123 Minn. 185 | Minn. | 1913
This action was to recover damages for the fraud of defendants in inducing plaintiff to purchase defendant Paine’s interest in the Russell Motor Co. and to advance money to the company thereafter. There was a verdict for $6,871.93 against both defendants. Each defendant moved for judgment notwithstanding the verdict or for a
The new trial was granted because the trial court was of the •opinion that there was prejudicial error in its rulings on the admission of evidence and in the charge. It is clear from the memorandum filed with its order that the trial court considered the verdict .sustained by the evidence. We have then to consider whether there was prejudicial error in any of the rulings on the trial or in the ■charge. In this situation where the appellant is necessarily unable to point out the errors, it is the duty of the respondent to make clear to the court the points relied upon to sustain the granting of a new trial.
A brief statement of the facts is necessary to an understanding of the questions before us. Defendant Russell was the manager and principal owner of the stock of the Russell Motor Co., a corporation (engaged in the sale and repair of automobiles in Duluth. In the fall of 1910 defendant Paine, who was a stockholder and president •of the Northland Motor Co. of Minneapolis, made an examination of the affairs of the Russell Co., and agreed to advance money to it on the company’s giving satisfactory security. The Russell Co. was •to handle the cars of the Northland Co. Twenty-five shares of the Russell Co. stock were issued to Paine, who testified that this was .given to him for the Northland Co., in consideration of the latter •company turning over to the Russell Co. the agency for the Stod(dard-Dayton cars; the Northland Co. agreeing to supply the cars for two years without charges for commissions. Paine advanced $2,->000 in cash to the Russell Co. The company gave Paine its note for $5,000 and to secure it a chattel mortgage covering its garage 'equipment, valued at $4,032. It was the understanding, evidenced !by another writing, that at any time the Russell Co. should repay moneys advanced by Paine or the Northland Co. from time to time in the future, and pay all debts due Paine or the Northland Co., the note would be returned and the mortgage satisfied. Another writing ■of the same date recites that the Russell Co. may within two years •buy back the 25 shares of stock for $2,500, provided all indebtedness \to the Northland Co. has been paid.
It was plaintiff’s claim, and there is evidence to support it, that he-was induced to take this interest in the Russell Co. by fraudulent representations made by Paine and Russell. As the question of the sufficiency of the evidence to sustain the verdict is not involved, on this • appeal, we need say nothing further as to these fraudulent representations. It would seem clear that plaintiff took Paine’s place in the-corporation. We must assume that he did so because of fraud om the part of both defendants; that Paine, with Russell’s help, unloaded onto plaintiff.
After the sale of the stock to plaintiff, and the other transactions mentioned, Paine took no further part in the affairs of the corporation. Russell managed the company, plaintiff apparently taking-little active part, though it had been contemplated that he would, have charge of the shop and the financial part of the business. From time to time plaintiff advanced to Russell for the company sums of' money to pay indebtedness of the company for automobiles and supplies purchased.
In June, 1911, Paine met plaintiff in Duluth and complained because the Russell Co. had not paid the Northland Co. for automo
The alleged fraudulent representations of defendants related to the solvency of the corporation, and the extent of its business, assets and liabilities. It was of course essential to a recovery that the falsity of these representations at the time they were made be proved. 'There was evidence fairly tending to show that the company was in bad condition, if not actually insolvent at this time, and there was -evidence to the contrary. It was one of the issues on the trial, as of ■course was the question of defendants’ knowledge of the condition of the company.
We now take up respondent’s claims of error in the rulings of the trial court, relied on to sustain the order granting a new trial.
The rule is clear and not disputed here. In cases of fraud or deceit the defendant is responsible for those results which must be presumed to have been within his contemplation at the time of the commission of the fraud, and plaintiff may recover for any injury which is the direct and natural consequence of his acting on the faith of defendant’s representations. It must appear that the fraud and damage sustain to each other the relation of cause and effect, or at least that the damage might have resulted directly from the fraud.
Our conclusion is that the trial court rightly granted a new trial.
Order affirmed.