Adams v. Collins

196 Mass. 422 | Mass. | 1907

Morton, J.

This is an action to recover damages for false and fraudulent representations in regard to certain bonds purchased by the plaintiff of the defendant Cox. There were five bonds in all. This action relates to two of them. It was tried with two other actions by the plaintiff against the defendant Cox alone: One for one of the bonds and the other for the other two. There was a demurrer by the defendant Robinson which was overruled, and he appealed. The plaintiff had a verdict in each case but no judgments have been entered m the other two actions. The case is here on exceptions by the defendants to various rulings and refusals to rule, and to the admission and exclusion of evidence. The defendant Cox also excepted to what the court did in sending the jury out again to consider their verdicts in this and the other two cases, after they had reported a verdict in this, and to the verdict thus rendered, but that exception has been waived. The plaintiff discontinued as to the defendants Collins and Libbey.

We take up first Robinson’s demurrer. It is in substance that the matters alleged in the amended declaration, on which the case was tried, are, so far as Robinson is concerned, matters of opinion, and that the alleged cause of action against him is improperly joined with that against Cox. The allegations, omitting preliminary allegations as to how the plaintiff came to apply to Robinson, are, in substance, that Robinson, knowing that the plaintiff contemplated the purchase of the bonds from Cox, concealed the fact that he had had the bonds in his possession for sale, and stated to the plaintiff that “ he understood that said Cox obtained a loan on said bonds from a banking institution to the amount of $3,500, and that said bonds were a good safe investment, and that said bonds had not sold in the market for 10 per cent of their value.” These allegations are’ accompanied by averments to the effect that the defendant Robinson knew that the statements were not true, and that he knowingly made them and concealed the facts as to his connection with the bonds for the purpose of aiding Cox to defraud the plaintiff. We think. that the demurrer was rightly overruled. To say that he understood that Cox had obtained a loan of $3,500 on the bonds from a banking institution, when he knew that he had not so understood, was or could be found to be a false representation of a fact, and not the expression of an opinion or a statement of something which he had heard and which he intended to simply state as such. It is plain that to say that the bonds had not sold for ten per cent of their value was, or could be found to be, an actionable misrepresentation. It sufficiently appears that the alleged representations were fraudulently made, and it is plain, we think, that, according to the allegations contained in the declaration, both defendants were properly joined in one action. Stiles v. White, 11 Met. 356. Patten v. Gurney, 17 Mass. 182. See also Burns v. Dockray, 156 Mass. 135, and Peabody v. Whitcomb, 195 Mass. 330, in which the actions were similarly brought, and Medbury v. Watson, 6 Met. 247, where the converse of the proposition was decided. We do not stop to consider now the representation that the bonds were “a good, safe investment.” The other representations were sufficient to justify the overruling of the demurrer.

We pass to the exceptions, taking up those of Cox first. The court in stating the substance of the declaration to the jury said that it embraced “ four different alleged false representations first, that Cox said that he had paid $5,000 for the bonds, their par value; second, that he stated that they were worth their par value; third, that no bonds of that issue had been sold for less than ninety-five per cent; and fourth, that he had pledged them to a banking institution for a loan of $3,500. As to the first two, the court instructed the jury in substance, as requested by the defendant Cox, that they were to be regarded as seller’s talk, and would not justify a verdict for the plaintiff. The first objection to the instructions and refusals to instruct concerning the other two is that the evidence introduced by the plaintiff did not warrant a finding that Cox had made the fourth misrepresentation relied on. The plaintiff testified that he said to Cox that Dr. Hipkin had told him that he, Cox, had said the bonds were a good and sure investment, and were selling at par, and there had not been any sale for less than 95, and that he, Cox, had borrowed $3,500 from a bank on these bonds, and that Cox replied in substance, “Yes, I have got these bonds, they are in the bank, and I borrowed on them $3,500. My note is coming due, and I want to keep my credit good with the bank, and for that reason I am willing to let you have them at a lower figure than I really ought to. I paid par for them, but if you want them, and because I want to meet my note, I will sell them to you at 80.” The real facts were, as evidence introduced by the defendant Cox tended to show, that he borrowed $3,500 from one Charles H. Collins, vice-president and director of the American National Bank, for which he gave him his note secured by the bonds, and that Mr. Collins got the money from the bank by turning over to it the note and bonds and guaranteeing the payment of the note. We think that the evidence warranted a finding that the representation was made in substance as alleged, and that it was false and fraudulent. The representation made by the defendant Cox, as testified to by the plaintiff, imported or could be found to import that he had himself borrowed the sum named from a bank, and that the bank had been satisfied to lend it to him on the security of the bonds, which was substantially what was alleged. Whereas the fact was or could have been found to be that he had borrowed the money from Mr. Collins, and Mr. Collins had got it from the bank by giving in addition to defendant’s note and bonds his own personal guaranty. The alleged representation therefore was, or could have been found to be, a statement which he knew was not true, or which he, when he did not know whether it was true or not, made as of his own knowledge, and which in that case would constitute a fraudulent misrepresentation, without any further proof of an intent to deceive. Chatham Furnace Co. v. Moffatt, 147 Mass. 403. The same could have been found in regard to the representation that the bonds had not been sold for less than 95. Whether they had been so sold or not was plainly, as ordinarily understood, a matter susceptible of knowledge.

The plaintiff made inquiries 'of others and in at least two instances was told that the bonds had been sold for ten cents on the dollar. He informed the defendant Cox of this and was told by him that it was impossible, that it could not be so, and that there must be some mistake. The plaintiff was also told that the bonds had sold at 95, and that they were a good investment. In the end, the plaintiff relied, as the jury must have found, on what the defendant Cox said, and he, Cox, contends that the plaintiff was not justified in relying on his representations, and did not exercise due diligence and could not recover unless he did, and that the jury should have been so instructed, as, in various forms, he requested that they should be. We see no error in the instructions or in the refusals to instruct on this point. The jury were told in substance that, in order to entitle the plaintiff to recover, he must satisfy them by a fair preponderance of the evidence that the representations were false and fraudulent, that he relied on them to a substantial degree in making the purchase, that, in view of the plaintiff’s admission (as to which, see the next paragraph), it was necessary for him to show that the representations relied on were made by the defendant as of his own knowledge, when he did not have such knowledge, and were false, and "that it was for them to say whether it was reasonable for the plaintiff to rely on the defendant’s statements in view of all that he knew and of all that he could ascertain by reasonable effort. This in effect left it to the jury to say whether the plaintiff exercised due diligence (Whiting v. Price, 172 Mass. 240), or acted reasonably in surrendering his judgment to that of the defendant Cox.

The evidence offered by the defendant Cox, that he believed the bonds to be worth 95 and that he had no intent to deceive the plaintiff, was rightly excluded. Chatham Furnace Co. v. Moffatt, supra. Litchfield v. Hutchinson, 117 Mass. 195. The plaintiff disclaimed bad faith on the part of the defendant, meaning thereby actual intent to deceive other than that inferrible from the statement of a fact as of his own knowledge when he did not know it to be true, or a lack of belief on his part in the truth of his statements.

We see no error in regard to the admission of the testimony of the witness Skelton.

We are unable to tell from the exceptions whether the testimony in regard to the six dollar note and the London Aylmer and North Shore Railroad bond was or was not admissible, and, as the burden is on the excepting party, the exception must be overruled. It seems to us, as far as we understand it, that the matter was wholly irrelevant and immaterial, but it does not appear that any harm was done by its admission.

The defendant Robinson contends that so far as he was concerned there was a variance between the allegations and the proof, and that the representation that the bonds were a good, safe investment was matter of opinion. Other questions raised by him are sufficiently covered by what has been said, so far as the instructions requested by him were not given. The allegations were, as already stated, that the defendant Robinson said that “ said bonds had not sold in the market for 10 per cent of their par value,” that they “ were a good, safe investment,” and that he stated that “ he understood that . . . Cox had obtained a loan on said bonds from a banking institution to the amount of $3,500.00.” The evidence in support of these allegations all came from the plaintiff and was in substance as follows: “ he . . . went down to see . . . Robinson and asked him about these bonds; that Robinson said they were not a good investment at 90 for a trustee; that British Consols could be bought for nearly that, and he did not consider them as good as British Consols; that the plaintiff then asked Robinson what he thought of a purchase of them at 80, and Robinson replied he considered them a perfectly good investment at 80, and the plaintiff would undoubtedly make money if he could purchase them at 80; that he, Robinson, knew that Cox borrowed $3,500 from a bank on them, and that ought to be a guarantee of their validity and of their value; that the plaintiff then said to Robinson that he had heard these bonds had been selling at ten per cent of their face value, to which Robinson replied, that he would ‘ like to buy a bushel basket full of them at that price.’ That ‘ that is absurd.’ ” On cross-examination the plaintiff testified that “he told Robinson that there had been sales of these bonds at 10,” and Robinson replied that “he would like, to buy a bushel basket full at that price ” ; that Robinson told him, the plaintiff, that he knew that Cox had got “ $3,500 from a bank and put up these bonds as security.” Robinson was a witness and denied that he said what the plaintiff testified that he did. We think that what Robinson thus said (if he did say it) could fairly be understood and ordinarily would be understood to be an affirmation, though expressed in an indirect manner, that the bonds had not sold for ten per cent of their par value, and that it therefore tended to show that the representation was made as alleged. As to the allegation that he said that he understood that Cox had got $3,500 from a bank on the bonds, the evidence clearly warranted a finding in the plaintiff’s favor. The defendant denied that he said so. But the jury were not bound to believe him. And if they did not, but believed the plaintiff, Robinson’s denial would make the case all the stronger against him.

The defendant Robinson further contends that there was a variance between the declaration and the proof in respect to the allegation that he represented that the bonds were “a good, safe investment,” — his contention being that the evidence showed that the statement was made as matter of opinion and not as the representation of a fact, and that he was not liable therefor. But he was a third party with no interest, so far as appears, in the trade. And he was bound to act honestly and in good faith not only in regard to matters of fact but also in regard to matters of opinion. Medbury v. Watson, 6 Met. 246. If he undertook to express an opinion he was bound to give his honest opinion. He had not the same latitude as a seller, for the reason that the buyer in dealing with the seller would naturally be supposed to be on his guard, whereas he would not be on his guard, and would have no reason for being on his guard in dealing with a disinterested third person. For aught that appears, the jury found that he made the representation as alleged and that it was false. Being liable for a false representation as to his opinion as well as for a false representation in respect to a matter of fact, it is immaterial which the allegations were construed by the presiding judge to be. Whichever construction was adopted Robinson could not have been harmed thereby.

Exceptions overruled.