138 Minn. 431 | Minn. | 1917
Action on four promissory notes of $500 each, made by defendant to himself and indorsed to plaintiff. Defendant claimed the notes were procured by fraud. Plaintiff denied fraud and alleged she was a bona fide purchaser without notice. Defendant denied this. The jury found for defendant.
On June 8, 1911, the Hiawatha Water Company owned about 30 acres of land near Janesville, Wisconsin, on which was a spring. Some buildings had been erected thereon. The property was not of great value save as the spring was valuable. The company was formed for the purpose of bottling and selling water from this spring. To do this it was thought the expenditure of a large sum for advertising and promotion was required. The corporation was capitalized for $1,250,000 and the stock put on sale. Plaintiff was a doctor at Blooming Prairie, Minnesota. One Campbell, an agent selling the stock of the company, asked defendant to buy. On June 8, 1911, defendant agreed to invest $2,500 in stock and gave therefor five notes of $500 each due in six months. Those in charge of the corporation conceived the notion, popular in some quarters, that real wealth could be amassed by watering the stock and selling six dollars of stock for one dollar in money. Defendant was not averse to this method of finance and it was agreed that he should receive stock of the par value of six times his investment. Defendant paid one note and had the others renewed from time to time until March 26, 1913. At that time Thomas Peebles, who was connected with the company in some way, made demand for payment of the notes. At Peebles’ suggestion defendant went to Minneapolis to see him. While there, defendant gave the notes in suit in renewal of his former notes and at the same time exchanged his right to receive stock for a right
The defense charges fraud committed by Campbell in procuring defendant to buy the stock and give his notes on June 8, 1911, and fraud by Peebles in procuring the renewal notes on March 26, 1913. We may assume that plaintiff was chargeable with notice of every fact in this whole transaction. The difficulty we have is in finding the existence of fraud that will avoid these renewal notes.
It is clear that at the time defendant gave the new notes in 1913 he had full knowledge of the truth or falsity of all representations which he claims in his answer were made to him when he bought his stock and gave the first notes in 1911. All these he waived by giving the new notes. 7 Cyc. 881; 8 C. J. 445; 1 Daniel, Neg. Inst. (6th ed.) 302; Long v. Johnson, 15 Ind. App. 498, 44 N. E. 552; Brown v. First Nat. Bank, 115 Ind. 572, 18 N. E. 56; Sawyer v. Wiswell, 9 Allen, 39; Keyes v. Mann, 63 Iowa, 560, 19 N. W. 666; Calvin v. Sterritt, 41 Kan. 215, 21 Pac. 103.
Defendant claims on this appeal that there was one misrepresentation, the falsity of which he had not discovered when he gave the renewal notes, namely, there was a statement in a prospectus handed to him by Campbell that the title to all assets of the company was “free and clear.” It appears there was some incumbrance upon the land. No such misrepresentation was alleged in the answer. Defendant in his amended answer alleged the acts of fraud, upon which he relied, in much detail. He did not mention this. The existence of a purchase money mortgage on the land came out in the course of a deposition taken a year and a half before the trial. Yet he never asked leave to amend to set up this statement in the prospectus as a fraud. Nor was this
We think the court should have directed a verdict for the plaintiff. So ordered.
Order reversed.