FRAUD — DAMAGES.

[Lucas Circuit Court,

November 5, 1900.]

Haynes, Parker and Hull, JJ.

#### Laurens Cable v. Noah Bowlus.

1. Damages Cannot be Recovered for Disgrace of Buying Worthless Stock.

A person is not entitled to recover damages for injuries to his feelings and for his disappointment or his disgrace in the community as a result of having been induced- to buy worthless mining stock by false representations, made knowingly or recklessly, that the property was unencumbered.

2. Evidence of General Talk of Financial Condition.

In an action for damages for the sale of the stock of a mining company upon the false representation that the property was unencumbered, it is doubtful whether evidence, in support of the claim that the defendant or his agent had . knowledge that the property was heavily encumbered, that the matter was talked about in the city, on the produce exchange and on the oil market and in offices generally, but where no witness is able to testify that it was ever mentioned in the presence of defendant or his agent, and the same may be said in regard to a custom of putting such stock on the market.

3. Evidence in Rebuttal Improperly Refused.

Where, in such an action, evidence is given that the plaintiff was present at a meeting of the directors of the corporation on a certain occasion and was then told that the company owed a large sum for the mines; that the debt was serious and outstanding ; and that at that time that he expressed no surprise, that he kept quiet, plaintiff in rebuttal should be permitted to give the reasons why he did not make a statement.

4. Charge Not Applicable Under Pleadings.

While the president of a corporation who, being inquired of by a person desiring to make an investment in the company, carelessly and recklessly made misstatements which misled such person, may be liable in damages, a charge to that effect would be improper in an action based upon charges that the statements were fraudulently made and was properly refused.

5. Bare Fraud — Punitive Damages not Recoverable.

In an action against the president of a corporation involving false statements or bare fraud concerning the financial condition of the corporation, without a showing of gross or malicious fraud, or a very corrupt condition, punitive damages in any, form cannot be recovered.

6. Deposition Without Proper Certificates.

A deposition taken before a notary public in Arizona, containing copies of instruments recorded in the office of a county recorder, containing certificates of the notary and county recorder, but without the certificate of a presiding judge or the governor, are inadmissible in evidence. Sec. 906, U. S. Rev. Stat.

Heard on Error.

*Hurd, Brumback & Thatcher,*for the plaintiff.

*D. R. Austin*and *Gilbert Harmon,*for the defendant.

Haynes, J.

This is an action which, I think, counts entirely on fraud. It is set up that the plaintiff was about to purchase some stock in the Guyjas Gold Mining Company, and he applied to the defendant, who was then the president of that company, to make some inquiries in regard to the mine. He inquired in regard to the title of the mine and in regard to the indebtedness, and was informed by the president that there was no *527indebtedness on the mine, that he was the president, and that none would be allowed to accumulate, and remarked that they would only operate so far as' they had means to operate; indeed he stated that they had no credit wherewith to get into debt, and he said they had abstracts which had been furnished by the attorneys in Tucson, Arizona, and that the title was good. It developed subsequently that the company had taken a title bond to certain claims in Arizona,' for which they were to pay, I think, $60,000. It had in fact paid about $15,000, and the balance remained unpaid and a payment was falling due in July — this conversation having taken place in January — which payment in fact was never met and the title of the company to the claims failed and was forfeited. Thereupon this suit was brought.

Now the plaintiff claims that there was fraud here. I think he claims also, at least did in argument, that if the statements were not knowingly made falsely, they were made recklessly, and plaintiff asks for damages, punitive damages, attorneys’ fees and damages to the plaintiff’s feelings and for his disgrace in the community for having been concerned in the buying of stock of this kind, which proved to be worthless; and he proceeded to offer testimony upon those points.

We are very frank to say that this is the first case that we have ever known in which a party in a case of this kind attempted to recover for his feelings, disappointment or disgrace in being induced to purchase stock of this kind.

One of the first exceptions taken is to the certificate to a deposition; that the certificate is not made in accordance with the statutes of the United States governing certificates of that kind and that appears to be true. There was no certificate of a presiding judge or governor attached to the depositions certifying to the official character of the county recorder, as required by Sec. 906, U. S. Rev. Stat. The deposition, taken in Tucson, Arizona, contained copies of instruments recorded in the records of Pima county, Arizona. The certificates of the notary and recorder were duly attached. Objection was made during the trial below that there was no certificate under the United States statutes attached to the deposition^ We find no statute or decision in this state which would permit that deposition to be read and we think the court was right in ruling it out.

There is another class of statements in the case to which the plaintiff objects, which consists of these: For the purpose of showing that the plaintiff, Cable, had knowledge, or that one Bowman, who was c aimed to be the agent of the plaintiff had knowledge of the condition of the title and indebtedness of the company, they offered testimony showing that it was talked about in the city, on the produce exchange and in the oil market and in the offices generally, very fully; indeed that it was the general topic of conversation, that this company had an outstanding indebtedness of this kind for the purchase price of the mine, but no witness was able to testify that it was ever mentioned in the presence of Bowman or Cable. Cable testified that the first time that he knew ot it was at a certain meeting of the directors, where he was informed that there was an outstanding indebtedness. The above class of evidence was permitted to be given., In regard to that we say that a majority of this court are not fully sat sfied that some evidence of that kind might not be gi en, but at the same time they have very serious doubts in regard to its admissibility, and if parties on the trial of the case hereafter put the evidence in again they will do it with knowledge that it is an *528open question. Speaking for myself, I think the testimony is entirely inadmissible and never ought to have been received.

There' was another item of testimony in regard to the custom of putting these stocks npon the market, that it was known throughout the country that these claims were obtained by options upon them, and then that they were stocked up and that the stock was put upon the market to obtain money to operate the mine. To this the same remarks apply which I made to the preceding-evidence, a moment ago. I do not myself see how such evidence could properly be received. The plaintiff inquired of this party (who was the president of the company), as to the true condition of the company in regard to title and debts, and the president undertook to answer in regard to this mine. Now what the custom may have been in regard to other companies, is a matter that I deem entirely irrelevant to the issue in this case.

There is another matter in which the error is serious, and that is this: Mr. Cable was present at a meeting of the directors on a certain occasion and he was then told that the company owed for the mines perhaps $45,000, and that a payment would be due in July; that the debt was outstanding and was serious and had to be provided for. Now at that time, it is said that he did not express his surprise; that he kept quiet. The plaintiff, when he came to the rebuttal, proposed to offer some reasons why he did not make a statement at that time, and this was excluded under the objection of defendant’s counsel and he was prevented from doing so, and the court is very clearly of the opinion that the testimony was competent, and that the plaintiff should have been permitted to give his reasons why he did not make a statement. I, myself, doubt very much whether there was anything in the case which required him to make any statement whatever, or say anything about it, but if he was required to do it, he should have been permitted to state the reasons why he did not do it.

There is another objection, and that is that Judge Austin testified that he gave an opinion upon the title to the officers of the company. I do not deem that very material in this case, and whether rightfully given or not, I do not think it should have had any influence against the plaintiff, for the reason that he stated to the officers that upon the abstracts, *the parties who were proposing to deed the property to them had a good title.*The difficulty in the whole case was that the defendants themselves had not yet obtained the title; the most that the company had put into these mines was the amount of $15,000, and that is all there was of it. He never in fact gave an opinion that the company itself had a good title, but that they had an option and upon making the payments stated, they would be entitled to have deeds to the lands.

There were some matters in the charge of the court also which I call attention to.

The plaintiff requested that the jury should be given two propositions, numbered respectively three and six, and that they should be given before argument. No. 3 was as follows:

> “ 3. If the jury find that Noah Bowlus was the president of the Guijas Gold Mining Company, and as such knew the real status of the title to the mines which were being operated by the company, and further knew of the indebtedness outstanding against the mines, then it was his duty when asked by any person regarding the title of the mines, or debts against them, to tell the truth about the matter if he undertook to give information concerning the same; and if the jury find *529that the defendant Noah Bowlus knew that the plaintiff was contemplating a purchase of stock in the company, and came to him and inquired about the company and the title to its mines, and if the said defendant knew, or under the circumstances had good reason to believe that the plaintiff was relying upon the representations of the defendant as to the title to the said mines and the debts of the company; and the jury further find that the defendant when asked by the plaintiff regarding the same did not truthfully state the knowledge he had concerning the mines and indebtedness, then the defendant was guilty of making false representations, and if the plaintiff was thereby misled, and without knowing the iacts about the title of said mines or the indebtedness against the same, relied upon the statements and was thereby influenced to invest in the stock of the company, and suffered loss whereby your verdict will be for the plaintiff.”

The objection made was, that this matter did not follow the petition ; that the petition was one charging fraud and that this did not bring the charge within the allegations of the petition, but that if he knew certain facts and failed to state them, he then was liable. We are not prepared to say, under that view of the case, that the court was wrong in its refusal to give that particular charge. It was not drawn with the care required of counsel in drawing a charge of that kind. If the case was a proper one and the pleadings properly stated, it would, perhaps, be proper td charge under the decisions in Ohio and at common law, that this person, being the president of the company and being inquired of by a person who wanted to make an investment in the company, and being inquired of in regard to the standing of the company, if he recklessly and carelessly made misstatements which misled the other, that he would be liable; but that was not the case charged against the party; he was charged with having fraudulently and wilfully made the statements.

The sixth proposition is as follows :

> “ If the jury find for the plaintiff under the rules of law given by the court, then plaintiff is entitled to recover damages, both compensatory and punitive. Compensatory damages are allowed to compensate the plaintiff for the actual loss he has sustained. In this case compensatory damages would include the full money loss sustained by plaintiff by reason of his purchase of stock in the company together with reasonable attorney’s fees to the plaintiff for the services of attorneys in the prosecution of this case. Punitive damages are given as smart money in the way of pecuniary punishment. If you find for the plaintiff you will add to the compensatory damages such sum by the way of punitive damages as in your judgment you may think just and proper in view of all the evidence and circumstances.”

He has asked that even on the state of facts set forth in the former request if the jury find them to be established, or if they find at all for the plaintiff, that they may add to these compensatory damages punitive damages. It is pretty difficult for the court to believe that the plaintiff has made out here a case for punitive damages in any form. The matter seems to have been dwelt upon and placed before the jury until it looks very much as if the jury had returned a verdict in favor of the defendant because the plaintiff had asked too much; but, be that as it may, we think the charge, in that form, is not right.

It is true that in Roberts v. Mason, 10 Ohio St., 278, they use the word “ fraud,” but so far as we can discover, the case must be such as *530that it was either gross or malicious fraud, or something showing a very corrupt condition of affairs. I have never even heard of a bare case of fraud where it was claimed that lor fraud alone the party was entitled to-punitive damages. The cases cited to us are where there was a malicious attack upon a party and the defendant had been indicted for m ciously attacking persons with intent to kill and had been convide ^ by the jury and in that case they would allow compensatory damages. So in Hayner v. Cowden, 27 Ohio St., 292, to which we are cited, where a clergyman was maliciously and wilfully charged by a woman, very falsely and under very aggravating circumstances, with a matter that was actionable of itself, and they there allowed compensatory damages and. with them included attorney’s fees, punitive damages. We are not disposed to hold that the court erred in refusal to give this charge, in the form in which it was asked. Perhaps a charge might be framed which would state various phases of this case which would be entitled to be given the jury.

It is contended very stoutly on behalf of the defendant that he understood, when the party inquired in regard to indebtedness, that it was with regard to the general floating indebtedness of the running of the institution, and he claims very strongly that he stated correctly, as he understood it to be, the condition of the title to the land.

A charge was given the jury, I think numbered three in the defendant’s request, in reference to the duty of Bowman if certain rumors *or*suspicious circumstances came to him, to make further investigation, which states the law too strongly against the plaintiff upon the evidence in the case; also in the fourth request as to the same point.

The judgment will be reversed and the cause remanded for a new-trial.