Court Opinion

ID: 6578932
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:36:42.691964+00
Date Added: 2024-06-11T15:57:12.512427
License: Public Domain

The opinion of the court was delivered by
Wilson, J.
This is an action on the case to recover damage for the fraud of the defendants, and the questions arise upon general demurrer to the declaration. The facts set forth in the declaration, and admitted by the demurrer, show that the defend*392ants, by their false and fraudulent combination and conspiracy, and by their false and fraudulent acts, statements and representations, deceived the plaintiff, and by reason thereof he was induced to subscribe, and did subscribe for a share of the stock of the proposed company, and to join in organizing the company, and thereby he was cheated out of his $500. The. fraud complained of was practiced not only by fraudulent acts, misrepresentation and fraudulent concealment, but by fraudulent pretenses, by which the defendants intended to deceive, and did deceive the plaintiff. At that time the plaintiff had no knowledge of the deceit; it was not apparent; he relied and acted upon the acts and statements of the defendants, and no prudence or caution which the law required him to exercise was sufficient to guard him against the fraud. From the acts of the defendants, in subscribing for shares of the stock ; from their representations as to the nature, quality, value and price of the land, as to the situation of the title and the arrangements which they stated were being made by them to purchase the land for the proposed company, and from their statements and representations as to the object of the proposed company, and the importance of obtaining the specified number of subscribers, the plaintiff had the right to believe the defendants were not the owners of the land, but that they would purchase it for the proposed company, and let the company have the land at what it cost them; that they had become bona fide subscribers for the stock; that they, with others who should subscribe for the stock, were to become bona fide members of the proposed company, upon equalHerms ; that they would in good faith pay their respective shares of the capital stock; and in view of the relation so effected- by the defendants, and of the confidence and trust which such relation imposes, that the defendants, in making the purchase, and in all things relating to the proposed company, had acted and would act in good faith, and for the common and mutual interests of all who had subscribed or should subscribe for said stock. Upon all this the plaintiff relied in subscribing for the stock and paying for the same. But, in fact, the defendants were the owners and sellers of what they had purchased at a much less rate, and devised these means to effect a sale from themselves to the plaintiff and others, a sale which they *393had reason to believe they could not effect by legitimate means. The defendants affected payments, but their money was secretly returned to them, by reason of which the company was destitute of capital. If the defendants had informed the plaintiff that they had bargained for said twenty-five acres of land, that they proposed to engage enough other persons to join them to make up forty in all, to be organized into a company for the purpose of engaging in the oil business, with the understanding that the defendants would sell, and the company, or the proposed members thereof, .would purchase of the defendants ten acres of land, at the sum of twenty thousand dollars, no one can reasonably suppose the plaintiff could have been induced to join them without examination of the premises and inquiry in relation thereto himself, or by an agent not in the interest of the seller, nor unless he had become satisfied it would be a good investment. If in this manner the defendants had introduced to the plaintiff the subject of selling said land for the price named, and organizing a company for the purpose above mentioned, the plaintiff would have understood that the relation, between him and the defendants, or between the defendants and the other subscribers for the proposed stock, was not other or different from that which exists between seller and buyer of property, in which the buyer as well as the seller must concur in the terms of sale. But this was not the manner in which the defendants introduced or conducted the business. They concealed from the plaintiff the material facts, and, gave the plaintiff to understand they had acted and would act for the mutual interests of all concerned. The relation thus created was' one of confidence and. trust, but it was intentionally and wantonly violated by the defendants, to the damage of the plaintiff. It is said by the defendants’ counsel that the plaintiff suffered no damage on account of the alleged conspiracy, because the defendants’ offer to sell the land was never acted upon or accepted, either by the plaintiff or the corporation. This is no defense to the plaintiff’s action, for the acts of the defendants were false and fraudulent from the beginning. The plaintiff’s subscription for the stock was obtained by the fraud of the defendants, by reason of which he was not liable to pay it. The defendants fraudulently *394organized tbe company for tbe purpose of obtaining payment of tbe plaintiff’s subscription, and the plaintiff paid the same, without knowledge of the fraud. The defendants proceeded far enough in their fraudulent scheme to obtain the plaintiff’s money, and their acts and representations would be none the less fraudulent if they had purchased the land. It is urged by the defendants’ counsel that the declaration does not show any wrongful or fraudulent conversion of the plaintiff’s money, or state any facts in regard to the disposition of the money which make the defendants liable, and that he should have proceeded against the alleged corporation or its treasurer. But we think the plaintiff was not bound to proceed for his money against the corporation or treasurer. This action is brought to recover damage for the fraud of the defendants, by which the money was taken from the plaintiff. The defendants, by fraud, took the money from the plaintiff, and they are liable to him whether they put the money into their own pockets or not. The question whether the plaintiff’s stock, if he has any, should go in mitigation of the damages is not before us.
The conclusion is that the judgment of the county court is correct. The defendants having moved for liberty to replead, the judgment of the county court is reversed, p-o forma, and the defendants may replead, on the usual terms as to costs.