76 Md. 118 | Md. | 1892
delivered the opinion of the Court.
This is an action for alleged deceit in the sale of certain shares of stock in a fertilizer company, in the City of Baltimore. The action was brought by the present appellant against the defendants, who were stockholders and officers managing the affairs of the corp'oration that issued the shares that were sold to the plaintiff.
The declaration contains two counts. The first alleges that the defendants, being desirous of obtaining addi
The second count alleges that the defendants unlawfully conspired and combined together to induce the plaintiff to invest $5,000 in the stock of the Parks Guano Company, and that, in pursuance of such purpose, the defendants represented to the plaintiff that the company had a large and prosperous business, and that it was a safe and sure investment; whereas, such representations were, at the time made, false in fact, and were wilfully and fraudulently made to deceive the plaintiff, and whereby he was deceived and induced to invest $5,000 in the stock of the company, to his loss and injury.
The defendants pleaded not guilty, and also pleas of res adjudicata in respect to the stock issued to the defendants, and other things tried and determined in an equity proceeding specially referred to.
It appears from the record that, prior to July 1st, 1887, there had existed in the City of Baltimore a copartnership formed for conducting the guano and fertilizer business, under the firm name of Parks and Company. At the time of the dissolution of this partnership it was composed of James T. Parks, John Mauldin and Matthew P. Hubbard, three of the defendants in this case. About July 1st, 1887, the members of the firm, for- the purpose, as stated by them, of increasing the capital and enlarging the business, determined to convert the partnership into a joint stock corporation, with a capital of $100,000, to be divided into one thousand shares of $100 each. The corporation was formed under the provisions of the general incorporation law of the State, by the name of the Parks Guano Company, and was organized about the 1st of July, 1887. Of the capital stock two hundred and fifty shares were subscribed for,
At this juncture of proceeding, the plaintiff filed a petition on the 11th of January, 1890, in the Circuit Court of Baltimore City, praying that Court to take jurisdiction of the trust, and to administer the same, and to direct distribution of the funds to those entitled thereto. In this petition there was no charge that the
On the trial below there was a good deal of testimony produced, and much of it of a very conflicting character, as to the representations that were made by the defendants to the plaintiff, in regard to the affairs and amount of available assets of the company, and its business prospects, and in regard to the extent of the disclosures made to the plaintiff in the course of his examination into the affairs of the company previous to his subscription for stock.
Both sides asked for instructions to the jury; and the jury were instructed by the Court, by granting some of the prayers offered by the plaintiff, and all those offered by the defendants. And, upon examination of the
The general principles upon which actions for deceit or fraudulent misrepresentations are maintainable have been very clearly stated by this Court in the cases of McAleer vs. Horsey, 35 Md., 439, and Buschman and Cook vs. Codd, 52 Md., 202. If a defendant knowingly tells a falsehood, or makes a positive representation of a fact as true, when he does not know it to be true, and has no reasouable grounds for believing in its truth, with an intent to induce, and does thereby induce the plaintiff to enter into a contract or incur liability, which, but for such misrepresentation, he would not have entered into or incurred, and the plaintiff is thereby damnified, a case of fraudulent deceit is established. It is not necessary in all cases to show that the defendant knew at the time that the representation made by him was false in fact. It is sufficient if the statement be made for a fraudulent purpose and without a bona fide belief in its truth by the defendant, with the intention of inducing the plaintiff to do an act, and that act is done, in reliance upon the truth of the representation, which turns out to be false, to the damage of the plaintiff. In such case an action for the damage sustained may be maintained. This was expressly decided in the case of Taylor vs. Ashton, 11 Mees. & W., 401, and which has been repeated in many subsequent cases. That was an action brought against the defendants, who were directors of a bank, for false and fraudulent representations alleged to have been made by them in a report which was published, stating in substance the flourishing state of the affairs of the bank. It was alleged by the plaintiff that the report was published by the defendants
The belief of the defendants must have been in the truth of the representations as made by them, and that was a question of fact for the jury. But the representations to be material, must have been in respect of ascertainable facts, as distinguished from mere matters of opinion or speculation. A representation which merely amounts to .a statement of opinion, judgment,probability or expectation, or is vague and indefinite in its nature and terms, or is merely a loose, conjectural, or exaggerated statement, goes for naught, though it may not be true; for a party is not justified in placing reliance on such statement or representation. Such an
The first prayer for instruction, offered by the plaintiff, was granted; but it was granted in connection with the third prayer of tire defendants. The second prayer of the plaintiff was rejected; but his third prayer was granted, and in the latter prayer he was given the benefit substantially of the proposition presented by the second prayer. He therefore had no ground of complaint because of the rejection of the second prayer as presented.
The plaintiff’s fourth prayer, in regard to the measure of damages, was granted; but his fifth and sixth prayers were rejected, and very properly so. They were properly rejected, if for no other reason, that they were not within the pleadings in this cause, and presented no substantive ground for recovery in this action. They proceeded upon the theory that because of the non-compliance by the corporation with certain provisions of the Code (Art. 23. secs. 61, 62, 13, 294,) in regard to receiving property for subscriptions to stock, and the making up and recording of certain semi-annual statements of the affairs of the company, and the agreement of the corporation to pay preferred dividends on stock, the plaintiff may have been misled to his prejudice. But clearly these omissions or neglects, if they existed, formed no substantive ground of recovery in this action for misrepresentation and deceit.
There was no error committed by the Court in granting the first prayer of the defendants. The questions as to the formation of the corporation, and the validity of the issue of the shares of stock thereof to the defend
The defendants' second prayer was granted, but in that ,we perceive no error. By that prayer, the jury were instructed that there was no legally sufficient evidence to show that the defendants, in the formation of the corporation, and the issue of certificates of stock to the defendants, conspired together to deceive or defraud the plaintiff, as alleged in the declaration, and that the jury, therefore, were not at liberty to consider such question in arriving at their conclusion as to the liability of the defendants. There is a total absence of any legally sufficient evidence to establish a conspiracy in the issue of the stock of the corporation to the defend
The third prayer of the defendants was granted in connection with the plaintiff’s first prayer; and in this we perceive no ground of objection. Upon the facts of the case, and the principles of law that we have stated, this third prayer of the defendants would seem to be entirely correct as an independent proposition; and if good as an independent proposition, it is not easy to perceive why it should be made bad by being coupled with the first prayer of the plaintiff, which was granted.
The fourth prayer of the defendants, we think, was also properly granted. By that prayer the jury were instructed that the plaintiff was not entitled to recover on account of any representation made by the defendants to the plaintiff that the stock of the company would pay as much as twenty per cent, dividend, or for any other expression of opinion concerning the future value or profit of the business to be carried on; and that such representations should be excluded by the jury as a basis of recovery. This, on the principles that we have already stated, and upon the authority of well decided cases, was a proper instruction. Gordon vs. Butler, 105 U. S., 553, 556-7.
The fifth, sixth and seventh prayers of the defendants-were granted, and we do not understand that their correctness is seriously contested. They are plainly correct, and the Court committed no error in granting them.
Upon the whole case, we think the jury were fully and fairly instructed as to all the principles of law applicable to the case, and that the judgment of the Court below should be affirmed.
Judgment affirmed.