226 Mass. 358 | Mass. | 1917
These are actions of deceit brought by thirty-seven plaintiffs, who allege that, relying on certain printed and oral representations made or caused to be made by the defendant, they were induced to purchase or to refrain from selling shares of stock in the North American Rubber Company, a corporation organized in 1909, for the purpose of manufacturing a substitute for rubber. The defendant demurred to all the declarations, the demurrers were overruled and five typical declarations, with their respective demurrers, are reported to this court.
It is further alleged in each declaration, that in 1910, the defendant was interested in the North American Rubber Company; that he was a stockholder or a holder of an option for the purchase of stock in said company; that he was an officer and large stockholder in the Boston Belting Company, a corporation engaged in the manufacture of finished products of rubber; that Wheeler and Shaw were officers of the North American Rubber Company, were the promoters of said company and its agents for the sale of the capital stock, and that they offered it for sale to the public through advertising in the newspapers and through various brokers in the city of Boston and elsewhere; that the defendant early in the year 1910, acting in behalf of the Boston Belting Company, made a contract with Wheeler and Shaw, acting for the North American Rubber Company, for the sale of the entire output of the North American Rubber Company at the price of sixty cents per pound; that the defendant through Wheeler and Shaw, and otherwise, several weeks before March 10, 1910, represented to the plaintiffs and others similarly situated, that the Boston Belting Company had agreed to purchase the entire output of the North American Rubber Company at one dollar per pound; that when said contract was made the North American Rubber Company and, Wheeler and Shaw, were heavily indebted to the defendant and were unable to discharge their indebtedness; that
In each of the declarations it is alleged that the defendant and Wheeler and Shaw made said representations to numerous brokers and other persons likely to repeat said representations to persons having money to invest, and showed to said brokers and other persons the said dollar per pound contract, but did not show to said brokers and other persons the secret forty per cent contract; that Wheeler and Shaw and certain of said brokers and other persons made and repeated said representations to the plaintiffs and showed the plaintiffs a copy of the dollar per pound contract and informed the plaintiffs of the fact that each of said representations had been made and published and frequently repeated by the defendant Forsyth; that the defendant did not inform the plaintiffs of the agreement to rebate forty per cent of the dollar per pound contract; that the defendant concealed the fact of
In the cases of Wheeler v. Forsyth and Harney v. Forsyth it is further alleged in the declarations that the defendant personally represented to these plaintiffs that the defendant was wholly familiar with the said product of the North American Rubber Company; that he knew what the finished product was; that it was an artificial rubber and that there was no real rubber*in it; that he knew all the ingredients and constituents of said product; that he knew how it was made and that he had been to the factory of the North American Rubber Company and had manufactured its product with his own hands; that the Boston Belting Company was paying one dollar a pound to the North American Rubber Company for its product; that this was being paid under a contract whereby the Boston Belting Company was to take all the product of the North American Rubber Company, and that the product was of good commercial value. It is alleged in each declaration that the representations were in fact wholly false, as the defendant at all times well knew.
The demurrer admits that the representations, upon which the plaintiffs relied, were published in a newspaper called the “Boston News Bureau” on March 19, 1910, under a heading entitled “North American Rubber Company. An Enterprise which may
In the article as published, two paragraphs in quotation marks are introduced by a paragraph which reads: “The following statement of Mr. Forsyth is one which will be read with great interest as coming from one who is acknowledged to have few superiors as a practical rubber manufacturer. Mr. Forsyth says: . . .”
The defendant contends that he is liable only for representations which appear within the quotation marks, because only that part of the article is held out to the public and to the plaintiffs as having been made by him. The several declarations allege that the defendant read the article after it was written and before it was published, “pronounced it to be correct,” and “caused and permitted” it to be published.
We think the defendant is legally responsible for the whole published article. Although not explicitly charged, it sufficiently appears that the article as a whole, and the representations therein contained, were made to the public through the newspaper, with the object of inducing every or any individual member of the public to act upon the representations so made. Andrews v. Mockford, [1896] 1 Q. B. 372, 382.
The several declarations allege that the plaintiffs read the representations, believed the representations, relied on them and were thereby induced to buy or to refrain from selling the stock of the North American Rubber Company to their harm, and pecuniary damage. It is plain the several plaintiffs acquired rights against the defendant. Nash v. Minnesota Title Ins. & Trust Co. 159 Mass. 437, 442. Hunnewell v. Duxbury, 154 Mass. 286, 288. Windram v. French, 151 Mass. 547, 550. Swift v. Winterbotham, L. R. 8 Q. B. 244. Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q. B. 256. The concerted concealment of the existence of the written contract to rebate to the Boston Belting Company forty per cent of the amount called for by its agreement to take
The representation that “the North American Rubber Company had a secret patented process which made a substance without the product of the rubber tree,” the representation that the product “has been successfully subjected to many important tests,” the representation that the product was an artificial rubber or “crude rubber without the admixture of the product of the rubber tree,” the representation that “it vulcanizes perfectly,” the representation that the defendant had experimented for six months, were each and all of them statements of past or existent facts which a prudent person might regard as important elements to be taken into consideration in the determination of the present and prospective value of the stock. It is plain the corporation had a most valuable asset in the secret patented process, if by its means it could produce for commercial use a substitute for crude rubber, especially if “the product was being placed on the market at a very low cost of production.” These statements were not representations protected or permitted as dealers’ talk, nor did they relate solely to future probable profits. See Braley v. Powers, 92 Maine, 203. These representations are alleged to have been wholly false, to have been believed by the plaintiffs and to have been relied on by the plaintiffs.
It is also alleged that the defendant made the representations with the intention and expectation that they would be believed
The second counts of the declarations of Wheeler v. Forsyth and Harney v. Forsyth are alike. Their effect is to connect the defendant more closely with the representations, but they do not require separate consideration. The remaining representations may fairly be said to relate to matters of opinion concerning, or belief in, the future commercial success of the product. See Kimball v. Bangs, 144 Mass. 321; Nash v. Minnesota Title Ins. & Trust Co. 159 Mass. 437. The declarations sufficiently set out the causes of action and require no extended discussion.
The result is that the order overruling the several demurrers must be affirmed.
So ordered.