26 Colo. App. 97 | Colo. Ct. App. | 1914
delivered the opinion of the court.
This action was brought by Herbert L. Carrick, defendant in error, to obtain the cancellation of a deed by which he conveyed to Thomas B. Moore, plaintiff in error, twenty acres
The answer admitted the exchange of the land for the ninety shares of stock mentioned in the complaint, and denied each and every other allegation of the complaint.
The evidence on the part of the plaintiff is substantially as follows: Plaintiff and defendant had no conversation or communication, were not acquainted and had not met each other, until long after the transaction in question; plaintiff was a resident of Seattle, defendant of Vancouver, but was doing business in both Vancouver and Seattle as a broker, and buying- and selling lands and stocks on his own account. George L. Estes was a resident of Seattle, engaged in the general brokerage business. About February 24, 1911, Estes overheard a conversation between Moore and the Sunset
“Seattle, Wash., Feb. 27, 1911.
Chas. W. Jennings,
Dominion Trust Building, Vancouver, B. C.
What is stock Hudson Bay Mutual Fire worth? What price can it be cashed ? Send full particulars.
(Signed) Geo. L. Estes, 1258 John St.”
“Vancouver, B. C., Feb. 27, 1911. 6:12 P.M.
G. L. Estes, 1258 John St., Seattle.
Hudson Bay Fire has no more stock for sale. Vancouver brokers paying no per share.
Chas. W. Jennings, President.”
About the same time, Estes began to talk with Carrick relative to purchase of the stock. Estes showed the telegram to Carrick, and told him that it sounded good. Both Estes and Carrick went to Vancouver personally to investigate the company and the stock. Estes examined the articles of incorporation, and found that the company was incorporated for $100,000 “guaranteed” stock, SO' called. He examined the law under which the company was incor
“Q. At any rate, he (Moore) left it to you to make your inquiries about the stock in Vancouver? A. Yes.
Q. You did investigate it? A. Yes.
Q. And it was not from anything- he said to you that you recommended the deal to your client, but rather from what you learned from Mr. Jennings’ telegram, or some other source? A. That’s right.”
And in his deposition:
Q. But I mean Mr. Moore left it h> you to investigate the value of the stock, didn’t he ? A. He told me to investigate it, yes.
*102 Q. And it was not from what Moore told you, but rather from what you got from Jennings, and what Mr. Car-rick found out, that you relied on in making' the deal ? A. It only backed up what Mr. Moore had already said in regard to the stock — that it was good — that part of it; but I didn’t particularly go into the proposition until I investigated both ends of it, you understand. I c'ould tell you that stock was good, but you wouldn’t take it until you went and seen what the company was.
Q. Did Mr.'Moore ever make any representation of the value of the stock before the deal ? A. He spoke about the stock being good — ‘As far as I know, the stock is good; I would not take less than $110 a share.’
Q. That is what Mr. Moore said? A. Yes.
Q. Did he tell you to investigate? A. Yes.”
There was no testimony on the part of plaintiff showing,. or tending" to show, that Moore did not pay $110 for the stock, nor, indeed, what price he paid; nothing to show that if any of his alleged statements of fact were false, he knew them to be false, except as to the price he had paid; nothing tending to show that he knew or had opportunity to know, anything more about the company’s affairs than Carrick and Estes knew. The witness Ball testified that he had seen Moore in the office of the Company — Ball was there himself.
At the time of the trial in this case, Moore was called as a witness in his own behalf. He testified that he had owned and traded some of the stock; that the stock he traded to Ball he got from a Mr. Lundy, paying him therefore ten acres of land in Idaho and $750 cash; that the stock he traded to Mr. Carrick he got through a deal with a Mr. G. W. Crotz, of Vancouver, about the middle of February, 1911, in exchange for 120 shares of stock in the Cresc'ent Lumber Company, which he obtained in exchange for 160 acres of land in Washington. The value of the parcels of land and personal property which he exchanged for stock was not given or asked. Moore testified that he was not interested in the insurance
The cause was tried to the court without the intervention of a jury, and the court rendered judgment for the plaintiff upon findings of fact in substance that the insurance company was a “cloak for a swindle;” that the stock was worth noth-' ing; from which, and the further fact that Mooi'e had had some dealings with the president, and had directed Estes to the president for information, it was conclusively presumed that he had done so with knowledge of the president’s fraud, and of what answer he would give; therefore was chargeable with actual fraud in this proceeding.
In form, this is an action, equitable in its nature, to recover the purchase price, to-wit, land, paid by the plaintiff for Certain shares of stock, after tendering back the stock, and rescinding the contract of purchase and sale, upon discovery of the alleged fraud. The only cause of action stated in the complaint is based upon the fraudulent representations of the defendant, made by him alone or in conspiracy with others. The fraud charged is not constructive or implied, but active, intentional fraud, involving moral turpitude.
There is some diversity of opinion as' to whether the same nxles which apply to actions to recover damages for deceit apply to cases equitable in their nature, such, for instance, as for rescission of contracts on the ground of misrepresentation; but in this state slight, if any, distinction is made, and we think no difference when the fraud charged is actual and intentional. Sellar v. Clelland, 2 Colo. 532; Larimer County L. & I. Co. v. Cowan, 5 Colo. 320; Wheeler v. Dunn, 13 Colo. 428, 22 Pac. 827; Connell v. El Paso G. M. & M. Co., 33 Colo. 30, 78 Pac. 677; Colorado Springs Co. v. Wight, 44 Colo. 179, 96 Pac. 820.
Sellar v. Clelland was an action to recover damages for deceit. Larimer County L. & I. Co. v. Cowan was an action in equity, praying for the cancellation of a deed made by the plaintiff. The court quoted and adopted the following rule as laid down in Kerr on Fraud and Mistake, 73 :
“In order that a misrepresentation may support an action or be of any avail whatever as a ground of relief in equity, it is essential that it should be material in its nature, and should be a determining ground of the transaction. Thé misrepresentation must be, in the language of the Roman law, dolus dans locum contractui. There must be the assertion of a fact on which the person entering into the transaction relied, and in the absence of which it is- reasonable to infer that he would not have entered into it at all, or at least not on the same terms. Both facts must concur; there must be false and material representations, and the party seeking relief should have acted on the faith and credit of such representations. * * * A misrepresentation goes for nothing unless it is a proximate and immediate cause of the transaction. It is not enough that it may have remotely or indirectly contributed to the transaction, or may have supplied a motive to- the other party to enter into it. The representation must be the very ground on which the transaction has taken place.”
The foregoing excerpt was also cited and quoted with approval in Wheeler v. Dunn, at page 436. In Connell v. El Paso Company, which was an action in equity for rescission of an executed contract of purchase and sale, for the cancellation of a deed and recovery of the purchase money, Mr. Justice Campbell, speaking for the' court, said:
*105 “It is a settled doctrine oí this court, ever sinc'e the decision in Sellar v. Clelland*, 2 Colo. 532, that for a misrepresentation to be actionable the party charging the same must, inter alia, show not only that it is false, but that the party making- it knew it to be false. This general doctrine, however, is subject to the modification that "when one has made a representation positively, or professing to speak as of his own knowledge on the subject, the intentional falsehood is disclosed, and the intention to deceive is also inferred, or at all events, this is so when the matters falsely represented are peculiarly within the knowledge of the party making them, and are not known to the party to whom they are made.’ ”
In Colorado Springs Company v. Wight, an action to recover damages for alleged misrepresentations, the same rule is approved, and the elements going to make up fraudulent representation, as enumeratéd by Pomeroy, are given, to-wit: “A misrepresentation, in order to constitute fraud, must contain the following essential elements: (1) Its form as a statement of fact; (2) Its purpose of inducing the other party to act; (3) Its untruth; (4) The knowledge or belief of the party making it; (5) The belief, trust, and reliance of the one to- whom it is made; (6) Its materiality.”
Under the foregoing rules, there is an utter failure of evidence to support the judgment. Moore’s representation that the stock was good, is, under all the authorities, 'an expression of opinion only; as also under the evidence is his statement that the stock was worth $110, when coupled with the' qualification “as .far as I know,” and as affected by the fact that he had no peculiar means of knowledge as to the condition oí the company or the acts of its officers whose criminality or delinquency destroyed the market value, as well as the intrinsic' value, of the stock. That statements as to value under such circumstances are generally regarded as opinions only, and may not be relied upon, is decided in Noetling v. Wright, 72 Ill. 390; Page v. Parker, 43 N. H. 363, 80 Am. Dec. 172; Poland v. Brownell, 131 Mass. 138, 41 Am.
In Connell v. El Paso G. M. & M. Co., 33 Colo. 30, 78 Pac. 677, it is held that a representation of the amount paid for property is a. material fact, and if false and relied on will avoid the contract. But whether that statement or any of the statements alleged to. have been made by Moore are regarded as mere opinions, or as statements of fact, it is manifest that they were not relied upon by the plaintiff in this case. There is a total absence of evidence that these statements were ever communicated to or came to the knowledge of the plaintiff. The rec'ord is utterly devoid of. any evidence, direct or indirect, tending to' show that the plaintiff relied on any such representations, or that Estes, in acting for him, relied on such statements. On the contrary, there is a direct arid positive statement made by Estes that he did not act thereon, but rather upon his own independent investigation. That both the plaintiff and Estes did rely upon their own investigations, is abundantly established by their own evidence, twice given and recorded. It is almost universally held, under circumstances as here shown, that if investigation is made by the buyer, he cannot claim that he relied on the representations, of the seller, except in cases of active fraud or concealment, or in cases where fiduciary relations existed, or peculiar knowledge upon the part of the seller was shown. Fauntleroy v. Wilcox, 80 Ill. 477; Fisher v. Dillon, 62 Ill. 379; Port v. Williams, 6 Ind. 219; Colton v. Stanford, 82 Cal. 351, 23 Pac. 16, 161 Am. St. Rep. 137; Grider v. Klopton, 27 Ark. 244;
The claim that plaintiff relied upon Moores statements that the stock was worth above par is negatived by the fact that immediately before he concluded this trade he purchased other of the same stock and contracted to sell the same- at par. As tO' the statement, made by Moore that he paid a certain price for his stock, there is no proof that suc'h statement was false, even if there had been anything to show, or tending to show, that such statement had been relied on; and the fact, shown by plaintiff’s evidence, that the stock was being purchased in considerable quantities by persons, having as good opportunities for investigation and knowledge as had Moore, and who were taking it at par, corroborates and establishes the truth of defendant’s statement that the stock was good and had value, if, as is generally the case, by “value” is meant what it is bringing in the market.
All material evidence upon the part of plaintiff having been submitted by deposition, this court is not governed by the usual rule that findings of the trial Court upon conflicting evidence is binding upon the court of review, and the evidence offered by the plaintiff is in no manner aided by the oral testimony of the .defendant.
We think it'is not amiss to call attention to' the fact that plaintiff does not come into this court with unsoiled hands. Representations were made to defendant that the land offered in exchange for his stock was worth $500 an acre, while the evidence offered at the trial showed that as good land, better situated, more highly improved, was offered in the market at $250 or less an acre.
Because of the entire failure upon the part of the plaintiff to sustain the charge of fraud, and because of the concldsive showing that plaintiff did not rely upon the representations alleged to have been made by defendant, the judgment must be reversed and the cause remanded. However,
Reversed and Remanded.