164 Ky. 844 | Ky. Ct. App. | 1915
.Opinion op the Court by '
Reversing.
It was alleged in the petition that Tobe Wiley was an agent of the insurance company and employed by it to sell its shares of stock; and that Wiley in an effort to induce plaintiff to purchase some of these shares, made false and fraudulent representations, to-wit: (1) That all of the stock of the insurance company had been sold except a limited amount, that it was selling fast, and if plaintiffs did not then buy, it would be impossible to obtain shares later; (2) That the shares in question, although of the par value of ten dollars, were in fact worth fifteen dollars each; (3) That Wiley himself was a director of the insurance company; (4) That the company would pay large dividends in the future; (5) That if plaintiffs purchased such shares and at any time desired to sell them, he, Wiley, would dispose of them at fifteen dollars per share; (6) That an insurance company known as. the Citizens Life Insurance Company had been organized by the same man who organized the Central Life Insurance Company (the shares of which, were 'being offered) and that the stock of the Citizens Life Insurance Company was then selling at forty dollars per share, and that the Central was organized on. the same plan and by the same person who had organized the Citizens, and that in a short time its shares would likewise be selling at forty dollars each; (7) That the company whose shares were being offered had already secured a million dollars of insurance in one day; and (8) That the company had already paid a dividend of fifteen per cent.
■ Plaintiff charged that upon the inducement of. these false and fraudulent representations, which were by him believed to be true and so relied upon, he purchased the shares aforesaid.
t Walters testified that he is a shareholder in the defendant company, having subscribed for ten shares in March or April, 1911, received his certificate on September 29, 1911 and paid for same; and that he had never received any dividends upon his shares;
íhis was all the material evidence for plaintiff, and the defendant introduced none.
It will thus be seen that the plaintiff proved that Wiley made the statements charged in the petition; but that there thé evidence stops. There is not one word concerning the truth or falsity of the representations charged.
Appellee argues that he proved by plaintiff that up1 to the institution of this action he had not received any dividend from the insurance company, and that this is proof of the falsity of the statement made relative to dividends. But there is no fact alleged in the petition or shown by the proof establishing plaintiff’s right to any dividends. The allegation in the petition is that the plaintiff purchased some shares; but it fails to state when or upon what terms the shares were to be issued; whether any ever were issued, or whether he had com-plied with the terms of his purchase in respect of itsissual. Nor is there any proof upon this subject otter-than that plaintiff never received a stock certificate»
Appellee also contends that the testimony of Walters •' that he had received no dividends on his shares, is sufficient to show that the company had not declared a dividend of fifteen per cent as stated by Wiley. But proof that Walters bad received no dividends on shares purchased by him in March, 1911, and issued to him in September, 1911;, does not establish as false a representation made in November, 1911, that the company had! already declared a fifteen per cent dividend. Nor does :• proof that one shareholder of a corporation has not re- - ceived a dividend, establish that the corporation has not: declared and paid a dividend. So that even if the. petition were sufficient, and conceding that the proof esfecb-lished the making of the representations charged,, still! there was a total failure of proof, or of attempt to prow, the falsity of th© representations charged, or of damage’ to the plaintiff resulting therefrom.
It was proven by plaintiff that Wiley also stated that the New York Life Insurance Company had offered
In Southern Insurance Company v. Milligan, 154 Ky., 216, 157 S. W., 37, this court held that where a sale of shares was induced by false representations as to the dividends which the company had been paying, or as to 'the purchase of shares by a certain person of recognized financial ability and shrewdness, a rescission might be had; and it was also suggested that false representations as to the value of the stock and the amount of the surplus of the corporation, if properly pleaded and proven to be false, would justify a rescission.
However, in the case at bar the petition failed to state a cause of action, for which reason the demurrer should have been sustained; and the evidence failing to show that the plaintiff was entitled to the relief sought, the petition should have been dismissed.
The judgment is therefore reversed, with directions to enter a judgment sustaining a demurrer to the petition and dismissing same.