Court Opinion

ID: 8033323
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:17:55.857824+00
Date Added: 2024-06-11T16:37:02.790053
License: Public Domain

Dean, J.,
dissenting.
In the majority opinion it is said: “The weight of authority sustains the rule that, in an action against a corporation for a rescission of a contract of purchase of its stock on the ground of fraudulent representations of its agent inducing the purchase, the agent is not a necessary or proper party defendant.”
I respectfully submit that the present case comes within well recognized exceptions to this rule.
In the brief of amici curias, counsel very fairly say:
“It is conceded that perhaps authority exists for joining principal and agents in such an action in equity at least in some jurisdictions, and notably in New York. This rule was announced and followed by Chief Justice Parker in Mack v. Latta, 178 N. Y. 525, 67 L. R. A. 126.” Counsel then incorporate this excerpt from the Latta case, which, in principal, is in point.
“These decisions seem to us so well grounded in reason as to justify a court of equity, invoked to cancel a subscription for stock on the ground of fraud, and enjoin further calls for payment, and the prosecution of actions thereon, in bringing in the officers and agents of the corporation who were personally guilty of making the misrepresentations constituting the fraud, so that plaintiff may have complete relief in one action against both the corporation and the persons guilty of the fraud.” Mack v. Latta, 178 N. Y. 525, 67 L. R. A. 126, and cases there cited.
In the present case plaintiff testified that Maixner, the *287president of the company, and Noah and Sacks, all called on him at his farm home near Bennett, to induce him to purchase stock and that Maixner, at one time, as an inducement, told plaintiff the value of the stock was $100 a share, and that “it was a wonderful investment, the best I had ever made or ever could make.”
Evidently the case was tried on the theory that the agents and the president of the company conspired together and, by concerted action, induced plaintiff to purchase. If so all defendants were properly joined as parties.
That evidence was introduced, which was not supported by the pleadings, was not assigned as error by defendants in their motion for a new trial. Hence the court did not err in overruling the motion.
That plaintiff believed, relied, and acted on the fraudulent representations of defendants sufficiently appears. The evidence was submitted to, passed on, and evidently accepted by the jury as the truth, and a verdict was thereupon rendered in favor of the defrauded plaintiff, and, with its verdict, and judgment thereon we .should be content and not permit defendants to escape restitution of the fruits of the fraudulent practices of which complaint is made. ■
The stock argument in defense of fraudulent sellers of corporate stock of doubtful, or no value, is that a prospective, but timid or suspicious buyer, before purchasing, should make general inquiry about values and also call at the company’s office and talk the subject over with its officers and representatives and examine the corporate books and, if suspicion still persists, he should go to the state house and look up the records which are required by law to be there recorded and, if he fails to do these things, and his purchase turns out to be valueless, his protest for relief in court should go unheeded. Nothing of the sort.
Corporate stock may be purchased from those offering it for sale the same as any other commercial commodity and, if the buyer is defrauded by the misrepresentation and deceit of the seller his remedy is no different from that of the defrauded buyer of any other article of merchandise which is offered for sale in the ordinary marts of trade. *288True, the stock argument plan may be at times salutary, and it may perhaps be exercised by the prudent as a precautionary measure. But all buyers are not prudent. Anyhow it is not a preliminary obligation which must of necessity first be exercised, by the defrauded corporate stock buyer, before he may obtain relief in court from the wiles of a designing and unprincipled seller.
The ultra-niceties of technical rules of practice are not ordinarily invoked to open up a door of escape to relieve the wrongdoer of well merited punishment. At most, in the present confused and almost incomprehensible state of the record, the case should have been remanded for trial instead of being dismissed.
For the reasons stated herein and in view of the Latta case and the authorities there cited, I respectfully dissent from the conclusion of the majority.