211 Mo. 444 | Mo. | 1908
— This is a suit in .equity, in which the plaintiff seeks to annul a transaction in which he conveyed to defendant Heard a 200-acre farm in Illinois, and to require the defendant Morgan, to whom Heard afterwards conveyed it, to re-convey it to the plaintiff. The petition charges that the defendants Kester and Heard made certain false representations to Mm by which he was deceived and thereby induced to make the deed conveying the land to Heard, and that defendant Morgan took the deed from Heard with knowledge of the fraud and to aid the fraudulent scheme. The transaction consisted in the conveying of the land to Heard for the consideration of stock in a manufacturing corporation in St. Louis. Defendants Kester, Heard and Hoge were at the time of this transaction, the chief stockholders in the corporation, they were directors and active participants in its business, defendant Morgan held five shares of the stock and about a month after the transaction in question was made secretary. The false representations alleged in the petition to have been made by Kester and Heard were that the capital stock of the corporation, $150,000, was all subscribed and $83,000 fully paid; that of the $83,000, $57,000 was paid in cash and $26,000 in property at a just and reasonable valuation; that the corporation was in a prosperous condition earning sufficient to pay all expenses and a large dividend on its total capital, and in addition to the representations it was
Defendants Kester, Hoge and Morgan filed an answer to the petition which was a general denial and a plea that plaintiff did not rely on any representations made by them or Heard, but that he investigated the subject for himself and acted on his own judgment. They denied that Heard had ever made any such representations and averred that, if he did, he was not authorized by them to do so. Morgan especially denied that he had engaged in any collusion or conspiracy with his co-defendants to defraud the plaintiff and averred that he was an innocent purchaser of the property for value. There was no service of the summons on Heard and no appearance for him, the suit was, as to him dismissed.
At the trial the testimony in behalf of the plaintiff in reference to the alleged misrepresentations was chiefly that of the plaintiff himself and was to the following effect: Plaintiff is a merchant living in Murphysboro, Illinois. The corporation in question was a concern engaged in the manufacture of a breakfast food called Cris-Po. Plaintiff’s attention was first attracted to this matter by an advertisement in a St. Louis newspaper; it led to a correspondence by mail and then to the plaintiff’s coming to St. Louis and meeting defendants Kester and Hoge at the mills of the corporation. They went over the mills together. In the course of their conversation at that time Kes
The deed conveyed the farm to Heard subject to two mortgages, one for $850', the other for $100'.
In a letter from Hester to the plaintiff, dated October 1, 1903, the writer enclosed a “statement showing business in detail.”
In a letter dated October 9, 1903, Hester said that the stock had “an actual market value of 75 cents,, while there has been some little of the stock changed hands at a little above par. Should we arrange a satisfactory deal and you would care to become identified with the company, we can arrange you a nice salaried position.” October 13th, he wrote again giving something of the history of the concern and its business prospects, and asking information about the farm, and concluded by saying: “I would want yon to visit St. Louis and thoroughly familiarize yourself with the workings of the business here and everything of interest. We refer you for outside reference to- Dun Merc. Agency or any banking house in the city.” In the correspondence Hester gave the plaintiff to understand that the stock he was proposing to give for the farm was not his own but a friend’s, which was true, it was Heard’s stock. Before coming to St. Louis plaintiff got his friend Zeche to go to the mills of the corporation and examine its books, and Zeche’s report corresponded with the statement sent in the letter of October 1st.
Defendant Hoge was called as a witness for plaintiff; his testimony was to the following effect: He was the president of the corporation. The capital stock was $150,000, 1500 shares of $100 each. Witness subscribed for 900 shares, Hester and Heard each 300*. “Prom the hooks which are here, the opening statement or record was made that the stock was subscribed and paid up by property, $145,899.88, and cash $4,001.-
In December following the trade, plaintiff had an
On the part of defendants the testimony was that neither of them ever stated to the plaintiff that $83,000 of the stock had been fully paid, or that the concern was at the time earning money enough to pay expenses and a dividend on the stock, and they never agreed to give him the position of secretary and treasurer; that at the meeting at the hotel referred to, the plaintiff made a written proposition to convey the farm for $18,000' of stock and the position of secretary and treasurer at the salary of $100'-a month, which they refused, because they told him the position was not in their power to give. After the plaintiff went home and returned again to St. Louis he offered to deed the farm for $20,000 of stock, the offer was accepted and. the trade closed.
There was no evidence that plaintiff offered to return the stock and rescind the trade before this suit was brought; at the trial plaintiff tendered the stock. The trial court found the issues in favor of the plaintiff and rendered a decree requiring defendant Morgan to reconvey the farm to plaintiff; from that judgment defendant Morgan has appealed.
I. One reading the plaintiff’s testimony is impressed with the idea that his main grievance is that he was not given the position of secretary and treasurer at a salary of $100 a month. Assuming that the ■evidence proved that such promise was made, it would not justify a rescission of the contract on the theory of misrepresentation. A promise, though made with
II. On the question of false representations the
Plaintiff testified that he relied to a great extent on the Dun report and hy that was deceived into believing that $83,000 of the stock was fully paid in money and money’s worth, that of that sum $57,000 was in money and $26,000 in property at a fair value, and the testimony showing that the information on which that report was made was furnished by the bookkeeper under the direction of the president, it was in effect the representation of the defendants themselves. But the testimony shows that the books of the concern showed exactly how the stock was paid, and it shows that the plaintiff and his friend Zeche examined the books before making the trade and he is chargeable with knowledge of their contents. Besides, the plaintiff’s witness Hoge testified to the character and value of the property and assets turned in to the company in payment of the stock and according to that testimony it was worth what it was turned in for. True, Hoge was one of the defendants and although a witness for plaintiff he may be considered unfriendly to plaintiff’s cause in so far as his feeling is liable to influence his judgment as to
False representations to justify the cancellation of a contract must have been relied on by the party complaining. Plaintiff himself testified that he did not rely on the statements that the defendants made to him, but that he and his friend Mr. Zeche examined the mills and examined the books and on that and the Dun report he made the trade.
It is significant that the plaintiff offered no proof as to the value of his farm or the value of the stock. He claims in his petition that he made the trade, being misled by defendants ’ false representations into believing that the stock was fully paid in money or money’s worth and the business was then earning enough to pay all expenses and large dividends on the total capital. The total capital was $150,000. If it is true that the plaintiff so believed then he must have believed that the stock was worth at least par and that he was getting stock worth fully $20,000 for his farm; that would be $100 an acre. But the only evidence in the record as to the value of the farm was that of defendant Morgan who said it was worth $20 to $25 an acre, which would amount to $4,000 or $5,000, less the two mortgages, $950. From those figures we must'conclude either that the plaintiff knew he was trading his farm for stock far below its face value or else that he was getting four or five times as much as it was worth. The evidence does not sustain the plaintiff’s charge of fraud.
III. Since the plaintiff’s charge of fraud and conspiracy is unsupported by the evidence there is really no necessity for going further to discuss the connection of defendant Morgan with the alleged fraudulent acts, but since he has been charged with fraud we will look at the evidence as it relates to him. He was not
The judgment is reversed and the cause remanded with directions to the circuit court to enter judgment for defendants, dismissing plaintiff’s bill.