Court Opinion

ID: 6989122
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:21:46.081449+00
Date Added: 2024-06-11T16:09:31.652294
License: Public Domain

Bailey, P. J. As to several of the material facts found by the decree the evidence is conflicting, but we are inclined to the view that the conclusions reached by the court below are fairly warranted by the evidence. The fact of Parson’s agency for Booth in all the matters involved in this controversy is, we think, established beyond any reasonab'e doubt. Booth expressly admits the agency in his answer to the amended bill, but seeks to limit it to the mere matter of the negotiation and sale to the complainant of the shares of stock in question, but Parson’s testimony— and he was the only witness who was examined on the subject—makes it very clear that he was Booth’s agent, having general charge of all his interests and business connected with the Western Indiana Coal Company. It seems to be established beyond any reasonable controversy, that Parsons, prior to the sale of said stock to the complainant, made to Smith, the complainant’s husband and agent, the several representations set forth in the bill, substantially as therein alleged. They are sworn to positively by Smith, and in the main are admitted by Parsons, and Smith’s testimony is'corroborated, to some extent at least, by a memoran chi m which he testifies he made at the time, and read over to Parsons, and also by the testimony of two witnesses to whom Parsons sought to sell the same stock at about the same time, and to whom he made certain portions of the same representations. We think the conclusion fairly deducible from the evidence, that the complainant or her agent relied upon said representations and was thereby induced to purchase said stock. Smith so testifies. He says: “ I went into the company upon the representations of Mr. Parsons. Without them I should not have gone in. If the real facts had been stated I should not have paid one cent. I had no other source of information. I had no experience as a miner.” It is said, however, that as Smith visited and inspected the mine before making the contract with Parsons, he sliou'd be deemed to have made the purchase upon his own judgment, and not in reliance upon Parson’s representations. Smith admits that lie went to the mine with Parsons before signing the agreement, and was there abouP twenty minutes. But giving to that fact all the force to which it is properly entitled, it is clear that most, if not all the representations in question, related to matters which could not be known from sncli brief inspection of the mine. Especially is this so, when we consider the fact that Smith had had no experience in mining coal and could form very little, if any, just estimate from such an inspection of the productiveness of the mine, the cost of mining, the quality of the coal, or the sum which had already been expended in developing the mine. He could not have ascertained from such inspection whether the company was successfully operating its mine and paying its current expenses out of the product of the mine; or that the product of the mine could easily be increased to fifty tons per day, and that the mine would then be profitable ; or that the coal could be mined and placed on the cars at the mine at a cost of not to exceed §1.27 per ton ; or that said coal would bring in the market twenty-five cents per ton more than any Illinois coal; or that the stockholders of the company had "nvested in their plant and the purchase of their property the sum of §3,500. As to some of these matters an expert might, perhaps, have formed some judgment from a mere inspection of the mine, but one having no experience in mining would obviously be forced to seek other sources of information. Smith testifies that he made no examination of the company’s books, and in this he is not disputed. The legitimate inference from all the evidence is, that in these matters he relied solely upon Parsons’ representations. But it is insisted that these representations were mere expressions of matters of opinion, and that even if false, they were not such misrepresentations as would justify a rescission of the contract. We think, however, that most, if not all of them, especially when viewed in the light of the attending circumstances, were representations of facts, upon which the complainant had a right to rely in entering into a contract for the purchase of said stock. Such clearly was the representation as to the amount of money which had already been invested in the business of the company. That was a fact upon which the value of the stock about to be purchased very largely depended. The same may be said of the representations as to the condition of the company’s business, whether profitable or otherwise. The representation as to the cost per ton of mining the coal and placing it on the cars at the mine, was clearly the statement of a fact derived from actual experience in operating the mine. If the mine had never been operated or, perhaps, if Parsons had never had any experience in operating it, such statement might have been deemed a mere expression of opinion. But when he is shown to have been engaged for some time in working the mine so as to have, presumably, in his possession all the data from which the precise fact as to the cost of mining might be deduced, the statement becomes a matter of fact upon which the complainant might properly rely, and not a mere expression of opinion. Upon analogous principles, it may be held that the representation as to the value and market price of the coal, was a statement of a fact and not an opinion. The record very clearly shows that most of said representations were false. It was admitted by the defendant at the hearing that the coal from said mine, instead of being worth twenty-five cents per ton more than Illinois coal, was worth twenty-five cents per ton less, and that efforts to sell the same in the Chicago market in competition with other coal were unsuccessful. The evidence is uncontradicted that the cost of mining said coal and placing it on the cars at the mine, instead of being only §1.27, was in fact a little over §1.88 per ton. It is also proved beyond dispute that the mine, at the time said representations were made, instead of making a profit was running at a considerable loss, and the evidence seems to show that it was incapable of being operated except at a large loss. The evidence also seems to show very clearly that the representation as to the amount of money which had been invested in the mine was substantially untrue. The evidence as to whether Parsons knew the falsity 'of these several representations at the time he made them, is in some respects quite conflicting, but the chancellor who tr'e 1 the case, and who saw and heard the witnesses, having decided this question adversely to the defendant, we do not feel justified in disturbing his finding. Parsons must be deem ad to have known the facts as to the amount of money he had invested in the company, and he does not attempt to deny such knowledge, but as to the productiveness of the m'ne, the expense of working it and the quality of the coal, he claims that at the time he made said representations he believed them to be true. Without attempting to analyze the evidence in detail, it is perhaps sufficient to, say, that he had then been operating the mine for a considerable time and had in his possession all the data upon which the truthfulness of his representations' depended. Furthermore, when he made the representations, he added, by way of emphasizing them, as Smith testifies, “ This is no guess work. Having had four years’ experience, I know what I am saying.” In view of all the facts we are of the opinion that the complainant was justified in rescinding her purchase of the stock and demanding a return of the purchase money. It appears that very shortly after the purchase and as soon as she had learned the falsity of said representations, she notified Parsons of her election to rescind, and offered to 'surrender to him the stock and demanded a return of the money paid therefor. At Parsons’ earnest solicitation she delayed -proceeding, for a time to enable him to find another purchaser for the stock, but on his failure in that respect, she renewed her demand for a return of her money. Under these circumstances, it was pro per for the cojirt to decree a rescission of the contract and a repayment of the purchase money, and this, in substance, has been done. It seems that after the purchase of said stock by the complainant, Smith, her agent was’elected and served.as a director and the treasurer of said corporation. It also appears that a portion of the money paid for the stock was in fact paid in to the company, and so came into Smith’s hands as treasurer, and was disbursed by him in that capacity; and it is argued that by reason of these facts the complainant should be estopped from making a claim for reimbursement from the defendant. We are unable to see in this any just ground for an application of the doctrine of estoppel. It is difficult to see how the acts of Smith as director and treasurer of the corporation were chargeable to the complainant. While acting in those capacities he was acting as the agent of a corporate body to which the complainant bore no relation except that of stockholder. While he may, in a sense, be said to have represented the complainant’s interests in the corporation the complainant had no legal control over and no legal responsibility for his acts as such officer. But were this otherwise, no estoopel could arise from his acts prior to the discovery of the fraud, nor from his acts after its discovery, and the offer to rescind, and while he was continuing to act for the company at Parsons’ solicitation, to give him time to negotiate the complainant’s stock to some other party. When those negotiations failed, Smith seems to have ceased to act as an officer of "the corporation. We think the decree was fairly justified by the evidence; and it will therefore be affirmed. Decree affirmed.