The Saint Paul globe., 1896-11-10
JUDGE sANB0RNS OPINION
EXPLAINS THE REASONS WHY THIN
VERDICT FOR so4O. 900 CAM
NOT STAND.
COMPUTED ON A WRONG BASIS.
Certain Errors Allowed to Green in
Which Were Fatal-Compre-
hensiye Opinion Given.

ton in which Mr.. Merritt claimed a
large sum of money was due him. The
United States circuit court of appeals
mas decided there was an error in the
way In which the jury figured up this
sum, and therefore Mr.. Rockefeller is
entitled to another trial. Judge San
porn wrote the decision, which was filed
yesterday. Owing to the general in
terest in the case, the syllabus and de-
| cision are given in full as follows:
United States Circuit Court of Appeals
Eighth Circuit. No. 707. May Term 1896.
Jonn u. Rockefeller, plaintiff in error VS.,
aired Merritt, defendant in error-In error
to the circuit court of the United States for
the District Of Minnesota.
Cushman K. Davis, George Welwood Muir
ray John M. Shaw and Joseph B. Cotton
were with them on the brieD for plaintiff i'm
error -
A. A. Harris and J. L. Washburn Renry e.
harris and o. W. Baldwin were with them
on the brief for defendant in error
Before Caldwell, Sanborn and Thayer, cir
cult judges.
Syllabus-1. In the construction of a con-
tract the court may put itself in the place OF
the contracting parties and then in view of
all the facts and circumstances surrounding
them at the time. the instrument was ex-
ecuted consider what they intended by the
terms Of their contract. When the intention
Is manifest after such consideration it will
control in the Interpretation Of the instru-
Hent regardless OF careless recitalS or inapt
expressions
q Parties to an agreement for the ex-
change OF mining and railway stocks and Sc
curlues OF various corporations for the bonds
and stock of a new corporation agreed in
the contract upon the values at which the
exchanges should be made. Held, this agree
ment did not constitute a contract that the
stocks, bonds and securities were of the
actual market values specified in the contract
s. The true measure Of the damages suf-
fered by one who is fraudulently induced to
make contract of sale, purchase or exchange
of property is the difference between the
actual value of that which he parts with and
under the contract.
sanborn, j., delivered the opinion Of the
court
This writ of error challenges a Judgment
of $4,000 against John D. Rockefeller, the
plaintiff in error, for fraudulent misrepre-
sentations of the financial standing of two
mining corporations, which induced Alfred
Merritt, the defendant in error, to make and
perform a contract to exchange stocks in
several corporations for stock in a single
corporation. The contract was made on Aug.
%, 1898. The parties to it were Alfred Mer-
ritt ten other gentlemen named Merritt, some
OF whom were his brothers, and Charles w.
I lWetmore, parties of the first part; John ID.
Rockefeller, party Of the second part, aid
the Lake Superior Consolidated iron mines,
a corporation, party of the third part. For
the sake of brevity Alfred Merritt who was
the plaintiff in the court below, will be called
the plaintiff, John d. Rockefeller the de-
fendant, the Lake Superior Consolidated iron
PeQOk6a
& Gogebic Consolidated mines, a corporation,
the Penokee corporation. and the Spanish
American Iron company the Spanish company.
The plaintiff Merritt alleges in his COM
plant that he was the owner of certain shares
of stock in certain mining corporations and
in railway corporation, which were of the
that the defendant Rockefeller, was the
owner Of certain stocks, bonds and notes Of
the Penokee corporation and the Spanish
company; that Rockefeller falsely and fraud
ulnnt1V fed tn hat
porations weresasolvent and prosperous and
owed little above their funded Indebtedness
and thereby induced him to enter into the
contract of Aug. 28, 1898, to the effect that
he would convey his stocks for certain
prices specified in the contract to the Con-
solidated mines new corporation, and take
in payment therefor stock in that corporation
at so per cent of its par value, and that this
new corporation would take the stocks bonds
and notes of the Penokee corporation and of
the Spanish company and cerain other Sc
curities held by Rockefeller at the prices
named in the contract and pay him for them
with its bonds at 80 per cent of their par
value secured by mortgage on all its prop
erty. He alleged that this agreement was per-
formed and that he received 80, $50 shares of
the stock of the Consolidated mines of the par
value of So, 066. 600 in exchange for his stocks
which were of the reasonable and agreed value
of 81 $50, GOO but that these shares of stock in
the Consolidated mines were not worth more
than 10 per cent of their par value more
than $306, 500, and that in this way he was
damaged by the fraudulent representations
of the plaintiff in error in the sum of 81 1885,
600. The defendant answered this complaint.
He denied that he made any of the alleged
representations. denied that the plaintiff was
induced to make the contract by any such
representations, denied that he, the defendant,
ever agreed that the stocks of the plaintiff
were of any stated particular market
value whatever and denied any knowledge
or information as to the value of his stocks
in his original corporations, or as to the
value of the stock in the corporation. He
alleged that about four months after the
nnfr ~ AITr
first learned that the Penokee corporation
and the Spanish company were financially
embarrassed, and that he thereupon returned
to the Consolidated mines its bonds to the
amount of 81, 799 900, and took in exchange
for portion of these bonds, which amount
ed to more than 81. 600 900 at their par value.
the stock of the Consolidated mines at it's
par value which was then worth but 10 per
cent of that value.
REVIEW OF FACTS.
1t is assigned as error that the court below
refused to permit the defendant to prove that
the stocks which the plaintiff exchanged for
the stock of the Consolidated mines were in
fact of no greater value than the latter re-
fused to permit him to show their actual
value at all, and charged the jury that the
measure of plaintiffs damages was the diff
ference between the values at which the
plaintiffs stocks were estimated in the con-
tract of exchange of Aug. g. 1893 and the
actual value of the stock of the Consolidated
mines which he received in exchange for
them. brief reference to the facts present
to this question of damages, is requisite
to a full appreciation of the character and
effect of these rulings. Prior to Aug. 2S, 1893,
the MerrittS owned stocks in several min
ing corporations, which either had title to or
leasehold interests in actual or prospective
mines on the Missabe range in Minnesota
and they also owned stock in railway cor
poration, which had railroad from Duluth
Mimi, to that range. The defendant had
some shares of stock and some trust notes
Of the Penokee corporation. some shares Of
stock and some bonds of the Spanish COM
pany and some shares of stock and some
bonds of certain other corporations whose
names are not material here. For about two
months the Merritts and the defendant had
been negotiating and contracting with
view to perfect and carry out a plan by
means of which the Merritts might vest the
title to all their stocks In their various min
ing corporations and their stock in the rail-
way company in single corporation to be
controlled by themselves, might have that
corporation give each of the Merritts a just
amount Of its stock at so per cent Of its par
value in exchange for his stocks in there
original CORPORATIONS, and might have the
new CORPORATION take the stocks and bonds OF
the defendant and give him its bonds in
exchange for them at 80 per cent of their
par value secured bv a mortgage upon all
Of it's property. The Consolidated mines was
the new corporation which was formed to
tako these various securities.
The interests Of the individuals who
somuesed the Merritfs in the stocks
which they proposed to convey to
Continued ON Eighth Page.