUST DEFINE ISSUES AND APPLY. RULES OF LAW.
    It is erroneous for the court, in submitting a case to the jury to merely read the- pleadings, and leave them not only to define the issues but also to apply thereto the rules of law laid down; a fortiori, ’when the action is founded upon fraud which is itself elusive in its nature, and a question therefore particularly requiring the court to define the issues precisely and completely.
    2. CIRCULARS OF PROMOTER ADMISSIBLE TO SHOW' KNOWLEDGE OF FALSITY OF HIS Agent’s Representations.
    Advertising circulars sent out by a promoter engaged in selling certain stock are admissible in evidence as bearing upon the question of whether or not he knew that certain representations with reference thereto, made by his agent, were false.
    3. Letters Competent as Admissions to Show Falsity of Representations Previously Made.
    Letters from a promoter with reference to certain corporate stock for sale by him are admissible in a suit for fraud in the sale thereof, as admissions or declarations tending to show the falsity of representations previously made.
    4. In Action for Fraudulent Sale, Evidence of Defendant’s Representations in Another Transaction, Inadmissible.
    In an action for a fraudulent sale of a certain corporate stock, the admission of evidence of the defendant’s newspaper advertisement of stock for sale.in another company which he promoted was erroneous.
    [Syllabus approved by the court.]
    ERROR to Summit, common pleas.
    Rogers, Rowley & Rockwell, for plaintiff.
    Musser, Kohler & Mottimger, for defendant.
   HENRY, J.

The defendant in error brought action and recovered judgment against the plaintiff in error for $120 paid for worthless stock in an oil company promoted by the latter, alleging that said stock had been bought on the faith of the promoter’s fraudulent representations. The representation specially relied on was that said company had two thousand acres in the Lima district under lease whereon there were five producing oil wells, whereas the contrary was the fact. Russell contends that he personally made no such representation of fact, and it is perhaps true that he did not. The facts appear to have been that the leases referred to were owned by other parties, and Russell held options for the purchase thereof from the lessees, which he afterwards allowed to lapse because surrounding developments proved discouraging. That is his evidence. But he spoke loosely of these leases in such a manner that his agent, Hess, in Cincinnati, understood and represented to his customers, including Weiler, that his company owned the leases and wells in question. Russell, being bound by his agent’s representations, must therefore be held to have actually so represented. The circular which he issued, of itself, hardly goes to that length; but that, together with other writings of like import, addressed by Russell to Weiler’s wife and to other persons, about the time that Weiler purchased stock, were properly admitted in evidence, solely as bearing upon the question whether •Russell knew that the representations made were false. United States Life Ins. Co. v. Wright, 33 Ohio State 533. Other letters afterwards written by Russell to third parties were admissible to the extent that, being admissions or declarations, they tended to show the falsity of the representations previously made to Weiler.

The conclusion of witness Buckner concerning the results of his investigation of the company’s'ownership of oil leases in West Virginia was, we think, erroneously admitted, as also was the plaintiff in error’s newspaper advertisement of stock for sale in another company which he promoted.

The charge of the court is complained of, among other reasons, because it failed concretely to define the issues left in the case for the jury’s consideration. The charges of fraud contained in the petition were numerous and diffuse; much of the evidence was only broadly applicable to the issues; and the right of action, being founded on fraud, which is itself elusive in its nature, made it peculiarly necessary for the court to define the issues precisely and concretely. What he did was merely to read the pleadings to the jury and leave them not only to define the issues, but also to apply thereto the rules of law laid down as best they might. What he should have done was to limit the issue to be determined by the jury'to the Lima leases and wells, and charge the law of fraudulent representation as applied to that precise point. In the case of Balt. & O. Ry. v. Lockwood, 72 Ohio St. 586, the first paragraph of the syllabus is as follows: “In submitting a case to the jury, it is the duty of the court to separate and definitely state to the jury, the issues of fact made in the pleadings, accompanied by such instructions as to each issue as the nature of the case may require; and it is also the duty of the court to distinguish between, and call the attention of the jury to, the material allegations of fact which are admitted and those which are denied. It is error to read the pleadings to the jury and then say to the jury that these constitute the pleadings in the ease, which make up the issue and from which they will try and determine the controversy between the parties, and not otherwise to define the specific issues.”

There is complaint of the conduct of counsel for the prevailing party in this case, and in a number of places in the long record there are instances of conduct that, perhaps, technically is not above criticism, but we reverse the judgment below only for error in the admission of ■evidence and error in the charge of the court, as above pointed out.

Marvin and Winch, JJ., concur.