27 Colo. App. 120 | Colo. Ct. App. | 1914
Lead Opinion
delivered the opinion of the court.
Plaintiff filed his complaint, demanding damages in the sum of $40,000 alleged to have been sustained on account of the breach of a contract which he alleges was entered into by and between himself and Basil B. Creighton, one of the appellants herein, defendant below. From a judgment for $15,550 defendants appealed.
The complaint is exceedingly voluminous and involved. That portion of the complaint which alleges the cause of action upon which plaintiff supposed he had laid his right
The matters of inducement alleged were, in substance, that in 1905 The Manitou Bathing Company, a corporation, was organized with .a capital stock of $110,000; that the by-laws provided, as a qualification for each person elected as an officer of the company, that he should hold at least 1,000 shares of stock in the company, and that no officer should bé paid a salary until the company should be on a paying basis; that the indebtedness of the company should at no time exceed $15,000, and that a vote of the majority Of the capital stock should be necessary to authorize a mortgage or encumbrance of the property; that in the summer of 1906, one Daniel N. Hitchcock, an acting director, and the president and manager of the said company, falsely represented to the plaintiff that The Manitou Bathing Company was then the owner of a large amount of real estate at Manitou, Colorado, fully paid for and free of encumbrance, of the value of $50,000, which had been conveyed to the company by said Hitchcock, in consideration of the issuance to him of 56,000 shares of the capital stock of said company; that the remaining 54,000 shares had been set aside as treasury stock, to be sold at par, for the erection and equipment of a bath house upon a part of. said real estate; that upon faith in these representations, plaintiff paid to said Hitchcock $21,200 for 21,200 shares of said treasury stock; that the said real estate had not, in fact, been fully paid for, but that much of the money received from plaintiff was used for paying for said real estate, instead of being utilized for the building of a bath house; that from the 7th day of August, 1906, until the 7th day of August, 1907,. Campbell
That on the 31st day of Miarch, 1908, defendant Creighton and said Daggett, assuming to act as directors’ of the company, made an assignment of the company’s property
We have not undertaken to "state in detail every allegation of the matters of inducement, but in substance sufficient for our present purpose to show the nature of the allegations, and bring the statement of the pleadings up to subdivision 6, which pleads the alleged agreement upon which this suit is predicated.
The defendants’ answer put in issue the misrepresentations alleged to have been made by Hitchcock, and denied that Creighton had knowledge thereof; admitted the assignment and denied its invalidity; admitted, or alleged, the sale of the property thereunder by the assignee for the purpose of paying the claims which had been allowed by the court; the purchase of said property at assignee sale by or for the defendant Creighton; the payment or settlement by Creighton of the company’s debts out of the purchase price for which the property was bid in; the organization of the defendant The Manitou Mineral Springs Bath-ing Company; the transfer by Creighton, or his trustee, to
After plaintiff had introduced his evidence on the matters of inducement, and to support his cause of action on the agreement, and rested his case, defendants moved for a nonsuit, whereupon the court held that plaintiff had failed to prove the agreement, and that, in fact, the evidence showed the alleged agreement had not been made, but denied the motion for nonsuit, and, over the protest of both plaintiff and defendants, required the trial to proceed upon the issues which the court said were formed upon the allegations of fraud committed by Hitchcock, and Creighton’s knowledge thereof, and stated that the jury would be instructed that the alleged contract had not been proven, and that the jury would not be allowed to take into consideration “any evidence of the negotiations looking toward the making of a contract as alleged in the complaint, except for the purpose of such light, if any, as it may throw upon the knowledge possessed by the defendants, or either of them, of matters preceding the time that it was alleged said contract was entered into.”
In our opinion, the court erred in refusing to grant defendant’s motion for nonsuit after holding that the agreement sued on had not been proven. It is clear that the issues had not been formulated by either party for the purpose of trying the case upon an issue of fraud, except as incidental to the agreement. We think the defendants did not waive the right to object to the trial upon such issues. If the complaint, except upon the agreement, may be held to state any cause of action as against the defendants upon which any judgment could be predicated, we think it does not state a cause of action upon which a personal money judgment against the defendants, or either of them,
But if the complaint be treated as sufficient as a cause of action for fraud, nevertheless, it appears that instructions given over the objections of the appellants are so prejudicially erroneous as to require reversal. The first instruction, which purported to state at length the issues made by the complaint, concludes by stating, as one of the allegations thereof:
“That all of the foregoing matters and things were done by and with the knowledge and consent and approval of said Creighton and the said company for the purpose and with the intent to defraud the said plaintiff, and in furtherance of the false and fraudulent representations made to said plaintiff by the said Hitchcock, and in furtherance of the fraud alleged by the plaintiff to have been practiced upon him by the said Hitchcock.”
The sentence quoted is incorrect and erroneous in this: the matters charged in the complaint as having been done by Hitchcock were done in the’ year 1906. The defendant company was not organized until late in 1908. There is
certain capital stock to be transferred to him for the purpose of defrauding plaintiff of any claims or demands plaintiff might have against said Hitchcock or The Manitou Bathing Company. But there is neither allegation nor proof that it accomplished that purpose, nor is there any prayer that such transfer be set aside or held invalid. .This is not a suit against Hitchcock or The Manitou Bathing Company, nor in aid of a suit against them. Such a misstatement of the allegations of the complaint could not be otherwise than prejudicial to the defendants. The seventh instruction, after instructing the jury that the evidence failed to prove the agreement sued upon, further instructed them that the evidence introduced relative to negotiations looking toward the making of the agreement as alleged “may be taken into consideration by you solely and only for the purpose of such light, if any, as it may throw upon the alleged acts and doings of the defendants or either of them,'alleged by the plaintiff to have been done for the purpose of defrauding him.” That portion of the instruction italicized continues and accentuates the error noted in instruction No. 1, as it erroneously assumes that, with the one- exception noted, there were any allegations of any acts
By instruction 9 the jury were instructed that if they believed an omnibus list of things assumed to be alleged in the complaint, and that the plaintiff was damaged thereby, they should find against the defendants. Among said matters are the following: “That the said directors, including the said Creighton, borrowed $1,500 and gave a trust deed to secure the same upon a part of the said real estate of said Manitou Bathing Company,” etc. There is neither allegation nor proof that the directors, including Creighton, borrowed said money o.r gave a trust deed therefor; in fact, both allegation and proof are that the money was borrowed and the trust deed given long before Creighton became a director. An instruction that impliedly assumes the existence of evidence which was not given is erroneous: Bowling v. Chambers, 20 Colo. App., 113, 122, 77 Pac. 16; Fisk v. Greeley Elec. Lt. Co., 3 Colo. App., 319, 324, 33 Pac. 70. Another: That at said time (August 6, 1907), or at any time the said Creighton was not the owner, of as many as one thousand shares of stock in the said Manitou Bathing Company, and that he could not become a director thereof under the by-laws of said company without being the owner of at least one thousand shares of stock in said company.” There is no allegation in the complaint, nor proof, that under the by-laws the ownership of one thousand shares of stock was a necessary qualification for becoming a director. The allegation was that the ownership of one thousand shares of stock was a necessary qualification for becoming an officer. While the position of director of a private corporation is sometimes spoken of in a géneral way as an “office,” the statute clearly distinguishes between directors who are elected by the stockholders and officers of the corporation who are elected or appointed by the directors. Of such officers, the only one
As a part of said instruction 9, the jury were also told that if they believed the defendant Creighton claimed to be the owner of said 56,000 shares of stock of The Manitou Bathing Company, issued to Hitchcock under certificates 1 and 2, and that at the time of the transfer to Creighton of said shares he knew that the stock had not been paid for by said Hitchcock, and also knew, when he purchased the same, of the alleged fraudulent representations made to and perpetrated upon the plaintiff by said Hitchcock and The Manitou Bathing Company, such claim of ownership by Creighton would be evidence of fraud. It is not alleged nor proven that Hitchcock did not cause the real estate to be conveyed to the company before he assigned the stock, or it came into the hands of Creighton. The evidence shows that when Creighton was first elected director by the use of that stock, it was voted by his assignor, the assignee of said Hitchcock, and that at the time he claimed to be the owner thereof and voted it, it had been duly assigned and
Moreover, although plaintiff was a director, he did not at any time obj ect to Creighton’s acting as director or officer on the ground that he was not qualified by the amount of his stock-holding. Is he not now estopped from objecting on that ground ? — Cook, Stock & Stockholders, section 523, p. 851.
Again, the jury were instructed that if they believed that “all of the foregoing matters and things,” being all the matters and things assumed to have been set forth in the complaint, were done by or with “the knowledge and consent of the said Creighton and the said'company, and with the intent to defraud the said plaintiff, and in' furtherance of the false and fraudulent representations made to
We think the court committed error in giving instruction 10, in that it did not give the proper measure, or any measure, of damages. That instruction is as follows:
“If you find for the plaintiff, you will assess his damages at such sum as you may find has been proven by the evidence, so as to fully compensate him for the damage sustained, and no more, and not in any event to exceed the sum of $40,000.”
The law seems to be settled in this jurisdiction that in cases of this character, where a definite rule for the measure of damages can be given, it is error in the court not to instruct the jury as to such rule. — Mustang Res. Co. v. Hissman, 49 Colo. 308, 112 Pac. 800; Colo. Spgs. Co. v. Albrecht, 22 Colo. App. 201, 123 Pac. 957. In the complicated and confused state of the pleadings and record, it is argued that three causes of action are included in one count of the complaint, namely, (1) an action for breach of express contract, (2) an action for damages for fraud and deceit practiced by Hitchcock on the plaintiff, of which defendants had knowledge, (3) conversion of plaintiff’s property by defendants. Under the first cause of action it is clear that the measure of damages would be the value of the capital stock in the new company, which plaintiff alleges he was to receive under the contract. Under the second cause of action, the measure of damages would seem to be the difference between the actual value of the stock
Attention has been called to instruction No. 7, under which the jury were not permitted to consider the negotiations looking toward the making of the agreement alleged in the complaint, except for the purpose of such light as it might throw upon the acts of the defendants alleged by the plaintiff to have been done for the purpose of defrauding him. It is plainly shown by the answer made to special interrogatory 2 that the jury not only considered said negotiations for other purposes, than that directed, but that their decision of the entire -question as to whether plaintiff was damaged at all by defendants’ acts was based upon such negotiations. Special interrogatory No. 2 propounded to the jury, and the answer thereto, are as follows:
“Question 2. If you find from the evidence that the plaintiff Campbell has been damaged by the acts and doings*135 of the defendant Creighton and the defendant Mineral Springs Company, or either of them, how was the said Campbell damaged?
Answer. Plaintiff Campbell was damaged by relying on representations made to him by Creighton and J. K. Vanatta looking to an equitable settlement of the Manitou Bathing Company and refrained from presenting or pressing his claims against said company in court.”
As has been said, consideration of the agreement alleged was taken from the jury. >That agreement, however, so far as established, consisted of the negotiations and representations “looking to an equitable settlement” of all matters concerning The Manitou Bathing Company. There fore, it appears by said answer that the jury not only considered the negotiations for other purposes than that permitted, but that they treated such negotiations as equivalent to an agreement under which the plaintiff had a right to refrain from pressing his claims, which was directly prohibited by such instructions. Moreover, a representation which constitutes a promise to do something in the future will not sustain an allegation of fraud and deceit. — Smith, Law of Fraud, section 7. Furthermore, it would be absolutely impossible for the jury, or any one else at this stage of the proceedings, to determine what'result would have followed the pressing of such claims against the assignment, and therefore there could be therein no foundation for estimating the damages.
We have considered only a few of the objections urged, but we think it unnecessary to mention others.
In this case, as in many others, it is strongly urged that, although errors may have been committed, nevertheless, as it appears that the verdict is not excessive, and that substantial justice has been done, the judgment should not be reversed. But, although we may agree that the verdict is not in apparent excess of the plaintiff’s probable loss sustained by reason of his trusting in Hitchcock’s repre
Moreover, the civil code and the rules of practice adopted by the Supreme Court are intended to provide, and do provide, ah orderly procedure designed for the purpose of making up issues for trial and for the conduct of trials. The right to insist upon a substantial compliance with these provisions of the code and rules is the right of every litigant, and the denial of such right is. the denial of a substantial right. In this case it is clear that plaintiff and defendants alike construed the issues made to be upon the alleged agreement, and defendants formulated their answer to meet that issue, and that only. We think that was the true construction. But when the court took that issue from the jury and directed the trial to proceed upon other issues not understood by the parties to have been made, the trial ceased to be an orderly presentation of evidence essential to the controversy, to such an extent that the learned trial judge, in desperation, declared that he would no longer attempt to limit the introduction of testimony to that which was admissible, but would let the parties “make it as ridiculous as possible on both sides.” It' would be difficult to conceive of a more chaotic and unsatisfactory state of the record than is here presented. This condition is emphasized by the defendants’ answer, formulated, as we have said, to meet certain issues, and under which no agreement was reached by court and counsel as to what allegations of the complaint were denied or put in issue, and by the fact, clearly outstanding, that the plaintiff had little first-hand knowledge of the testimony that was necessary to support his complaint in the many matters affecting the defendants) Much of the testimony which he did give was elicited by his counsel only after verbal castigation and the pressure of
As to the cross-errors assigned, we think the court could not do otherwise than withdraw from consideration the agreement as it was alleged; but we are not satisfied that the court might not have submitted to the jury the question as to whether some agreement, consisting of a written proposal submitted by Creighton, and its verbal acceptance, with modifications, understood by both, did not constitute an agreement, or understanding, upon which both parties proceeded, and in reliance upon which plaintiff did in fact permit the assignment and the sale thereunder to proceed, not only without objection, but with his full consent and approval, and by reason of which the defendants in this case may be under obligations, in equity, to share with defendant the capital stock of the defendant company. We think the court did not err in charging the jury that for the purposes of this action, the assignment made for the benefit of creditors and the 'Claims presented therein and allowed must be regarded as valid, whatever may be the rule in an action under the statute of frauds.
If this suit were in the nature of a creditor’s bill, or to hold the defendants to an accounting as trustees, or a proceeding to hold the property involved to satisfy any judgment that might be obtained by plaintiff against Hitchcock and The Manitou Bathing Company, and all necessary parties were parties hereto, an entirely different question would be presented as to the materiality and effect of the evidence. The record shows that proceedings of that nature were instituted before the instant suit was begun, and are still pending; but they have not been consolidated with this, and cannot be considered as affecting the present ease.
■The judgment is reversed and the cause remanded for further proceedings in conformity with the views herein expressed.
Reversed and Remtanded.
Dissenting Opinion
dissenting:
With deference to the .view of my associates, I do not concur in the reversal. The judgment was just and, for this reason alone, it should not be reversed. The irregularities complained of occurred by reason of the desire to. reach the truth at the trial, and not in a single instance did the lower court commit any irregularity that affected the substantial rights of the parties.
The maj ority opinion says the action is for damages for the breach of a contract; but the complaint and the evidence, from my view, were for damages on account of the fraud practiced upon the plainitff, the negotiations concerning the contract being only a statement of a part of the circumstances constituting the fraud charged. The complaint as construed by the court and- the evidence comprise three charges of fraud, chronologically stated:
First, that plaintiff was induced, by the fraud and deceit of Hitchcock, to purchase 21,000 shares, by being led to believe that Hitchcock had conveyed to the company about $50,000 worth of real property for 56,000 shares, the remaining 54,000 being treasury stock that was being sold to raise money to build a bath house on the real property; when in fact the 56,000 shares had been issued without, consideration and the company did not o.wn any real estate, but plaintiff’s $21,000 was used to take up options the company had on it.
Second, that the plaintiff’s wife, as a stockholder, brought suit to require an accounting for the treasury stock, of 54,000 shares, and to require the 56,000 shares to be returned to the company by Hitchcock, on the ground.
Third, that, in order to settle all differences between the plaintiff and Creighton, and to satisfy the plaintiff’s rights and claims, Creighton proposed to plaintiff, and, it is alleged that he agreed, of plaintiff would desist from prosecuting his action against the assignee,' and drop all other litigation, that .he, Creighton, would organize a new company — after the assignment proceedings had been first closed, the property sold, and the assignee discharged — and have the purchaser at the assignee’s sale transfer all the
These allegations were immediately followed by a closing statement in the complaint: “that by said acts of the said defendants and each of them this plaintiff has been damaged to the amount of $40,000.” The court submitted the negotiations concerning the contract as a part of the “said acts.”
Plaintiff introduced his testimony in the order of the allegations in the complaint, showing that he had been deceived in the purchase of the stock originally; that the defendant Creighton had oppréssively and fraudulently used the 56,000 shares of stock, which it clearly appeared were issued without consideration to Hitchcock, and had been transferred to Creighton with such knowledge, and, by such use of it, he had thereby oppressively and fraudulently obtained absolute control and management of the company, and had fraudulently made the assignment for the benefit of creditors, and, through the negotiations concerning the contract, had lulled the' plaintiff into security, and caused him thereby to refrain from pressing his suit against the assignee, and thereafter by the sale and transfer of property, had converted to his own use, and the use of the defendant company, all of the property of the old com
It is true the lower court instructed the jury that plaintiff had failed to prove an absolute contract of settlement and told counsel, on overruling a motion, for judgment for the defendants and nonsuit, at the close of plaintiff’s case, that he would submit the negotiations concerning the contract to the jury, and he did afterward so instruct them, for their consideration, in so far, only, as such negotiations would throw light upon the fraud charged against the defendants. The defendants, without objection tot such statement of the court, proceeded to introduce their testimony in defense of the charges of fraud, and maide no objection to the instruction, aforesaid, thus acquiescing in the ruling of the court, and accepting the issue thus made, upon the question of fraud. The verdict of the jury was against them for only $15,550, which the jury, no doubt, considered the actual value of plaintiff’s interest 'in the property so taken from him by the defendants.
.Thus it appears that the action was not for a breach of contract, and even if it were partially so, as originally stated in the complaint, the court narrowed and limited the issues to the one question of fraud, and submitted the negotiations concerning the contract for the jury’s consideration as to the fraud charged against the defendants
All negotiations concerning the contract (which included Creighton’s offer to pay and satisfy plaintiff, and to persuade him to drop his suit against the assignee and the directors who made the assignment, one of whom was Creighton, by the transfer to plaintiff of a sufficient number of shares in the new company to be organized) were pertinent facts, tending to prove a consequent admission of the fraud charged; an acknowledgment of plaintiff’s rights and interests. If the 56,000 shares had not been fraudulently used to control the company, if the assignment was in good faith, why were these negotiations carried on, the purpose of which was to stop the suit against the assignee, and to settle with plaintiff? And if the negotiations were in good faith, why were they so completely repudiated after the defendants obtained the property? The court properly submitted these negotiations to the jury as part of the fraud charged.
Thus it not only appears that the non-suit was properly denied, but that the defendants waived the alleged error in
The defendant, Creighton, stated in his answer that he did not have and could not obtain sufficient knowledge or information upon which to base a belief, as to the allegations, that he never did at any time own to exceed 220 shares of stock in the company. This must be taken as an admission that he never owned the 56,000 shares with which he obtained control of the company, and the court so instructed the jury, and defendants made no objection and saved no exception thereto.
The evidence for the defense consisted almost entirely in an effort to prove the necessity and validity of the assignment, and the proceedings therein terminating in the assignee’s sale. They did put plaintiff on the witness stand, and he reiterated that he was deceived and fraudulently induced to buy the shares in the company; that the 56,000 shares were originally issued without consideration to Hitchcock, then to his brother Dean, and then to Creighton; that the assignment was illegal, and a maj ority of the claims filed in that proceeding were illegal; that the having of the 56,000 shares by Creighton at the annual meeting and his assuming control was one cause of his loss and damage, together with the testimony that he did nothing to hinder the assignee’s sale, and that Creighton and the company now had all the property that was paid for with his money.
They did not put Creighton or any one of the directors of the defendant company on the stand. They ought to have been able to testify, if it were true, that they were not guilty of the fraud charged. They knew whether the 56,000 shares were fraudulently used to obtain control of the company and to make the assignment, and to thus obtain all the property of the company. Their failure to testify must have been considered by the jury. It was a' circumstance far from favorable to Creighton, or to the three directors,
The majority opinion concludes that the judgment should be reversed, because the court in stating the issues made by the pleadings made misstatements prejudicial to defendants.
The entire scope and purport of the complaint was to state facts constituting the fraud by which plaintiff was deprived, first of his money, and afterward of the property purchased with his money, and that the defendant Creighton had knowledge of those facts, did them himself, or consented to and approved them, and accepted the fruits thereof; and the instruction relied upon as reversible error was a general statement of the allegations as construed by the court, and could not have deprived the defendants of any substantial right. The same may be said as to the part of the 7th instruction, considered as reversible error, with the additional reason that defendants made no objection and saved no exception to it. They acquiesced in it. As to instruction No. 9, wherein the court included Creighton as a director making the $1500 loan, this was a mistake, as he was not a director then. It was quite immaterial, however, whether he assisted in making this loan; the charge was that it was made contrary to the by-laws of the company, and over protest. The jury could not have been misled by this very slight mistake. Furthermore, it is corrected by other instructions where it is plainly stated that Creighton first became a director in August, 1907, a year after .the said loan; and, in another instruction, the directors’ names are stated who made this loan. There was no such assuming of the existence of evidence here as referred to in the authorities cited in the majority opinion.
It is then concluded in the majority opinion that reversible error was committed in the same instruction by instructing that Creighton could not become a “director” under the by-laws without he owned 1000 shares, when the
The majority opinion says that “it does not appear that the transfer to Creighton of the 56,000 shares was without consideration nor merely colorable; therefore, prima facie, he had the right to vote the stock and act as a director-, even though he was a merely nominal owner.” But he admitted in the pleadings, and the court instructed the jury without his objection or exception, that he never owned to exceed 220 shares. This admission is clear and was certainly intentional, because an amendment was made to the answer for the specific purpose of denying, directly, allegations of the complaint, and this allegation was denied again on information and belief.' The certainty of such intention to admit is shown by the fact that no objection was made to the instruction telling the jury such fact was admitted. Creighton did not testify at all, and he did not allege that they were ever paid for, and the plaintiff proved that the only way Creighton ever became a director was by the vote of these shares, over the vote of plaintiff’s 21200 shares; and that by these shares another director who never owned 1000 shares was elected, constituting a majority of the board, and that' these two changed the by-laws, set another date for an annual meeting, elected three directors at an annual meeting “held in accordance with the new bylaws,” made an assignment for the benefit of creditors,
Another error is found in the 9th instruction: that the court told the jury if they believed Creighton claimed to own the 56,000 shares, and at the same time knew that the same had not been paid for, and knew of the' fraudulent representations of Hitchcock and the old company, such claim would constitute a fraud. The majority opinion says this was error, because “it is not alleged nor proved that Hitchcock did not cause the real estate to be conveyed to the company before he assigned the stock, or it came into the hands of Creighton.” This was not error. The instruction is too favorable to defendants. They admitted that Creighton never owned these shares. Creighton did not allege, nor testify, that he did, but admits he did not; and, to the charge that he never owned to exceed 220 shares, he says in his answer that he did not have sufficient knowledge or information upon which to base a belief. Furthermore, he became a director and vice-president of the company, and acted as such, for about five months before he ever claimed to own but 220 shares, thus haying ample knowledge of the company’s affairs, and especially as to whether these shares had ever been paid for; for, before he voted them for himself and the other two directors, and while he was a director and vice-president, the judgment for $24,000 was obtained for the company against Hitchcock for the balance Hitchcock owed the company on his disposition of the 54,000 shares of treasury stock, rendered on a report of a referee that showed conclusively that Hitchcock had never paid the company anything for the 56,000 shares, but lacked $24,000 of having turned over property to the company as the equivalent of the 54,000 shares of treasury stock. Furthermore, the referee’s report showed that
The majority opinion says this judgment of $24,000, prima facie, settled all issues in that case and “left the stock standing in the name of Hitchcock’s assignees including Creighton.” Now, Creighton never claimed these shares at-that time; this judgment was obtained in January, and the only evidence indicating that these shares were ever even transferred to him was plaintiff’s testimony from a memorandum that the books showed a transfer February 7, 1908, about 12 days after the judgment, and 3 days before Creighton voted them for himself, as director. So Creighton was not an assignee when the judgment was entered. As to the money judgment, prima facie, settling all issues, the record in that proceeding showed the contrary; after a temporary injuiction was issued as to any transfer of these shares, Hitchcock filed an answer, saying he had transferred the shares to his brother before he knew of the injunction; and the court appointed a referee, and ordered an accounting as to the 54,000 shares of treasury stock, and in such order all other issues were continued until the report of the referee was made, upon which the court rendered the judgment for $24,000, without any adjudication concerning the 56,000 shares, neither Hitchcock’s brother nor Creighton being defendants.
And even if the 56,000 shares were left in Hitchcock’s brother as assignee, there was no adjudication that he owned them or that they were not assigned without con
The majority opinion says that the judgment should be reversed, because the court instructed the jury that if they believed all the matters or things, set forth in the complaint were done by or with the knowledge and consent of Creighton, and in furtherance of Hitchcock’s fraud upon plaintiff, they should find for the plaintiff. This was not error, first,, because it was favorable to defendants. It required the jury to find that all of the matters and things were done to defraud the plaintiff; second, if Creighton adopted, carried- on and used for his own benefit the fraud of Hitchcock, together with the things he did, on his own initiative, thereafter, the verdict should have been for the plaintiff; third, other instructions clearly define the issues so that this instruction is made clear to the jury.
The majority opinion says that the lower court, by instruction No. 10, committed fatal error “in that it did not give the proper measure, or any measure, of damages.” One reason why such alleged omission to instruct was not reversible error is that the defendant did not ask for any such instruction, never-objected to the instruction given for this reason, and never called the court’s attention to the matter, but objected only on the ground that no instruction at all, as to damages, should have been given. It is true that there are instances where the court should give such an instruction, of its own motion, but this is not one of them. In the case of Mustang Co. v. Hissman, 49 Colo., 308, 112 Pac., 800, and Colo. Spgs. Co. v. Albrecht, 22 Colo. App., 201, 123 Pac., 957, cited in the majority opinion, there was a clear dispute at the trial as to the proper measure
There was mo reversible error pertaining to the answer of the jury to the special interrogatory, for two reasons: First, the answer discloses only one way in which plaintiff was damaged, if it discloses any way that he was damaged, and is not, therefore, inconsistent with the general verdict. The answer discloses one of'the ways in which the plaintiff was defrauded rather than damaged, but two more charges of fraud were made upon which the verdict may stand. If the answer does not exclude every other conclusion that will authorize a recovery for the plaintiff, then it is not inconsistent with the general verdict; and if not inconsistent, the general verdict should stand. 2 Thompson on Trials, 1958 (2nd Ed.); Drake v. Justice G. M. Co., 32 Colo., 260, 75 Pac. 912. The special findings will not control the general verdict “unless invincibly antagonistic to it.” Thomp. on Tr., 1962, 1967; D. & R. G. R. R. Co. v. Bedell, 11 Colo. App., 140, 54 Pac., 280. Second, the interrogatory was confusing and misleading, as the' answer shows. If the question had been how was the plaintiff defrauded, it would have been responsively answered in part. But that was not the question, and the answer was therefore' indefinite. The question propounded was intended to elicit a different response. Counsel should have required the jury to answer it, if possible. The question was confusing also because it did not call for a “particular question of fact,” as the' Code provides. Special findings of facts by a jury are often wise precautions, but in order that they may not be used to con
The majority opinion concludes that the defendants were denied a substantial right because the trial did not proceed in all respects in compliance with the orderly procedure designed for the purpose of making up issues for trial and for the conduct of trials. The trial of this cause required about nine days in the lower court, and there are in the record many instances that required discretion, but the only actual deviation from reasonable regularity consisted in the action of the lower court in submitting to the jury the consideration of the negotiations concerning the alleged contract; but, as has been shown, this was a wise and reasonable thing to do, and counsel for the defendants acquiesced in it. Furthermore, the statute provides, in reference to appeals, that the Supreme Court “shall disregard any error or defect in the pleadings which shall not affect the substantial rights of the parties, and no judgment shall be reversed or affected by reason of such error or defect.” Sec. 20, Sess. Laws 1911, Ch. 6. The entire purpose of that act was to facilitate the speedy determination of causes and to lessen, if not prevent, the reversal of causes for technical reasons. New provisions of the statute have been so frequently cited, and so infrequently obeyed. The re-enactment in 1911 of that statute is a plain reminder that a similar statute, that had been in existence since 1877, had not been receiving the attention that the legislature intended. Technicalities should never be used to reverse a just judgment. The reversal of this judgment, in my opinion, cannot be based upon anything except that it was not found according to certain rules. In a very recent case, Taylor v. Thomas, 77 N. H., 410, 92 Atl., 740, the Supreme Court of New Hampshire said:
“It is now universally recognized that the object of a trial is to ascertain the truth by rational means. The sport*151 ftig theory — the theory that a judicial trial is a game to be played according to certain rules — has no more place in the present conception of the administration of justice than has the wager of battle.”
Just judgments are too frequently reversed because learned members of the bar boldly assert some technical rule, and so plausibly maintain it with citations and argument, based upon iron clad rules handed down to us from past ages, that the courts, sometimes in fear of reversal by a still higher tribunal, sometimes from the mistaken belief that it is the law, and. in some few instances from a lack of extended consideration, adopt such technical precedents and reverse just judgments because they were not recovered with that degree of nicety, science and art that does sometimes so adorn judicial procedure that even an unjust judgment is permitted to stand.
The majority opinion concedes that something might have been done by the lower court to permit the plaintiff to share in the stock of the new company; but plaintiff was not compelled to sue for a part of such stock, and the lower court sustained a money judgment, as sued for, which conferred the same benefit, and which defendants seemed to prefer, by acquiescing in the issues.
It is true, as the majority opinion indicates, that the record contained intimations of plaintiff’s ignorance. It clearly shows, also, his innocence; that he was not a shrewd man; that he knew nothing about the law, and that he was easily influenced and without ingenuity; “there are no tricks in plain and simple faith.”
Remanding for another trial means further expense to. plaintiff, the necessity of delay, another opportunity for defendants to defeat a just cause, simply to require a moye rigid enforcement of the technical rules of pleading and! practice. Such rules, like the statute of frauds, have been adopted to prevent fraud and injustice, not to permit and promote them.
“For the clearest reasons, the officers of a corporation will not be permitted to issue the stock belonging to the company to themselves, with the design and for the purpose of retaining themselves in office. * * * So, directors were enjoined from issuing new stock immediately prior to an election for the sole purpose of controlling it. * * * They show a clear case of fraud upon the rights of the existing stockholders.”
For a much greater reason, is it fraud for directors to elect themselves by the vote of shares that have never been paid for, with their knowledge.
Fraud is not readily classified or defined and the courts usually avoid attempting it; it “is so various in form and color that it is difficult, if not impossible, to confine it within the limits of any precise definition.” ' Kerr on Fraud and Mistake, page 42.
This author further says:
“The fertility of man’s invention in devising 'new schemes of fraud is so great, that courts of equity have declined the hopeless attempt of embracing in one formula allots varieties of form and color, reserving to themselves the liberty to deal with it under whatever form it may present itself.”
In the case of Hanger et al. v. Evine et al., 38 Ark., 334, 346, the court said:
“The criterion is the good sense of the jury, estimating the character of the transaction by applying to the evidence their general knowledge of human motives, and their sense of dealing. Fraud is manifold in its devices, and its ingredients cannot be so defined as to include all cases, save by. such general statements as must, after all, refer the question to the judgment of the jury upon the facts. Twelve men, taken from the mass of citizens, will rarely fail to detect a fraudulent intent, if any such existed, from all the circumstances.”
In the case of Kirby v. Ingersoll, 1 Har. Ch. 172, 190, a case in which one partner, without the consent of his co-partner, made an assignment for the benefit of creditors, the court said:
“By the term fraud, it should be remembered that the legal intent and effect of the acts complained of is meant. The law has a standard for measuring the intent of parties, and declares an illegal act, prejudicial to the rights of others, a fraud upon such rights, although the parties deny all intention of committing a fraud.”
Creighton’s failure to testify had. its weight with the judge and jury.
“The failure of a party to testify in his own behalf as to disputed matters within his personal knowledge warrants the inference that his testimony .would be unfavorable to his contention on those points.” 9 Ene. Ev. 969.
“Where a party is charged with fraud and fails to come forward and testify to repel the charge, he generates by his failure an unfavorable presumption against his cause.” Stephenson v. Kilpatrick, 166 Mo., 262, 65 S. W., 773.
“When it is reasonably within the power of a party to offer evidence upon the facts and rebut the inferences which the circumstances tend to establish against him, and he fails to offer such proof, to rebut same, the natural conclusion is that the proof, if produced, would support the inferences against him, and the jury is justified in acting upon that conclusion.” A. T. & S. F. Ry. vs. Davis et al., 26 Okla. 359, 364, 109 Pac. 551, 553.
I think a reasonable and fair administration of justice demands the affirmance of the judgment.
