Court Opinion

ID: 5218136
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:27:42.130076+00
Date Added: 2024-06-11T08:27:28.405192
License: Public Domain

Burr, J.:
Iu November, 1904, Henry W. Poor was. a member of a firm doing business in the city .of New York uudér the title of Henry W. Poor & Co. Mark R., Spelman and Henry Y. Poor were his copartners, but Henry W. Poor’s interest in said firm amounted to ninety per cent of. the entire capital stock thereof. There was also a firm doing business in the city of Boston under the same firm name., of which the said Henry W. Poor, Charles F. Cushman, Henry Y. Poor and Frederick A. Farrar were the members. In this firm *744Henry W. Poor had a one-third interest. Prior to the date above mentioned the Boston firm of Henry W. Poor & Co.,- in connection with another firm doing business in that city under the name of S. D. Boring. & Son, had purchased the entire authorized issue of bonds of the NevMon and Northwestern Bailroad Company of Iowa, and had disposed to otliei’ persons a considerable portion thereof. On the twenty-second of November the New York firm of Henry W. Poor & Co. agreed to sell to plaintiff 250 of ■ the bonds of the said road of the par value of $1,000 each, and on the second day of-December in the same year they were delivered to plaintiff, who paid for them the sum of $243,368.06. To enable them to -make delivery the New York firm ■ obtained from the Boston firm a sufficient amount of the said bonds at a price somewhat less than that paid by-plaintiff,. This action is brought to rescind the contract of sale to plaintiff' upon the ground of false representations made by defendant Henry W. Poor or by one Dennie M. Hare, which representations were the inducing cause to plaintiff of such purchase. The said Hare was in the employ of. the New York firm, and his relations to it were such-that a jury would be justified in finding that representations made by him to plaintiff with respect to the said bonds were within the scope of his authority, and binding upon the members of the said firm. The jury having found a verdict in favor of plaintiff for the sum-of $277,899.94, this appeal is taken by-the defendant Henry W. Poor from the judgment entered on such verdict and from an order denying a motion for a new trial.
The representations which it is claimed were made by or on behalf of defendants are of two kinds: First, written representations contained in a prospectus which was. issued some time in the latter part of the year 1903. by the Boston firm of Henry W. Poor & Co., and a copy of which was delivered by Hare -to plaintiff at the timé when negotiations were pending for the purchase and sale of said bonds; and, second, oral representations made by defendant Henry "W7 Poor, or Hare as his agent. It was conceded by plaintiff upon the trial -that when this prospectus .was issued it was.issued in good faith, and so far as the persons who subscribed to the same then'knew" the statements contained in it were true. But his present contention is that -in November, 1904, when the prospectus.was delivered to; plaintiff, defendant knew- -that sotoe *745of the statements therein contained, and which in November, 1903, were supposed to be true, were as matter of fact false, and particularly was this the case respecting some of the statements therein contained with regard- to the cost per mile of the construction of the road, the earnings of the road, and the extent and quality of mineral deposits in coal properties owned or con-. trolled by it. There was a sharp conflict of evidence whether. Poor did or did not make the statements which Hare testified that he did make, whether he authorized the delivery of the prospectus to plaintiff, or whether he knew that it had been delivered to him. In view of this sharp conflict it becomes our duty carefully to scrutinize the testimony that was admitted as bearing upon the issues in this action, to determine that no error was committed in connection therewith.
In order to prove that some of the statements contained in the prospectus were false at the time that plaintiff contends it ivas delivered to him, and to prove that defendant Henry W. Poor had information respecting the falsity thereof, plaintiff introduced in evidence certain reports made to the Railroad Commissioners of the State of Iowa under the provisions of a statute'of that State purporting to show the condition of the road. It was not claimed that Poor participated in making these reports, and his testimony that he never saw them until the time of the trial is not contra» dieted by any direct testimony. Plaintiff also introduced in evidence, with the same purpose and intent, certain monthly reports made by the officers of the company in Iowa to the firm of Henry W. Poor & Co. in Boston showing the condition of the road, its earnings and expenses, and showing that the road was being operated, at a loss, both in respect to its business as a common carrier and in connéction with its mining properties. These reports are referred to as Exhibits A-l- to A-25.and B-l to B-25. As to Exhibits A-l to A-25, being statements made by officers of the company in Iowa as to the earnings anyl expenses of the Newton and Northwestern Railroad Company from October, 1902, to October, 1904, tile court stated that they were simply received for the purpose of showing that defendant got notice of what the papers contained, not as establishing the contents of the papers themselves. No limitation was made as to the purpose or effect of Exhibits B-l to B-25, *746which were monthly reports of the sales, earnings and expenses of the Boone Coal and Mining Company, under which name the coal business of the road was being conducted. There is no direct evi■dence that defendant Poor, or either of • the members of the firm of Henry W. Poor & Co. in Hew York, ever saw these reports. Poor makes positive denial that he had seen them, and asserts that he never had any information respecting the contents thereof. It was sought to connect Poor with knowledge of such contents by the testimony of Frederick A. Farrar, who was at one time vice-president of the railroad company, and' who was a member of the Boston firm. In his attempt to show that Farrar received these reports and communicated the contents thereof to defendant Henry W. Poor, plaintiff called him as a witness. He testified: “ During the period of my being an officer of this road [and it appears that he became such officer in June, 1904], I was more or less in com-. m unication and correspondence with Mr. Henry W. Poor of Hew York with regard to the affairs Of this railroad. Q. Did you send to him copies of the reports that you received from the operating officers of the road ? A'. I do not think all of them, many of them. Q. Did you send him many of them ?. A. I don’t remember much about that personally.” He then testified that he was in the habit" of going to Hew York very- often, as often as once or twice a -month, and when there frequently discussed with Poor the .condition of this railroad, as- lie did other matters pertaining to their business. When asked specifically whether or not the information that came .to him in these reports was discussed with Mr. Poor he testified : “ I think very likely; T cannot remember definitely: I cannot say definitely whether it was or not. I cannot recall any conversation or the substance of any conversation with Mr. Poor on the subject of these reports or the infer-. matio'n contained in these reports.” Again lie testified that he discussed practically everything connected with the general condition of the road in a general way with Henry- W. Poor, as often as once or twice a month during the whole period that they were members of the firm in Boston. It might be urged with ■ much force that testimony so indefinite in character, in the face of Poor’s positive denial that the contents of these reports or the subject-matter of the statements contained in them had ever been brought *747to liis attention, failed to sustain the burden of proof devolved upon plaintiff to establish by a fair preponderance of evidence the facts material to his contention. But the further testimony of Farrai makes it perfectly clear that whatever conversation he did have with Poor on the subject of these reports and the contents thereof, was subsequent to the sale of these bonds. He testified : “ As -treasurer and as director, I received constantly during the period that I was an officer, reports from the operating officers of the road in Iowa. I received daily reports from them. I also received regular monthly statements. Q. * * "x" Did you receive those during the whole period of your being an officer ? A. Ho. Q. "Well, during what part of the period that you were an officer ? A. I should think we began to get our reports subsequent to the time of this meeting, when Meservey and the rest of them went out. Q. Subsequent to the stockholders’ meeting in June, 1905 ? A. That would be my recollection of the matter. Q. You received daily reports beginning witli the spring or early summer of 1905 ? A. I should say so, subsequent to these changes. Q. By changes you mean the election of Mr. Boring ?. A. Yes, and I think Mr. Meservey went out of the directory at that time.” Again he testifies : “ Mr. Boring and my- firm took over the active management of the property in July, 1905. I think that is the date.” Defendant not only objected to the admission of these papers in evidence as being incompetent, but at the close of the case expressly requested the court to instruct the jury that the defendants were not “ chargeable with knowledge of the facts contained in the reports made by the operating officers of said railroad company and sent to Henry W. Poor and Company of Boston and Boring and Son of Boston, and in evidence as Plaintiff’s Exhibits A-l to A-25 arid B-l to B-25.” As the only foundation for a finding of the jury that Poor had such knowledge is based upon the testimony of Farrar, the exception to the admission of these papers and to the refusal of the court to charge the jury as requested, was well taken, since, even if Farrar did communicate to Poor the whole of his knowledge based upon these reports, that knowledge was not obtained until some months subsequent to the sale of the bonds in question.
Respondent contends that the representations orally made by Poor, or by Hare, his agent, and particularly those representations *748made with reference to the pendency of negotiations.for the sale of the Newton and Northwestern Railroad Company to the Chicago, Rock Island and Pacific Railroad Company, and which plaintiff contends had terminated before he was approached with reference to the purchase of these bonds, would be sufficient of itself to sustain the verdict of the jury, entirely independent of any other false and fraudulent representations made in the case. The fact that any oral representations were.made by Poor, or by Hare with his express authority, and the extent of Poor’s knowledge in eon neetion therewith, was a disputed fact. The verdict. was a general one. In the absence of specific findings by the juryj it is. impossible for us to determine. ■ which of the ■ various representations alleged to be false and fraudulent the 'jury decided were false, and which of those established as false were untrue within the knowledge of the defendant.
We have not considered various other objections and exceptions urged by defendant, for the reason that the error above referred to we deem fatal to the maintenance of the judgment.
The judgment and order appealed from should be reversed and. a new. trial granted, costs to abide the event.
Thomas and Care, JJ., concurred; Woodward, J., read for affirmance,, with whom TIirschberg, P. J., concurred. .