Court Opinion

ID: 8177681
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:23:21.668481+00
Date Added: 2024-06-11T16:40:02.945134
License: Public Domain

Lynch, J udge

(dissenting) :

As plaintiff had a complete and adequate remedy at law, no equitable grounds existed for the maintenance of this suit. Fraud, it is true, is one of the elementary grounds for jurisdiction in equity; but not all fraudulent conduct warrants relief in that forum. “The jurisdiction of courts of equity does not extend to all possible cases in which the commission of fraud may be involved. If the right invaded is legal, and the remedy at law full, adequate and complete, the concurrent jurisdiction in equity does not exist”. Buck v. Ward, 97 Va. 209; Kane v. Coal Co., 97 Va. 829. Where the fraud alleged results in an injury as a mere tort, equity will not take cognizance, but the injured party must resort to an *489action at law. Lumber Co. v. Parks, 72 W. Va. 625. The cause for relief in that case was fraudulent misrepresentation of the quantity of standing timber upon a tract of land purchased by the plaintiff company. So, in Laidley v. Laidley, 25 W. Va. 525, it was held that, in the absence of other distinct grounds of equitable cognizance, a bill in equity is not maintainable to recover damages for false representations as to the subject matter of the negotiation. Equity can not award damages in any case where there is a clear remedy at law. Meze v. Mays, 6 Rand 660. Generally, courts of equity will not entertain a suit for damages, or compensation for wrongs or injuries cognizable at law, if these constitute the sole objects of the bill, as clearly in this case they do. 2 Story Eq. Jur. §794. The right to a decree for the consideration paid for water fund certificates secured by a deed of trust, on the ground of false representation as to the value of the securities, was denied in Powell v. Louisville, 141 Fed. 960. On facts somewhat similar, the court there said, what is entirely appropriate here: ‘ ‘ The suit is in effect _a bill in chancery to recover damages for false representation; or, perhaps more exactly fitting the purpose of the suit, to recover as in an action at law moneys had and received” by defendant for plaintiff’s use and benefit, or as for fraud and deceit.
The fraud which gives rise to an action of deceit^ exists where, as charged by the bill, “a person makes a false representation of a material fact susceptible of knowledge, knowing it to be false, or as of his own knowledge when he does not know whether it is true or false, with intention to induce the person to whom it is made, in reliance upon it, to do or refrain from doing something to his pecuniary hurt; when such person, acting with reasonable prudence, is thereby deceived and induced so to do, 'or refrain, to his damage; * * * # and, as a general rule, whenever the facts bring a ease within this definition, an action for damages will lie”. 20 Cyc. 10. While courts of equity have concurrent jurisdiction with courts of law to give damages for .fraud, and may entertain jurisdiction although plaintiff may have an adequate remedy by an action of deceit; yet, where plaintiff has a plain and adequate remedy at law, and seeks no relief peculiarly within *490tlie .jurisdiction of a court of equity, the court will ordinarily decline to entertain jurisdiction for the mere purpose of giving damages”. 20 Oyc. 94,
Damages sustained by reason of fraud can not be ascertained in a court of equity and decreed to the person injured. Robertson v. Hogshead, 3 Leigh 667. See also Schwartz v. Bowler Mfg. Co., 177 Ill. App. 294. “A court of equity of the United States will not sustain a bill in equity, in a ease of fraud, to obtain only a decree for the payment of money by way of damages, when the like amount might be recovered in an action at law.” Buzard v. Houston, 119 U. S. 347. The gravamen of the charge in the case last cited was fraudulent representation as to the solvency of the contracting party, and relief was denied “because an action of deceit would afford a full, adequate and complete remedy”.
Relief in equity by restoration of the possession of a movable house, treated as personal property, on the ground that such possession was obtained by fraudulent representation as to the ownership of the patent on which was issued the stock transferred to the plaintiff in consideration for the house, was refused in Wilson v. Maxon, 56 W. Va. 194. In the opinion it is said: “The allegations and proof are insufficient to overthrow the title of the Maxon-Miller Company to the patent involved, and, as this is really the only foundation for the charge of fraud or the want of consideration, the bill should have been dismissed. Not only is this true, but the plaintiffs, if showing a good case for relief, have a good and adequate i-emedy at law”. The rule is general that resort can not be had to a court of chancery for relief, even where fraud is charged, if plaintiff has as complete, effectual and adequate remedy in an action at law. Green v. Spaulding, 76 Va. 411; Harvey v. Fox, 5 Leigh 444. Save as ancillary or auxiliary to some recognized subject of jurisdiction, equity will not entertain a suit for damages, or undertake to award damages, and then only by way of compensation for the resultant injury. Ewing v. Litchfield, 91 Va. 575. Nor even where fraud in the procurement of a contract constitutes the meritorious cause of complaint will equity interpose the remedy by cancellation, if there is an adequate remedy at law. Johnson v. Swanton, 107 N. W. (Wis.) 481; Farmington v. Bank, 85 *491Me. 46. Later this doctrine was recognized in Coal Co. v. Thomas, 85 S. E. (W. Va.) 171, wherein the second point of the syllabus says: “Equity will not entertain a suit to cancel a contract for the sale of land solely on the ground that it was procured by false representations. In such case, the law affords full, adequate and complete remedy”.
Where, as in this case, plaintiff’s object manifestly is recovery of the amount paid for the shares of stock, he, as a matter of justice and right, should have been relegated to an appropriate action at law, where a jury would have had opportunity to determine as to his right to the return of the money invested in the shares of stock, and to express its opinion upon the charge of fraud imputed to defendant, as to whose guilt grave doubt exists. That was the proper forum for the determination of the issues involved. Plaintiff’s remedy there was full, complete and adequate. 16 Cye. 81.
Besides, while many- cases deem imperative the requirement of an averment of want of adequate remedy at law (1 Enc. Dig. Va. & W. Va. Rep. 173), the bill in this case contains no such averment. On the contrary, it clearly shows the existence of a complete and adequate remedy by an appropriate legal action. .Nor does plaintiff seek cancellation or rescission of the contract of sale and transfer of the shares of stock, on the ground of fraud or on any other ground. He merely offers to return the shares to defendant upon receipt of the money paid by him and the interest accrued thereon since the date of payment. Specifically, plaintiff prays that defendant “be decreed to pay back to him said five thousand dollars which he paid as aforesaid for said fifty shares of stock, with interest from the date of said payment”, and for general relief. Thus, clearly, plaintiff’s demand is limited solely to the restitution of the money paid in acquiring the certificates of stock in the power plant. He seeks no other relief, makes no other demand. 1
Did defendant misrepresent the value of the stock sold by him to the plaintiff? The prevailing opinion concedes that, on this feature of the case, the testimony of the plaintiff and that of the defendant is directly conflicting and wholly irreconcilable. But it is based on the assumption that the testi*492mony of the plaintiff’s son and the audit of the company’s accounts so far tend to corroborate the father as to discredit the evidence of the defendant. I am constrained to withhold assent to that conclusion. The testimony of the plaintiff is itself incoherent, unconvincing, inconclusive. He was an old man when examined as a witness in.the case, and did not seem to have a clear conception of the plainest principles pertaining to corporate stock,' though owning shares in several different corporations, in some of which he was or had been a director. Although alleging in his bill, and as a witness admitting, want of knowledge of the existence of a bonded indebtedness on the company’s property, he said Stockert wanted to sell him some of the bonds in lieu of stock. Whether he admitted or denied such information, it is fully established by the testimony of Stockert and Moore.
Nor was the testimony of Charles F. Jackson, the son, entitled to the credit accorded to it by the opinion in this ease. He was present only on one of the several occasions pending negotiations between his father and Stockert, and then but a few moments. Besides, he was not called as a witness until after the examination of the defendant. The questions propounded to the latter and the answers by him were repeated to the son by plaintiff’s counsel, who asked the witness what he had to say about that; what was said about this1? Was anything said about gross earnings? Generally the desired answers were either suggested or made apparent by the character of the questions propounded. They admitted only of categorical answers. But when asked on cross-examination to detail conversations heard by him, his only reply was: “Well, I don’t know as I could say word for word. I could give you the substance of what I was called in for, and as Mr. Moore wasn’t there and father was buying some stock of Mr. Stockert, the Water and Light Go.; and the books wasn’t there, and I was just called in to hear the contract stated, which Mr. -Stockert agreed to let father have $5,000 worth of Buckhannon Light and Water stock, that he didn’t have all the money but could give the balance of it with due bills for part and his note for the balance, and the certificates should be issued as soon as he could notify Mr. Moore; that is about the substance of it”. In this summary, *493he says nothing by way of confirming the fraudulent representations on which plaintiff based his right to a decree for the restoration of the cost price of the stock certificate.
But it is claimed that the audit makes obvious-the fact that Stockert had not, as claimed by him, paid for the shares held by him in the company. No witness in the least discredits Stockert’s statement, in his answer to the bill and as a witness, that he paid in full to the company par value of the stock issued to him. None could deny its truth. Nor does the audit justify a conclusion to the contrary. He testifies that he gave four years’ constant service to the construction and management of the company’s property prior to the first day of January, 1907, every year of which except the first it yielded a net profit ranging from $2,300.51 for the year 1904 to $6,755.05 for the year 1906, in addition to the large expenditures for betterments; and that, although for the two succeeding years the net profit was only $39.61, the delinquency resulted not under his management but under the mismanagement of his successor. The majority erroneously, doubtless inadvertently, found the latter amount to be the net profits for the year 1906, when, as heretofore stated, they were approximately seven thousand dollars. Moreover, as this diminution in revenues occurred subsequent to the purchase by plaintiff, he can not justly rely on it as ground for relief. Besides, the audit shows the company was charged with $4,200, salary due Stockert; that sum, as manifestly appears, being credited to him on the purchase price of the stock, or at least it was not paid to Stockert. For this service, for money expended by him, for salary unpaid, and $1070 cash, his compensation was invested in company stock, part of which he sold and transferred to plaintiff. He frankly and fully, and I think satisfactorily, accounts for the entire face value of every one of the 140 shares of stock owned by him in the corporation. If other share-holders failed to pay for their stock, plaintiff can not complain; for in his bill and as a witness he admits that Stockert informed him of such failure. He was therefore not thereby misled or deceived, but purchased his shares cognizant of their delinquency.
Likewise, if made at all, defendant’s representations as to the probable earnings for any annual period subsequent to *494plaintiff’s purchase, were merely the expression of an opinion, and not of an existing fact within the actual knowledge of any stockholder or other person interested in the concern. Such revenue's were altogether problematical, depending upon uncertain contingencies, and safe and competent management, without which the business could not be successfully conducted. Such official direction of the company’s affairs appears to have been wholly incompetent and unsuccessful. The responsibility for that condition was due as much to plaintiff’s as to defendant’s dereliction. Both were shareholders of the company’s stock during such period.
Nor, as conceded, does a sale of shares at auction, had nearly four years subsequent to plaintiff’s purchase, though at a merely nominal price, have any probative value as of the date of the first sale, especially when, as manifestly appears, the ownership of the shares sold at auction was doubtful and suspicious.
Upon this character of proof, the circuit court entered the decree denying relief; and, under the authority of Wolf v. Bank, 54 W. Va. 689; Fisher v. Berwind, 64 W. Va. 304; Bradshaw v. Farnsworth, 65 W. Va. 28, and Baker v. Jackson, 65 W. Va. 282, it should have been affirmed; because these cases hold that “a decree based on evidence, especially when conflicting, will not be reversed unless plainly wrong”. In my opinion the decree justly can not so be characterized.
Judge Robinson concurs in this dissent.