Source: https://www.legalcrystal.com/case/94843/james-dickinson-farm-mortgage-co-vs-harry
Timestamp: 2019-04-22 04:44:05+00:00

Document:
Appellant James-dickinson Farm Mortgage Co.
1. Jurisdiction over a corporation of one state cannot be acquired in another state in which it has no place of business and is not found, merely by serving process upon an executive officer temporarily therein, even if he be there on business of the company. P. 273 U. S. 122 .
2. By common law, and under the Texas statute here involved (Comp.Stat. 1920, Title 62, Arts. a-c), the liability of one who, personally or through agents, knowingly makes false statements with intent that another shall act upon them does not depend upon the receipt of any benefit by himself. P. 273 U. S. 122 .
3. A statute making actionable as a fraud a false promise of future action by which the other party is induced to enter into a contract is within state power, and not a violation of due process. P. 273 U. S. 123 .
4 A state constitutionally may make proof of one fact presumptive evidence of another rationally connected with it, and may shift the burden of proof. P. 273 U. S. 124 .
5. A state statute defining liability and regulating procedure in cases of fraud in transactions involving purchase of real estate or of stock in a corporation or joint stock company does not violate the equal protection clause of the Fourteenth Amendment in not embracing other frauds. P. 273 U. S. 125 .
6. The fact that a state statute defining special classes of frauds allows recovery of exemplary damages up to twice the actual damages doe not make it a penal law, and a cause of action arising under it may be enforced in a federal court in another state where, though there be no statute of similar import, there is no public policy against it. So held of a statute adding no extraordinary feature to the common law liability for fraudulent misrepresentations, and in the absence of any showing that substantial justice between the parties could not be done consistently with the procedure and practice of the federal courts in the second state. P. 273 U. S. 125 .
to a review of all questions. Chaloner v. Sherman, 242 U. S. 455 , 242 U. S. 457 . All have been considered. Only a few require discussion.
First. The objection to the jurisdiction over the corporation was taken by a plea in abatement. The decision thereon was made upon a demurrer to the replication. By these pleadings, it was admitted that the residence and principal place of business of the corporation was in Missouri; that it had never been a resident of Illinois; that Dickinson, its president, was in Illinois on business of the corporation at the time of the service; but that it has not engaged in, or carried on, business within the state. Jurisdiction over a corporation of one state cannot be acquired in another state or district in which it has no place of business and is not found, merely by serving process upon an executive officer temporarily therein, even if he is there on business of the company. Philadelphia & Reading Ry. Co. v. McKibbin, 243 U. S. 364 ; Rosenberg Bros. v. Curtis Brown Co., 260 U. S. 516 ; Bank of America v. Whitney Central National Bank, 261 U. S. 171 ; Lumiere v. Wilder, 261 U. S. 174 , 261 U. S. 177 . The objection to the jurisdiction over the corporation should have been sustained. As it was not waived by the later proceeding in the case, the judgment against this defendant is reversed, with directions to dismiss the action as to it. This reversal does not require that the judgment be reversed also as to Dickinson. Compare Camp v. Gress, 250 U. S. 308 , 250 U. S. 317 .
has received the money arising from a fraudulent sale, every stockholder becomes liable for the tort, and that, by making the liability joint and several, the statute makes one person liable for the wrong of another although there was neither participation in nor ratification of it, nor even knowledge. At common law, every member of a partnership is subject to such a liability, Strang v. Bradner, 114 U. S. 555 ; McIntyre v. Kavanaugh, 142 U. S. 138 , 142 U. S. 139 , and often stockholders of corporations are made similarly liable by statute. Compare Thomas v. Mattiessen, 232 U. S. 221 , 232 U. S. 235 ; Buttner v. Adams, 236 F. 105. The case presented by the pleadings and the evidence, so far as Dickinson is concerned, is, however, a very different one from that suggested. He is not sued as stockholder, and the count on the Texas statute does not charge him with full liability for the loss suffered because, as stockholder, he received some benefit. It charges specifically that "the defendants, and each of them, derived the benefit of the fraud and deceit." And their liability is sought to be enforced primarily because "they represented themselves to the plaintiff to be the owners" of the large tract of land, and cheated her "through their authorized agents." If Dickinson, either personally or through agents, made knowingly false statements with intent that the plaintiff should act upon them, his liability, either at common law or under the statute, would not depend upon the receipt of any benefit by him. See Nevada Bank v. Portland Nat. Bank, 59 F. 338; Hindman v. First Nat. Bank, 112 F. 931, 944-945; Goldsmith v. Koopman, 140 F. 616, 621; Talcott v. Friend, 179 F. 676, 680. There was in the evidence ample support for a finding of such deception.
The contention is groundless. To modify the substantive and procedural law so that recovery may be had in tort for a breach of contract is well within the power of a state. An action for deceit was long the sole remedy for a breach of warranty, and it still lies in some jurisdictions. See F. L. Grant Shoe Co. v. Laid, 212 U. S. 445 , 212 U. S. 449 ; Nash v. Minn. Ins. & Trust Co., 163 Mass. 574, 587; Carter v. Glass, 44 Mich. 154. Recovery in contract on a tort that is waived is common. See Crawford v. Burke, 195 U. S. 176 , 195 U. S. 194 . Here, moreover, no such change is brought about by the statute. Some courts have long recognized that a false promise is a species of false representation for which there is remedy in tort, Church v. Swetland, 243 F. 289, 294-295; Wright v. Barnard, 248 F. 756, 775, as, for instance, where goods are obtained on credit by a purchaser who does not intend to pay for them. See Burrill v. Stevens, 73 Me. 395; Stewart v. Emerson, 52 N.H. 301.
Third. It is claimed that the Texas statute violates the equal protection clause of the Fourteenth Amendment because it applies only to fraud in transactions involving the purchase of real estate or of stock in a corporation or joint-stock company. The contention is clearly unfounded. A statute does not violate the equal protection clause merely because it is not all-embracing. Zucht v. King, 260 U. S. 174 , 260 U. S. 177 . A state may direct its legislation against what it deems an existing evil without covering the whole field or possible abuses. Farmers' & Merchants' Bank v. Federal Reserve Bank, 262 U. S. 649 , 262 U. S. 661 . The occasion of the legislation is indicated by the urgency provision of the statute which recites "that there are now in this state a number of fraudulent land schemes and that a great number of citizens of this state have been defrauded thereby."
Exemplary damages are recoverable at common law in many states. A statute providing for their recovery by and for injured party is not a penal law. Huntington v. Attrill, 146 U. S. 657 , 146 U. S. 666 -683. Compare Atchison, T. & S.F. Ry. v. Nichols, 264 U. S. 348 , 264 U. S. 350 -351. No reason appears why the cause of action arising under the Texas statute should not be enforced in Illinois. The Texas statute, as applied in this case, does not add any extraordinary feature to the common law liability for fraudulent representations. There is nothing in the public policy of Illinois with which the statutory cause of action is inconsistent. It is not shown that substantial justice between the parties cannot be done consistently with the forms of procedure and the practice of the federal courts for Illinois.
* See Pritchard v. Norton, 106 U. S. 124 , 106 U. S. 129 -136; Richmond & D. R. Co. v. Mitchell, 92 Ga. 77; Chicago T. T. R. Co. v. Vandenberg, 164 Ind. 470; Jones v. C., St.P., M. & O. Ry. Co., 80 Minn. 488, 490-491; Pennsylvania Co. v. McCann, 54 Ohio St. 10, 17-18. Compare Hoadley v. Northern Transp. Co., 115 Mass. 304. But see Hartmann v. Louisville & N. Ry. Co., 39 Mo.App. 88, 98-101.

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