198 N.W. 1018 | Mich. | 1924
On December 1, 1918, plaintiff purchased 100 shares of stock in the defendant Universal Book Stores Company, paying therefor its par value, $1,000. In this action, begun on March 16, 1920, he seeks to recover the amount so paid from the company and the defendants Hill and Ryerson (president and treasurer of the company) personally, under a claim that he was induced to make such purchase by the false and fraudulent representations of the individual defendants as to the financial condition of the company. The trial court directed a verdict in favor of Hill and Ryerson. Plaintiff reviews the judgment entered thereon by writ of error.
It is conceded that the representations claimed to have been made were not in writing. The action of the court was based on the following statute (3 Comp. Laws 1915, § 11983):
"No action shall be brought to charge any person, upon or by reason of any favorable representation or assurance, made concerning the character, conduct, credit, ability, trade or dealings of any other person, unless such representation or assurance be made in writing, and signed by the party to be charged thereby, or by some person thereunto by him lawfully authorized." *517
Plaintiff's purchase was of corporation stock. There is nothing to indicate that the individual defendants profited thereby except as it increased the capital stock of the corporation. Assuming that the representations were made as claimed, we think the statute above quoted precludes recovery. The facts are so similar to those presented inGetchell v. Dusenbury,
"The defendant directors were not acting in their own behalf. They were not selling their own stock. They made no profit by the transaction. They were not floating a spurious corporation. They were in good faith carrying out the direction of the stockholders of a bona fide corporation. They could not be held guilty of fraud upon the charge that they profited by the transaction, because they did not. The defendants were representing the good faith and credit of another and not themselves, and therefore are within the statute. Bush v.Sprague,
In that case the defendant Bahlke was held liable for the reason that he received a commission on the stock sold. See, also, Diel v. Kellogg,
"Said money and property did not go to the corporation — whose organization was merely a step in the scheme of fraud — but went directly to defendants or to their confederates."
For that reason it was held that the statute had no application. Neither does it apply in cases where the representations were made by the owner of the property concerning which they were made. Hess *518
v. Culver, supra; Massey v. Luce,
The plaintiff offered in evidence the articles of association of the defendant company. A copy does not appear in the printed record, nor do we find it in the return to the writ of error. No claim is made that plaintiff purchased in reliance on any statement made therein. To recover in such a case as this, he must show that he acted in reliance on the representations made. Scott v. Brusse,
The judgment is affirmed, with costs to appellees.
CLARK, C.J., and McDONALD, BIRD, MOORE, STEERE, FELLOWS, and WIEST, JJ., concurred.
