The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1896-11-10

Sixty-one (6D per cent of the capital stock
of the Mountain Iron company, at the rate
of So, 100000 for the entire property" and
then follows in the same article the de-
scrption of the other stocks to be acquired
from the Merritts. with the exception of the
stock of the railway company, and the rates
at which they were to be taken in exchange
for the stock OF the new corporation. The
third article, without an exception Wnlch 1t
ton of damages, reads: 1.-THE Consolidated
mines will pay for the properties above men
toned in its capital stock, at the rate of 90
per cent of the par value thereof, that is to
say, 81 of such capital stock for every dollar
of cash valuation, as stated above The
only valuation stated above consisted OF the
rates at which the stocks of the Merritts
were to be taken by the Consolidated mines,
to which reference has been made. The al
legation of the plaintiff that he was induced
to make this contract by the false and fraud
ulent representations of the defendant as to
the financial standing of the Penokee cor
poration and the Spanish company, and that
the securities Of those companies were in
fact worthless, was supported by some evil
dence, and for The purpose of this discussion
will be taken as established. The contract
performed. Bonds Of the Consolidated
mines to the amount of 81, 699, 85l, payable in
ten years with per cent interest were is
sued to the defendant for his Stocks trust
notes and bonds of the Penokee corporation
and the Spanish company, and for 81, 599, 149
for his other securities, about which no COM
plant is made, so that the mortgage indebt-
edness of the Consolidated mines became
s., 299, 600. These bonds were secured by q
first mortgage on all the property of the
new corporation. In January, 1894, the Pen
okee corporation and the Spanish company
were financially embarrassed, and on Jan. 18,
1894, the defendant surrendered to the Con-
solidated mines its first mortgage bonds OF
the par value of 81 LAG, "a and took in ex-
change for these bonds and their secured in
interest, stock of the corporation at it's par
value. although 1t was then worth but 10
per cent of that value. Bonds to the amount
of 81, S51 of those so surrendered had
been issued on account of the securities of
the Penokee corporation and the Spanish
company, and the balance on account of the
securities about which no complaint is made.
At the same time, the defendant took back
from the Consolidated mines $40 shares OF
the West Superior Iron and Steel company
which he had sold to that corporation under
the contract Of Aug. %, 1893, and surren-
dered to it its first mortgage bonds of the
par value of about $685., $780, which he had
taken therefor. In this way the mortgage in
debtedness of the Consolidated mines was re-
duced in January 1894, from about 81, 290, 900
to about 81 800, 900. In February 1884, the
Merritts sold large portion of all Of their
stock in the Consolidated mines to the de-
PENDANT, at its market value, which was then
10 per cent of its par value. During all this
time until the sale of the stock in February
1894, the plaintiff had continued to own the
stock in the Consolidated mines which he
the Merritts. and they held majority Of its
obtained under the contract of Aug. g. 1893,
the president of that corporation and ma
jority of its directors had been members of
stock. Its board of directors had in jan
uary, 1894, unanimously adopted the resolu-
tons which authorized the issue of the stock
of the corporation and its exchange at par
for the bonds and accrued interest which the
defendant had received for the securities of
the Penokee corporation and the Spanish
company, and which authorized the reduction
of it's mortgage Indebtedness by this and
other exchanges of securities from s., 299, 900
to $1.50O000.
VALUE OF CONSOLIDATED STOCK.
During all this time as far as the record
discloses, the market value of the stock Of
the consolidated mines was 10 per cent OF its
par value. The Consolidated mines issued It's
stock under the contract of Aug. 2S, 1898, to
the amount of $21, 600, 900, and the property it
received for this stock, reckoned at the rates
specified in the contract, was worth so per
cent of that amount or $40. 500 900. Upon this
record the plaintiff was induced, by the false
representations of the defendant to take
stock in the new corporation to the amount
of 81, 967, 692 and to part with stocks in his
original corporations, which, at the rates
specified in the contract, were worth 80 per
cent of the amount of this new stock or
81, 1888 SIG. The stock he received in the Con-
solidated mines was actually worth but 10
per cent of its par value, or $685. 1920. The
defendant offered and refused permis-
sion to prove that the actual value of the
stocks which the defendant gave for his
stock in the Consolidated mines was no great
er than the value of the stocks he received
namely 1926, 1920. For the purposes of this
offer, must now be deemed to be the fact
Scotland County VS.. HILL 112 U. S., 1873, 1885,
Under this state of facts the effect of the
rulings of the court below upon the question
of damages was that. if the Jury, found the
deceit to be proved as they did, the plaintiff
was entitled 10 recover the difference between
the value of his original stocks, at the rates
specified in the contract, 81, Asa, S16 and the
actual value of the stock of the Consolidated
mines, which he received, 1926, 1853. 20, or
81, 1856 20, notwithstanding the fact that the
Lob s1{if
stocks was never more than the actual value
of the stock of the new corporation, which
he received for them. Their effect was to
permit the plaintiff to recover of the de-
PENDANT as damages if the jury saw fit TO
allow as much, four times the actual market
value Of all the property he had parted with,
because Ia an agreement for the exchange Of
stocks, the parties had stated its value for
the purposes of the exchange, at five times
its actual value. Can these rulings be sus-
tanned?
by one who is fraudulently induced to make
a contract of sale, purchase or exchange of
property is the difference between the actual
value of that which he parted with and the
actual value of that which he receives under
the contract. 1t is the loss which he has
sustained and not the profits which he might
have made by the transaction. 1t excludes
all speculation and is limited to compensa-
ton. Smith VS.. Bolles. 1872 U. s., 125; Bus
terud VS.. Harrington, SO Mimi, 800; Reynolds
vs. Franklin, "A Mimi, 80, SO; Stickney VS..
Mimi, $40, 542; Wallace VS.. Hallowel Sc
Mimi, SOL; Woolenslagle vs.. Runals, rs
Mich. 545; McAleer VS.. Horsey, 80 Nd 439 l.;
Buschman VS.. Codd. 50 Md, POP, 2O9; High
VS.. Berret % Att. Rep. PENN, 1904. These
propositions are unquestioned, and counsel
for the plaintiff insist that they were properly
applied to measure the damages in this case.
They maintain that the plaintiff and the de-
PENDANT agreed, by the contract of Aug. %,
1893, that the actual value of the plaintiff s
original stocks was an amount of money
which was equal to so per cent of the par
value of the new stock which he received or
to ST. 4S3 S16 and that the defendant is there
by estopped from proving any other value
for them in this action. But there can be
no binding contract between parties unless
their minds meet and assent to the terms Of
the agreement. Did the minds of the parties
to the contract of Aug. Is, 1898, ever meet or
assent to the proposition that the property
described sherein was Of the actual market
value there specified on sale Of 1t for cash
or that any of them would pay for any of it
at the rates there named in money, or its
equivalent, either under the contract or 9TH
to ascertain the true meaning of a contract
is made by putting ourselves in the place of
the contracting parties when it was made
and then considering, in view of all the facts
and circumstances surrounding them at the
time of it's execution, what the parties in
tended by the terms of their agreement.
When their intention is thus made clear it
must prevail in the Interpretation of the in
strument, regardless of inapt expressions or
careless recitals. Accumulation Company vs.
App, 364, 372; IL c. G. A. 81, IL, %; Ga Fed.
Rep, 20, "A.
APPLYING THE TEST.
Let us apply this test to this contract. 1t
&c trnp hat n QntQ0Qdnnt