183 A.D. 673 | N.Y. App. Div. | 1918
The action was brought to recover the sum of $20,750 damages based upon the rescission of a contract whereby plaintiff purchased for that amount 100 shares of stock of the National Nassau Bank, the rescission being based on fraud in that false and fraudulent representations were made to plaintiff to induce him to buy the stock, the representations being made by the defendant Earl personally, and by the other defendants (constituting the firm of Taylor, Smith & Hard) through said Earl as their agent. These representations were as follows: That the National Nassau Bank was then in fine condition; that it was sound, solvent and prosperous; that it was then and had been doing a fine business and making a great deal of money; that it was as good as the Bank of England; that the shares of its capital stock were of great value and easily worth more than $207.50 each; that the shares were a good investment, and that if plaintiff bought these shares for $207.50 each, he would get a fine investment and make a large amount of money therefrom. There are allegations of plaintiff’s reliance upon said representations, of
The plaintiff was a business man and president and controlling owner of a corporation engaged in the printing business. His corporation had been a depositor in the Nassau Bank from 1908 and plaintiff had considerable dealings therewith, including the discounting of the commercial paper of his company’s customers. In this way plaintiff came into personal relations with defendant Edward Earl, who had been for many years employed by the bank and who had become the president. Plaintiff came to regard Earl as his friend and banker and had implicit faith and confidence in him. He bought shares of stock on his advice, beginning as early as February 9, 1909, and plaintiff left his securities in the bank’s custody. In March, 1911, the bank became a National bank under the name of “ The National Nassau Bank of New York,” and Earl continued as its president and as a director thereof. On May 16, 1911, on the recommendation of Earl, plaintiff bought eighty half shares of the bank stock of the par value of $50 each, paying therefor $12,400, or at the rate of $155 for each half share. Plaintiff had bought a substantial amount of various stocks on Earl’s advice before the transaction in question and he apparently had unlimited faith in him, allowing his securities to remain in the vaults of the bank and apparently under Earl’s complete control. The. defendants other than Earl constitute the'firm of Taylor, Smith & Hard, stockbrokers and members of the New York Stock Exchange. Augustine J. Smith, one of the defendants, was elected a member of the board of directors of the bank on January 9, 1912. A few days thereafter an examination of the bank by the national bank examiner was begun, which showed it was in a very bad condition, doubtful and worthless commercial paper to the extent of $381,000 being carried on its- books as good assets, slow and unsatisfactory items amounting to
Upon the trial Earl strenuously and repeatedly denied that Smith ever said to him, in words or substance, “ Can.you sell it for us? ” (referring to bank stock), but when finally confronted with his answer last above quoted, in which he swore that Smith said, “ Can you sell it for us? ” he was forced to admit that he had given the answer and that his answer to the question was substantially true. He testified again upon the trial: “ Q. Do you mean to say to this court here, under oath, that Mr. Smith did not ask you to sell for Messrs. Taylor, Smith & Hard their stock? A. I do; he did not ask me to sell any stock for Taylor, Smith & Hard. Q. Will you look at that question and answer? A. I see the question and I see the answer. Q. Now, then, after reading that, do you mean to say did not Mr. Smith ask you whether or not you could sell some of that stock for him? A. I do not know that he asked me could I sell stock for him. Q. What did he ask you? A. He asked me if he bought stock for customers could I place it for him. Q. Did he ask you whether you could sell stock for him? A. I do not recall that,he did. Q. Will you look at that question again? A. Go ahead. Q. Did he say ‘ Can you sell it for us? ’ A. No, he did not.”
And again he .swore under examination by plaintiff’s counsel: “ Q. Now, Mr. Earl, you know the occasion which your attention has been called to relates? A. I do. Q. On that occasion did Mr. Smith say to you in substance that he would be glad to take any stock that came along, of the National Nassau Bank? A. Yes. Q. And did he say in substance to you at that time, ‘ Can you sell it for us? ’ A. He did not. Q. And did you reply, ' Yes? ’ [Objection by Mr. Battle.] Q. What did he say? A. He said, ‘ If you have any customers who want stock I will be glad to buy it for them.’ Q. He would be glad to what? A. Buy it for them. Q. Stock that they owned? A. People that wanted to sell stock. Q.
Defendant Smith testified as to these prior conversations between himself and Earl, beginning in 1907 while Earl was cashier of the bank, in reply to questions by the court as follows: “ By the Court: Q. What did he say? Tell us what talk you had, Mr. Smith? A. I cannot distinguish which particular conversation it was or how to put it, because these were continuous conversations. Q. Then give the substance of the conversations? A. The substance of it was that he had many people who wanted to buy securities, not only the Nassau Bank. ‘ I have been asked at the bank about a great many securities of all kinds, bonds and stocks and among them was the Nassau Bank.’ He had a list, I remember it sitting alongside of his desk. * * * I did not see the names on the fist. I saw there were a number of names. He stated to me, ‘ Here is a list of people who want to buy Nassau Bank stock. If any comes along let me know.’ I told him ‘ I will do so.’ We received circulars and we received telephone messages all the time in the office relating to all kinds of stock. If this stock was mentioned I would let him know. At some subsequent time my manager of the bond department, the outside securities department, came in to me and said— Mr. Van Zandt: I object to that. Q. Never mind what he said to you. You had another talk with him then? A. I did; I had another talk with him later. I had several talks. By Mr. Battle: Q. With Mr. Earl? A. With Mr. Earl. Q. What was the substance of it? A. I told him, ‘ Earl, here is some Nassau Bank stock offered. You told me you had customers that wanted it. I can sell it to them at such and such a price. Do you want it? ’ He said ‘ I will let you know,’ He would call me up after that and say ‘ My customer ’— he would say 1 It is all right, send the stock to the bank. I have communicated with my friend,’ I think he said customer, he meant customer of the bank. Mr. Van Zandt: Wait a minute. Mr. Smith cannot say what Mr. Earl meant. Just state what he said. A, I am trying very hard Mr. Van Zandt, to remember. By the Court: Q. Leave out what you thought he referred to and go on. A. He would say ‘ Send the stock to the bank.’
Earl is not claimed to have had any dealings with any other defendant save Smith, and concededly Smith had no dealings with plaintiff. This was the state of the prior relations of the parties when, on the morning of March sixth, Earl had his conversation over the telephone with Smith. Earl testifies that Smith then said to him, “ There is one hundred shares of Nassau in the market. Do you know anybody that wants it? ” Earl said, “ I think I do,” and then called up plaintiff. On cross-examination he testified: “ Q. You have just testified that Mr. Smith called you up and said there is 100 shares of Nassau in the market, do you know anyone that wants it or will buy it? Didn’t you just testify to that? A. I did not testify that he called me. Q. Didn’t you testify that Mr. Smith said to you before you talked with Mr. Schweinler there is 100 shares of Nassau in the market; do you know of anybody that wants it or wants to buy it or words to that effect? A. I testified to that. Q. In any event that conversation you had with Mr. Smith before you talked with Mr. Schweinler, didn’t you? A. Yes. Q. And it was on that morning, wasn’t it? "A. It was. Q. And after that conversation you talked with Mr. Schweinler? A. It was. Q. Whether it was half past nine or half past ten or any other time? A. That is correct. Q. Just repeat now what he did say to you, Mr. Smith? A. He said ' Earl, there is 100 shares of Nassau in the market. Do you know anyone who wants it? ’ Q. And you said ‘ Yes, I do? ’ A. I said, ‘ I think I do. I will find out.’ Q. That is you would see if you could find out if there was somebody that wanted it? A. That is correct. Q. When Mr. Smith said to you ‘ There is 100 shares of Nassau on the market, do you know of anybody,’ what is the balance, do you know of anybody what? A. Do you know anyone who wants it. Q. What did you understand that to mean? A. He knew there was 100 shares of Nassau for sale. Did I know anybody who wanted it. Q. Who wanted to buy it? A. Yes. Q. Now then after that you called up Mr. Schweinler? A. I did.”
Smith says there had been a conversation between him and
Plaintiff further testified that when Earl said $20,700, plaintiff replied: “ Why, that would make the stock two, seven and a half, and the last stock I bought was for one fifty. What is it, so much more valuable? ” And Earl said, “ Why yes, we have been doing a great business and are doing a great business, and making a lot of money, and this will make you a lot of money. It will go higher than two, seven and a half.”
After consulting with his cashier, plaintiff called up Earl again, and after some further discussion plaintiff finally told his cashier to make out the check. “ Q. Did he [Earl] say to whom the check should be made out? A. Yes, he said, ‘ Make the check to Taylor, Smith & Hard.’ Q. What did you say when he said that? Had you ever heard of them before? A. I had heard the name before. I had in some way heard the name. Q. When he said to make out the check to Taylor, Smith & Hard, what was your reply? A. I said, 1 Why,’ I said, ‘ I thought I was buying the stock from him. I didn’t know I was buying it from Taylor, Smith & Hard.’ By the Court: Q. What did he say? A. He said, ‘ That is all right, you make out the check to Taylor, Smith & Hard, and send it up to me,’—that is what I finally did. By Mr. Van Zandt: Q. By whom did you send that up to Mr. Earl? A. By Mr. Downing, my cashier.” During the discussions, plaintiff says that Earl repeatedly said the bank was as safe as the Bank of England and also that the stock was easily worth 207| and plaintiff would make money if he bought it at that" price.
Earl’s version of his conversation with the plaintiff is radically different from the latter’s. He thus explains it: “ Q. What did you say? A. I said, ‘ Mr. Schweinler, there is one hundred shares of Nassau in the market. Do you want it? ’ Q. What did Mr. Schweinler say? A. He said 11 certainly do. Send it along.’ Q. What other conversation was had? A. I said ' It will cost $207.50 per share.’ He said ‘ I do not care what it will cost me. How much do you want me to draw a check for? ’ Q. Just continue; what else? A. I gave him the name of Taylor, Smith & Hard
Earl derned making any of the representations charged to * have been made by him.
Plaintiff, having signed his check for $20,750 to the order of Taylor, Smith & Hard, gave it to his cashier, who delivered it to Earl in the latter’s office and then left. No receipt for the check was asked for. Earl swears that after his talk with Schweinler he called up Smith and told him he had a party who could take the stock. Thereafter Smith sent up the 100 shares of stock to Earl, indorsed in blank, and received from Earl plaintiff’s check for $20,750. Earl placed the shares in the box in the bank’s vaults where plamtiff’s other securities were kept and to wMch Earl had free access. Plaintiff is not sure that he ever had a key to that box and he does not think he ever opened it.
Ón the stock thus bought by plaintiff dividends were paid. In May, 1914, plaintiff was sent for by Earl, as he testifies, who told him that there was to be a consolidation of the National Nassau Bank and the Irvmg National Bank; that in six months he (Earl) would be president of the combined banks, and Schweinler could get anytMng he wanted and have Ms line of credit continued. Earl then told him to sign a typewritten paper, tellmg him it was a consent to the consolidation of the two banks. At this time plaintiff was one of the largest stockholders in the National Nassau Bank (owmng some 330 shares), and he signed the paper, which bore other names, without reading it. In fact, tMs paper was a consent by the stockholders to the National Nassau Bank going into voluntary liquidation. Schweinler learned that the bank was to be liquidated and returned the next day to Earl, who gave him various explanations, which apparently kept plaintiff quiet for about two weeks, when he called again on Earl at the latter’s desk in the Irving Bank, where, in the presence of Earl’s counsel, plaintiff produced his shares of stock, demanded back his money and tMeatened to go before the grand jury, but was advised by Earl to retain a lawyer. He did so, and this attorney in May, 1914, called on Earl and demanded that he take back the stock and refund the
There is no claim that the other defendants knew of Earl’s misrepresentations or authorized him to make the same. The jury has found that Earl made the representations, that they were false, and that they were relied upon by plaintiff. We cannot say that these findings are against the weight of the evidence. But so finding, the defendants composing the firm of Taylor, Smith & Hard are not liable for the acts of Earl unless he was, as alleged in the complaint and sought to be proved upon the trial, the agent of the other defendants. Appellant concedes that his case must stand or fall upon a finding that Earl was the-agent of the other defendants and as such made the representations in question. That he was such agent is denied by Smith, the only member of the firm who had any knowledge of the facts relative to the controversy, and by Earl himself. That he was plaintiff’s agent the plaintiff emphatically repudiates. What the nature of Earl’s relationship to the parties was, whether he was the agent of the firm, the agent of Schweinler,- or merely an intermediary using his good offices as president to facilitate the sale and purchase of the bank’s stock, is a disputed question which must largely depend upon the credit to' be given to the
The only remaining question to which reference requires
The order appealed from is affirmed in so far as it sets aside the verdict in favor of plaintiff as being against the weight of the evidence; in so far as it directs a verdict in favor of defendants it is reversed. The judgment and amended judgment and the order of amendment are hereby reversed in so far as they dismiss the complaint of the plaintiff herein upon the merits as to the defendants Taylor, Smith, Hard and Stockton, and in so far as they adjudge that plaintiff take nothing by this action, and in so far as they award costs to the defendants Taylor and others against the plaintiff; and a new trial is ordered as to the defendants Taylor, Smith, Hard and Stockton, with costs to appellant to abide the event.
Clarke, P. J., Laughlin and Merrell, JJ., concurred.
Order in so far as it sets aside verdict for plaintiff affirmed, and reversed in so far as it directs verdict for defendants. Judgment, amended judgment and order of amendment reversed as indicated in opinion, and new trial ordered as to defendants Taylor, Smith, Hard and Stockton, with costs to appellant to "abide event. Order to be settled on notice.