Case Name: Stewart H. Chisholm, Respondent, v. Ella V. Eisenhuth, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1902
Citations: 69 A.D. 134
Docket Number: 
Parties: Stewart H. Chisholm, Respondent, v. Ella V. Eisenhuth, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 69
Pages: 134–137

Head Matter:
Stewart H. Chisholm, Respondent, v. Ella V. Eisenhuth, Appellant.
Sale of stock — when induced by false representations-— proof of similar statements toothers is competent — what offer to return is sufficient—lien decreed on real properly purchased with the proceeds of the sale.
3n an • action to cancel a contract for the purchase by the plaintiff from the ..defendant of a number of shares of stock of a corporation, and to recover the moneys paid on account of such purchase on the ground that the plaintiff had Ibeen induced to enter into the contract by false representations made by the "'defendant’s husband, who was authorized to sell the. defendant’s stock and manage all of the sales thereof, evidence that at or about, the time that the contract in question was entered into similar representations were made by the drasband to two other parties who, through him, also purchased shares of the •capital stock of this corporation owned by the defendant, is competent as tending to establish a fraudulent intent.
The failure of the plaintiff to tender a return of the stock before bringing the action will not prevent his maintaining the action. The rights of the ; defendant are sufficiently protected where the plaintiff offers to return such stock in kis complaint and produces it upon the trial and tenders a surrender thereof and the decree requires it to be deposited with the clerk of the court for the benefit of the defendant.
"Where it appears that a portion of the moneys paid by the plaintiff under the contract has been invested in real estate, the title" to which is in the defendant, the court may properly adjudge that the plaintiff is entitled to a. lien on such real estate to the extent of his money invested therein and interest.
Appeal by the defendant, Ella V. Eisenhuth, from a judgment ■of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 14th day of June, 1901, upon the decision of the court rendered after a trial at the New York Special Term.
Charles W. lefler, for the appellant.
Charles A. Decker, for the respondent.

Opinion:
Laughlin, J.:
This suit is in equity to cancel a contract for the purchase of 700 shares of the capital stock of the Eisenhuth Horseless Vehicle Company and to recover the moneys paid on account of such purchase. The purchase was consummated on the 17tli day of November, 1899, and the stock was delivered to plaintiff, who, by check, paid $10,000 down and agreed to pay $20,000, that being the balance of the purchase price, within six months.
The plaintiff alleged that he was induced to make the contract by false and fraudulent representations to the effect that the automobiles which said company was incorporated to manufacture, under the protection of patents owned by it, had passed the experimental stage, had been tried, tested, and were an assured success; so much so that the company had contracts for the manufacture and sale of automobiles upon which its profits would amount to over $1,000,000, and that it had one order alone from a prominent New York ice company for 1,000 auto trucks, which would yield a profit of $500,000. These allegations were sustained by the evidence introduced upon the trial.
Not only did the company not have these or any other contracts, but it was still experimenting with a motor which,had stood a shop test and was attempting to improve upon and perfect it.
The evidence fairly justified the finding that the representations were fraudulently made for the purpose of inducing the plaintiff to-purchase the stock, and that he relied thereon in so doing.
These false representations were made, not by the defendant, but by her husband, and it is contended that they were not authorized by her. There was evidence of an express admission on her part that her husband was authorized to sell her stock, and that he managed all of the sales of her stock. She did' not directly participate in the negotiations for the sale of the stock, but permitted the same to be conducted by her husband, and she executed the contract thus induced and accepted the fruits of his services. For the-purpose of the relief sought in this action, his fraud was her fraud.
Evidence that similar representations were made by the husband at or about the same time to two other parties, who also through him purchased other shares of the capital stock of this corporation owned by her, offered by plaintiff, was received under defendant's-objection that it was incompetent, and a motion to strike it out was-denied. Her counsel excepted to each of these rulings, and he relies on Hubbell v. Alden (4 Lans. 214, 225) to sustain his contention that-.the evidence was incompetent. That was also an action to rescind a. contract for the purchase of stocks on the ground of fraud and to recover the amount paid. The court recognized - the existence of the rule permitting evidence of similar contemporaneous frauds, but-did not deem the other fraudulent representations proved sufficiently contemporaneous to justify the reception of the evidence. The Court of Appeals, however, reversed the General Term and sustained the recovery as to a party against whom this evidence was received and, without discussing the competency of the testimony, cited this evidence in the opinion as tending to establish the fraud, (Hubbell v. Meigs, 50 N. Y. 480, 491.) The evidence of the false representations made to the plaintiff was ample to establish the fraud and sustain the judgment without the testimony relating to similar contemporaneous representations'; but we consider that evidence competent as tending to establish the'fraudulent intent. (Cary v. Hotailing, 1 Hill, 311; Amsden v. Manchester, 40 Barb. 158; Naugatuck Cutlery Co. v. Babcock, 22 Hun, 481; Miller v. Barber, 66 N. Y. 558, 568; Baldwin v. Short, 125 id. 553, 559; Boyd v. Boyd, 164 id. 234.)
The false representations were made on a prior sale of similar stock to plaintiff some months before and were not expressly reiterated on the sale of the stock in question. We think the court was warranted in finding that they were calculated and intended to induce the last purchase and that plaintiff was justified in relying thereon.
The point is also made that the action cannot be maintained because plaintiff did not tender a return of the stock before bringing the action. The plaintiff brought this action within a month after discovering the fraud, and in the meantime he did nothing in affirmance of the contract or that could in any manner mislead or prejudice the defendant. In his complaint he offers to return the stock, and he produced it upon the trial and tendered a surrender thereof, which was refused. The decree requires it to be deposited with the clerk of the court for the benefit of the defendant. The suit being in equity, this is all that is required. (Delano v. Rice, 23 App. Div. 327, 331; Littlejohn v. Leffingwell, 47 id. 377, 379; Vail v. Reynolds, 118 N. Y. 297, 302; Berry v. A. C. Ins. Co., 132 id. 49, 55.)
Part of the consideration paid by plaintiff having been invested in real estate, the title to which was in defendant, the court properly decreed that plaintiff was entitled to a lien thereon to the extent of his money invested therein and interest.
No other question requires discussion.
The judgment should be affirmed, with costs.
Van Brunt, P. J., Patterson, Ingraham and Hatch, JJ., concurred.
Judgment affirmed, with costs.