151 Mass. 547 | Mass. | 1890
It appears from the declaration that the defendants knowingly and fraudulently signed, as president and treasurer respectively, and issued, invalid certificates of stock in a New Hampshire corporation, which were afterwards acquired by the plaintiff in good faith and for value in Massachusetts. The certificates were in the usual form of stock certificates, and bore upon their face the words, “ Incorporated under the Laws of the State of New Hampshire. Non-assessable.” There is no doubt that by thus authenticating and issuing the certificates the defendants made certain representations which accompanied them, and which, like the offer in a letter of credit, addressed themselves to whoever should purchase those certificates thereafter, wherever he might be. Bruff v. Mali, 36 N. Y. 200, 205. See Bartholomew v. Bentley, 15 Ohio, 659; Clark v. Edgar, 84 Misso. 106 ; Bank v. Lanier, 11 Wall. 369, 378 ; Matthews v. Massachusetts National Bank, Holmes, C. C. 396 ; Lobdell v. Baker, 3 Met. 469, 471.
The scope of these representations is matter of construction. They certainly went to the point that the stock was not spurious, and that it was not invalid by reason of the fraudulent or known acts or omissions of*the officers in question. In view of the word “ non-assessable,” they went further. That word affirmed that such things had been done as were required by New Hampshire law to be done in order to make the stock rightfully exempt from further assessment. This is not the case of an original subscriber, to whom the facts were made known upon which the conclusion that the stock was non-assessable
The representations thus made by the defendants were false. It is suggested, that unless the plaintiff knew the New Hampshire law, which is not alleged, there was no representation that the stock was paid up. But there was an express representation that somehow or other the stock was non-assessable, and that is enough. For if that does not imply that it was paid up, and if some other mode by which it might become non-assessable can be conceived, the declaration discloses, by reasonable implication, that the only mode in fact under the New Hampshire law was by the par value having been fully paid in. It also alleges that in truth nothing had been paid in, and thus that the representation was false, if the certificate represented stock at all. There is a further allegation that the stock was invalid, by reason, as we understand it, of the defendants’ acts and omissions set forth. This, so far as it involves a conclusion of law, is an allegation of New Hampshire law, and therefore of matter of fact which we must take to be true. In this respect, also, the representations imported by the face of the certificate set forth were false.
If, as we must assume, the stock was void, the damage to the plaintiff is apparent. The same would be true if, though not void, it was subject to assessment, although it is not distinctly alleged that the plaintiff believed it to be non-assessable. We need not consider at this stage of the case what his position would be if it should turn out to have been the law of New Hampshire that a bona fide purchaser of the stock was entitled to hold it as paid up, so that the stock was not void and was not subject to assessment in the plaintiff’s hands, even in favor of the creditors of the company. It would not follow necessarily
We have then fraudulent representations and damage. The weak point in the declaration is in the connection between these two elements. The allegation is, that the plaintiff indorsed, etc., “ relying on the validity of said stock as security,” but not that he relied on the defendants' representation that it was valid or non-assessable. If the demurrer had pointed out this specific defect, and the plaintiff had not seen fit to amend, it might have been questionable whether the declaration ought to be sustained. But the only ground of demurrer that could be taken to support this objection is, that it does not appear that the plaintiff was deceived by any false representations made by the defendants. This would seem to have been addressed, and to have been understood to be addressed, to a somewhat different point, viz. that the representations on the face of the stock, for one reason or another, did not amount to false representations by the defendants to the plaintiff. We therefore give the plaintiff the benefit of a somewhat liberal construction. When we can gather from the whole declaration that it is intended to present a certain case, we do not pronounce it bad for a want of technical accuracy of allegation, unless the specific defect is unmistakably pointed out.
While it is true that the declaration does not aver, in terms, that the plaintiff relied upon the representations made in the certificate, it does allege that the defendants delivered the stock to Meacom for the purpose of enabling him to raise money upon it, that Meacom applied to the plaintiff to lend him three hundred dollars on the security of the stock, and that the plaintiff, relying on the validity of the stock, etc., indorsed the note of Meacom for three hundred dollars, and obtained that sum “ by placing said stock as collateral security for the payment of said amount.” These last words import that at the time of the transaction the plaintiff had the certificates, and we think that the declaration may be taken to mean that he knew their purport. We have then the representations which we have recited, made by the
In this view it is unnecessary to consider whether the declaration does or does not state a cause of action valid in this Commonwealth, for an omission to give the warning required by the New Hampshire statute to be placed upon the face of the certificates.
Demurrer overruled.