Twachtman v. Connelly

• Decision Date: 18 September 1939
• Docket Number: No. 7912.,7912.
• Citation: 106 F.2d 501
• Parties: TWACHTMAN v. CONNELLY.
• Court: U.S. Court of Appeals — Sixth Circuit

106 F.2d 501 (1939)

TWACHTMAN v. CONNELLY.

No. 7912.

Circuit Court of Appeals, Sixth Circuit.

September 18, 1939.

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COPYRIGHT MATERIAL OMITTED

Murray Seasongood, of Cincinnati, Ohio (Paxton & Seasongood, of Cincinnati, Ohio, and Estabrook, Finn & McKee, of Dayton, Ohio, on the brief), for appellant.

S. S. Markham, of Dayton, Ohio (McMahon, Corwin, Landis & Markham, of Dayton, Ohio, on the brief), for appellee.

Before HICKS, ALLEN, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

This is an appeal from a jury verdict in an action in which appellant seeks to recover damages for alleged negligence of the appellee in discharging his duties as her compensated agent.

Appellant assigns error to the denial by the lower court of her right to recover for failure of appellee, her trustee, to furnish her information as to the financial condition of the Union Trust Company of which he was a director and in which she owned 1,104 shares of stock.

She also assigns error to the rejection and admission of evidence. She assigns error to the rejection of her amended petition tendered during the trial; to the exclusion from the court room of her husband, Quentin Twachtman, during the taking of her evidence; to the argument of counsel before the jury; to the court's charge and to the overruling of her motion for a new trial.

Appellant alleged in substance that in February, 1927, she executed and delivered to appellee a written power of attorney, authorizing him to have the securities described therein, including 276 shares of the capital stock, par value $100, of the City National Bank of Dayton, Ohio, predecessor of the Union Trust Company, transferred to him with full power to vote it with all incidental rights except that of sale. She alleged that appellee was then a director of the City National Bank, and so continued until the Union Trust Company closed October 31, 1931; that she resided at Greenwich, Connecticut, a long distance from Dayton, and relied exclusively on appellee for factual information relating to the various securities included in the trust instrument.

She alleged that early in 1930 she asked appellee for advice, particularly as to the sale of all, or a substantial part of the Union Trust Company shares, and in June of that year requested him to sell approximately twenty-five percent and on June 30, 1930, he advised her he was endeavoring to do so; that there had been no decline in the price and that he was immediately placing it with the trust company for sale but on August 16, 1930, appellee advised her no bidders could be found and stated he was leaving the stock listed for sale at not less than ninety dollars per share, net. She alleged that up to this time, both the bid and asked price for the stock were $90 or more and until January 1931, it had not been sold, whereupon she insisted that appellee make a more diligent effort to dispose of it.

She alleged that in August, 1931, she orally advised appellee that if there were any possibility of the Union Trust Company being in a questionable financial condition he should sell her stock at the best obtainable price and he assured her that the trust company's financial condition was entirely satisfactory and he would continue his efforts to sell and take the necessary steps to protect her interest.

She also alleged that he knew, and for many months prior to August, 1931, had known, or by the exercise of ordinary care could have known, that the Union Trust Company was in a failing condition and had theretofore attempted, and was then attempting, to obtain financial aid from other banks; that its directors were endeavoring to form a pool to protect the rapidly declining sale price of its stock and consolidate it with the Winters National Bank & Trust Company of Dayton. She alleged that the appellee knew these facts, but withheld them from her, and by the exercise of due diligence, could have sold her stock at $90 per share.

Appellant alleged that appellee at no time advised her of the declining value of the stock; that the Union Trust Company went into insolvent liquidation October 30, 1931, and as a consequence thereof, her stock became worthless; that she had lost $99,360 because of his negligence and had incurred also a statutory liability because of her ownership of the stock which, due to her distressed financial condition, was settled for $3,000. She sought to recover $102,360.

The court admitted evidence as to the financial condition of the trust company from June 18, 1930, to October 30, 1931, its closing date, but restricted it to whether appellee failed to exercise reasonable care, skill and judgment in not selling the stock and further whether his failure to do so was because of his directorship in the bank. Appellant insists the evidence should have been considered for the further purpose of ascertaining whether she was entitled to recover damages on the ground that appellee had negligently failed to furnish her the information as to the failing condition of the bank which would have enabled her to offer the stock at a lower price in 1930.

The court, in its final charge, limited appellant's right to recover to appellee's failure, if any, to exercise reasonable care, skill and judgment in attempting to sell the stock and refused to permit her to recover because of appellee's failure to advise her of the financial condition of the trust company. The error assigned to the charge limiting the grounds on which appellant could recover and the weight to be given the evidence are essentially the same and will be disposed of together.

Appellant put in evidence the minutes of the meeting of the Board of Directors tending to show the financial condition of the trust company, at which time the court instructed the jury that appellee was under no legal obligation to furnish to appellant any information about the financial condition of the trust company subsequent to August 31, 1931, and that these minutes would be considered solely for the purpose of throwing light, if any, on the good faith effort of appellant to sell the stock.

In its final charge, the court instructed that before finding for appellant, the jury must believe, from a fair preponderance of the evidence, that she directed appellee to sell her shares of stock, or part thereof, at $90 per share or less and that appellee failed to exercise reasonable care, skill and judgment in carrying out her instructions or failed to sell the stock by reason of his directorship in the trust company and that it could consider the evidence as to the financial condition of the bank only for the purpose of showing the good faith or lack of it on the part of appellee.

Pleadings are to inform the court and the parties of the facts in issue that the court may declare the law and the parties may know what to meet by their proof.

In common law or code pleading, the essential facts of a cause of action should be unequivocally plead, matters of substance being in positive and direct terms in order to obviate uncertainty. Deducible arguments or references from pleadings may not be used as a basis of proof and where both general and specific allegations are made respecting the same subject matter, the specific restrict the general and likewise restrict the proof.

Under Section 11306 of the Ohio General Code, plaintiff may unite in one action all causes arising from the same transaction or transactions connected with the same subject and this includes actions, legal, equitable, ex contractu and ex delicto, but if they do not arise from the same transaction or transactions connected with the same subject, then cases ex contractu cannot in general be united with those ex delicto. Sturges v. Burton, 8 Ohio St. 215, 72 Am.Dec. 582.

Appellant insists that she has alleged two grounds of recovery cognizable under the above code; first, the negligent failure of the appellee to keep her advised of the unfavorable condition of the trust company; second, his negligent failure to carry out her instructions to sell. When appellant's declaration is stripped of recitals, arguments and references, it states but one ground of recovery, viz., the negligent failure of appellee to sell the stock.

In order to afford sufficient basis for an action of deceit, the representations made or the facts concealed must have been material and must have had such relation to the transaction under consideration as to operate as an inducement to the action or omission of the complaining party (Kimber v. Young, 8 Cir., 137 F. 744, 745) and in addition, plaintiff must allege and prove some specific damage sustained because of the deceit or fraudulent conduct. B. F. Avery & Sons v. J. I. Case Plow Works, 7 Cir., 174 F. 147.

In the case here appellant makes no claim of damages because appellee did not advise her of the condition of the bank. She alleges unequivocally that appellee could, and should, have sold the shares of stock at $90.

Appellant now undertakes to apply the proof to establish the predicate that the stock was worthless. The court will not lend its aid to such inconsistencies. Milske v. Steiner Mantel Company, 103 Md. 235, 63 A. 471, 5 L.R.A.,N.S., 1105, 115 Am.St. Rep. 354; Reiff v. Mullholland et al., 65 Ohio St. 178, 62 N.E. 124.

Appellant's action is not based on the declining values of the trust company's assets reflected in the falling price of the stock, but on the failure of appellee to sell the shares in an available market, which it is claimed he did not do because he was an official of the trust company and owner of its stock. It therefore follows that evidence of appellee's failure to keep appellant informed of the condition of the trust company throws no light on the issue, except his lack of good faith in carrying out appellant's instructions to sell.

It is a familiar and elementary rule that pleadings and proof must reasonably correspond. Standard Oil Company v. Brown, 218...