186 Iowa 30 | Iowa | 1919
Lead Opinion
The pleadings and the record are quite voluminous. We shall condense as much as possible. Appellee concedes that appellant’s statement of the nature of this action is correct. It is substantially as follows:
“The defendant, or appellee, admitted the execution of the note and liability on the same, except for the matters alleged, and claimed an offset to said note and damages against appellant in the sum of $35,000, and $10,000 exemplary damages for fraud and misrepresentations in the sale of 450 shares of stock sold by the appellant to appellee, claiming that appellant was president of said bank, and represented that said hank stock was worth $115 per share, and that the bank books showed the true condition of the bank at all times, and that, for a series of years, dividends were paid to stockholders of said bank from the net profits. That said records and books exhibited by plaintiff to defendant showed all time deposits drew a uniform rate of 4> per cent, while, in fact, a large amount of time certificates had been issued to plaintiff that 'bore 5 and 6 per cent interest, who was president of the bank after defendant purchased said stock, without authority of the board of directors. That notes and securities of the amount of $50,000 owned by the bank were represented by plaintiff to be good, and that the bank would not lose a dollar on them. That there were many poor loans made by the bank, and overdrafts against certain parties, which were uncollectible. That the sale of said bank stock to appellee included the loan business of S. S. Dilenbeck, and that there were representations that the profits of said business amounted to $1,200 to $1,500 per month, and that appellant had made excessive loans; and further represented that the stock of the bank was worth $107 per share, but, on account of the hidden assets of the bank, the loan
The issues now before this court, as stated by appellant, are as to whether plaintiff practiced actionable fraud on the defendant in the sale of said stock and loan business; whether the written contract of purchase and sale precludes the appellee from recovering for the matters alleged; whether appellee, by his conduct, waived his rights; whether appellee’s conduct, after the discovery of the fraud, create® an estoppel; whether any damages were shown, and if so, the measure thereof. Appellee states that the only issues now are as to whether defendant proved the fraud alleged, and whether he has shown damages by reason of said fraud. The opinion and findings of the trial court, including a review of the testimony, covering 60 pages of the abstract, are set out. The findings are substantially as follows:
“The court is of the opinion and finds that there is no waiver, or was no waiver, on the part of the defendant by his conduct or payments, and no estoppel on his said right of action for fraud. The court further finds that there was no intention on his part to waive his right of action for said fraud, and thgt plaintiff had no reason to believe that defendant intended to waive his right of action; that it is incumbent on plaintiff to show: (1) That the defendant made the representations charged, and that they were representations of fact, as distinguished from mere opinions; (2) that such statements were false in fact, and that de
It appears from the evidence that plaintiff, in order to induce defendant to purchase the stock in question, made statements of fact, as distinguished from mere opinions, which were not in accordance with the true condition of affairs. There are some alleged false representations that defendant has failed to show by a preponderance of the evidence. The alleged representation as to the certificates of deposit’s only drawing 4 per cent is difficult to determine. The plaintiff and his son testified that it was explained to defendant that some of the certificates drew 5 per cent and 6 per cent; the defendant and Rhoades testified that the representation was made that all the certificates drew 4 per cent. The defendant is supported to some extent by Mc-Creery, who says:
“The Smith certificates were presented to me in the absence of Mr. Davis, and already figured at 5 per cent. I said I would prefer not to credit 5 per cent, without speaking to Mr. Davis about it. When Mr. Davis came in, the matter was explained to him. I think Mr. B. C. Dilenbeck said to Mr. Davis, ‘Here is a matter which we -have said nothing about, or which has not been explained, — these certificates were to bear 5 per cent interest.'’ ”
The court continues to the effect that it is shown by the evidence of both plaintiff' and defendant that plaintiff refused to guarantee the payment of the notes, and from this it is urged that no representation as to their being good and collectible could be enforced. It cannot be inferred, from the fatet that plaintiff refused to guarantee the payment of the notes,'that he might not represent the notes to be good and payable, and further represent that they would not lose a dollar on them. There is nothing inconsistent with the refusal to guarantee, and the representation. On account of his age, plaintiff decided to sell the bank, and be free from all obligations; and he might not want to guarantee the payment oif two or three hundred thousand dollars of notes, running to a large number of parties, in various amounts, some quite small. Some of the notes were to run as long as ten years, and many for a considerable length of time; and it is natural that, if the plaintiff was to stand back of the paper during the maturing of the same, he would want to control the collection thereof, — this is a mere matter of business. It is claimed that the defendant did not act as an ordinary and prudent man, under the circumstances. This claim is not shown by the evidence. Plaintiff did not wish to have the negotiations made public, until the trade was completed, and at his request, most of the meetings were at the plaintiff’s home, or at the bank in the evening. Defendant was given no opportunity to investigate the matters connected with the business of the bank, without ignoring plaintiff’s request. Furthermore, the deal was between the presidents of two banks; they were dealing with each other as bankers, and as such, they had a right to rely upon the statements made by each other. Defendant was a stranger in the community; the depositors and borrowers at the bank were strangers to him; the condition of the bank and the
The court continues: Another witness gives the value at 150 per share, but he, did not take into consideration all the circumstances disclosed by the evidence; another witness says, 115 to 120 per share, and says that, if a large num
The foregoing is a clear statement of the facts; and, after a careful reading of the record, we reach the same conclusion. It is largely a question of fact. It would take many pages of the opinion for a detailed recital of the evidence. This we shall not attempt to do. The negotiations were conducted, for the roost part, when defendant and Rhoades and the plaintiff were present. Defendant and Rhoades testify as to the representations. Plaintiff denies. The two testify that plaintiff took each note from the note case, showed it to the defendant, and stated, in substance, that the notes were good, and the makers good, and that the bank would not lose a dollar. This is all denied by the plaintiff. The plaintiff was acquainted with the makers of the notes, and their financial standing. He was the manager of the bank, and the business was conducted under his personal supervision. The record shows, in great detail, the testimony of the different witnesses in regard to the questioned notes. There were losses on some of the notes. Appellant argues that others of them are collectible. We are satisfied that some are not, and that others are not as represented. Some are in 'litigation; others are on .vacant lots,
1. The first, or option, contract, entered into in September, 1915, provides:
Substantially the same provision, though rworded somewhat differently, is in the contract which was later entered into. It is contended by appellant that the meaning of this clause is that appellee has waived all his rights whatsoever against the appellant, for the sale or purchase of said stock, and that the only remedy appellee has is on the following clause in said contract:
“It is further agreed and understood that parties of the first part guarantee the books and records of said bank will and do show the true and correct condition of said bank, and all accounts thereof, on the date of taking possession thereof by the party of the second part.”
5. Eeadd : fraudulent representations : opinion or fact: expressions as, to value, i1
“The actual condition of the profit account of the bank, as shown by the computation, shows a loss in the profit ac
We think the rule or measure of damages adopted by the trial court does justice between the parties, and that the amount fixed is, under the evidence, as near right as it can be. Appellee cites the following eases to sustain the rule: Warfield v. Clark, 118 Iowa 69; Smith v. Packard & Co., 152 Iowa 1; Campbell v. Park, 128 Iowa 181, 185; and other oases involving the question of fraud in the sale of lands; also, 1 Sutherland on Damages (3d Ed.) Sections 107, 113, 120, 121.
After a careful examination of the record, it is our conclusion that the decree of the superior court is right. — Affirmed.
Dissenting Opinion
(dissenting). The vital thing in the majority opinion, as I construe it, is an alleged representation by defendant that the notes sold by the bank were good and payable, and that not a dollar would be lost on them. The defendant did guarantee to take care of the deposits. He declined to guarantee that the notes were good and payable, and that not a dollar would be lost on them. The majority declares that this refusal to guarantee is immaterial. In my opinion, the fact that the deposits iwere guaranteed, and a guarantee as to the said quality of the notes whs declined, shows that the alleged representation as to the notes was the pure expression of an opinion. And it must not be overlooked that they are claimed to have been made by a banker, selling to a buying banker. As said, while other things seem to be relied on, this alleged representation as to