Court Opinion

ID: 5204829
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:59:23.508317+00
Date Added: 2024-06-11T08:27:16.103589
License: Public Domain

Ingraham, J. (dissenting):
While the complaint contains allegations of many statements of the defendant’s testator in relation to the future value of the property that was to be acquired by the corporation and of the stock which plaintiff purchased, and enthusiastic and, as it subsequently appeared,, exaggerated estimates of the advantages that "would accrue to the stockholders of the company in consequence of the future operations of the company, there is' but one statement of a fact that was made by the defendant’s testator upon which the *825plaintiff could base an action for fraud or for a rescission of the contract, and that was the alleged statement to the plaintiff that “ the said company was capable of and will produce sixty thousand (60,000) tons of ore and pig iron annually from which the said company would pay dividends.” Assuming that all of these representations alleged in the complaint were made by the defendant’s testator to induce the plaintiff to purchase the stock, this statement by the defendant’s testator was the only representation of the existence of a fact, upon the falseness of which this action in either aspect could be based. There was no proof offered on the trial that this statement was not true, nor did the plaintiff claim upon the trial that he had evidence to prove it was false. After the testimony of the plaintiff’s brother as to the interview between the plaintiff and the defendant’s testator was excluded, plaintiff went on to prove his case by other testimony, and he offered all the testimony that he desired in relation to the falsity of the statement made. If the testimony of plaintiff’s brother as to the statement of cthe defendant had been admitted, it would only have established the representation made as alleged in the complaint, and in the absence of proof to justify a finding that this statement was false, I think the court could do nothing but dismiss the complaint. All of the other alleged representations related, to what the defendant’s testator expected that the corporation would accomplish. Statements that the company was “ the biggest thing ever gotten up ; ” that the shares of stock “ would double in value' and would probably be worth three times as'much that the stock of the company “was a splendid investment for plaintiff,” were certainly not representations upon which a cause of action for fraud or for a rescission of a purchase of the stock would be based. The further allegation that the plaintiff supposed that he was subscribing for this stock assumed that he had understood that he was obtaining it from the company at fifty cents on the dollar, when in fact the defendant was selling him his own stock, could not justify a verdict for the plaintiff. In the first place, the defendant must have known that there could be no subscription of the company’s stock at less than par. If the plaintiff had subscribed for the issue of stock by the company, that subscription would necessarily be at par and not fifty cents on the dollar, and upon such, subscription, whatever the subscriber paid, he would be liable to the company for the par value *826of the stock. .But.when the stock was delivered,to the plaintiff by the defendant’s testator it' showed upon its face that it was the defendant’s testator’s stock, and that it stood in liis name .upon the books, of the company, for that fact appeared upon the face of the certificate delivered to the. plaintiff. He, accepted those cfe-rtifk cates as a. compliance with the contract, and it is toó late for him, years afterwards, to attempt to disaffirm ■ the .purchase upon the ground that the stock was the. defendant’s testator’s stock and not the stock of thq company issued .as tile result, of his subscription to the Capital stock of the .company. It is quite evident that by this •'transaction the plaintiff,'who had confidence in the judgment.of the defendant’s testator, entered into a speculation in acquiring this stock, which he thought would result in large profit. This! conclusion quite probably was based upon the enthusiastic and'exaggerated' idea of the defendant’s testator as to the result of the speculation, but I think it is quite clear that there was no- fraud in the transaction to justify this action. •
I think, therefore, that the judgment appealed'from should he affirmed. * j
Scott, J., concurred. ' ■
Judgment reversed, new trial ordered, costs to appellant to abide ■event» . ■ •