Arnold v. E. X. Somers, F. M. Abbott, Charles Weeks, W. J. Aldrich, A. P. Ladd, J. E. Alexander, And American News Vending Co.
| Decision Date | 13 November 1918 |
| Parties | GARDNER B. ARNOLD v. E. X. SOMERS, F. M. ABBOTT, CHARLES WEEKS, W. J. ALDRICH, A. P. LADD, J. E. ALEXANDER, AND AMERICAN NEWS VENDING COMPANY |
| Court | Vermont Supreme Court |
May Term, 1917.
ACTION on the case for fraud. Plea, the general issue. Trial by jury at the March Term, 1916, Chittenden County, Stanton, J presiding. Verdict and judgment for the plaintiff against defendants E. X. Somers, J. E. Alexander, and American News Vending Machine Company. Verdict directed for the defendant Charles Weeks. Judgment on the verdict. Verdict and judgment for the defendants W. J. Aldrich, A. P. Ladd, and F. M Abbott. Plaintiff and defendants both excepted. The opinion states the case.
Judgment except as to defendant Somers affirmed. As to him, judgment reversed, and judgment that he is not guilty and that he recover his costs.
V A. Bullard and Sherman R. Moulton for the plaintiff.
Present: WATSON, C. J., HASELTON, POWERS, TAYLOR, and MILES, JJ.
The plaintiff sues for damages for fraud in the sale to him of certain rights in a patented vending machine known as the "Eureka Vendor." The defendants are the American News Vending Machine Company, the holder of the letters patent of the machine; E. X. Somers, at the time in question its president and general manager; J. E. Alexander, a commissioned salesman of stock and state rights of the company; A. P. Ladd, F. M. Abbott and W. J. Aldrich, members of its board of directors; and Charles Weeks, a stockholder. The trial was by jury. The court directed a verdict for Weeks and overruled a motion for a directed verdict for the other defendants. The jury returned a verdict for the plaintiff against the company, Somers and Alexander and in favor of the defendants Ladd, Abbott and Aldrich. The plaintiff and the defendants that were held bring exceptions.
In his declaration plaintiff charges a conspiracy among the defendants to defraud him by false representations in the sale to him of the right to manufacture and sell said Eureka Vendor in the state of New York. Several fraudulent representations are alleged as a basis of recovery, but only two were relied upon and submitted to the jury as supported by the evidence. It may be noted in passing that the question of a conspiracy in such an action is important only as it gives character to the individual acts of the parties to it and charges all with the legal consequences of such acts. Note, Ann. Cas. 1914C, 764. See Saxe v. City of Burlington, 70 Vt. 449, 41 A. 438.
It appeared that prior to January, 1912, Alexander was engaged by the American News Vending Machine Company, hereafter called the "company, " in selling the stock of the corporation on commission. On January 10, 1912, he entered into a contract with the company to sell state rights to manufacture its vending machines on a fifty per cent. commission. His business for the company took him to Barre, Vermont, in September, 1912, where he first met the plaintiff. He interested the plaintiff in the vending machine and first sold him some of the stock of the corporation. Later he directed plaintiff's attention to the matter of state rights and expressed a desire to find some one who would purchase the right for the state of New York with him. He found the plaintiff favorably inclined and proposed to ascertain the smallest amount for which the right could be bought. During the negotiations he showed the plaintiff a list of the maximum and minimum prices asked by the company for each state right outside of New England, the minimum for New York being about $ 22,000. Alexander secured from Somers, who had authority from the directors to fix the price of state rights within certain limits, a proposition for the New York right at $ 12,000 and certain royalties on the machines manufactured and $ 2,000 for the necessary manufacturing equipment. Later he met the plaintiff and submitted the proposition. After some talk it was arranged that the plaintiff should visit the factory of the company at St. Johnsbury. Accordingly plaintiff visited the factory with Alexander, met Somers who showed him around and explained the working of the vending machine, and he thereupon decided to purchase the right with Alexander. In due time the contract was executed, and plaintiff paid his share of the first installment of the purchase price. Subsequently, as the deferred payments except the last came due, plaintiff handed Alexander his check drawn to the company for his share and later received from Alexander, or was shown by him, the company's receipt for the whole payment. Plaintiff's share of the final payment was made in person to Somers, and a receipt for the final payment in full was given. As a matter of fact, Alexander actually paid no money to the company on account of his share; his proportion being represented by commissions on the sale of the right. The entries on the books of the company, made under Somers' direction, treated the whole amount as received in cash and an amount equal to his commission paid out to Alexander. Pursuant to an arrangement contemplated in their contract with the company, Alexander and the plaintiff organized a corporation to which they transferred the New York rights, receiving therefor stock of the corporation of the par value or $ 26,000.
One of the alleged fraudulent representations on which the case was submitted to the jury was that Alexander stated to the plaintiff that he had the means to pay for a half interest in the right and tool equipment at the price of $ 14,000 and would purchase the same with the plaintiff and pay cash for his half of the price. The other was that Alexander represented to the plaintiff that the Eureka vending machines, as then being manufactured, were perfect and the best of their kind in existence.
We will first examine the plaintiff's exceptions. He was permitted to testify as against Alexander alone that he would not have entered into the contract to purchase the New York rights if he had known that Alexander was to pay nothing. He objected seasonably to the limitation, and now insists that it was error which should reverse the judgment in favor of defendants Aldrich, Abbott and Ladd. He had already testified without objection or limitation that in making the contract he relied upon the fact that Alexander was paying for his share of the right in cash. Besides, the jury found against him on his claim of a conspiracy involving these defendants on which he relies to sustain the admissibility of this evidence against them, so his rights were not prejudiced by the limitation.
The plaintiff also excepted to the exclusion of the question asked defendant Aldrich in cross-examination, whether he knew of any action by the board of directors whereby Alexander was to receive a commission for selling the New York right to himself. But in further cross-examination plaintiff developed the fact that Aldrich knew of no arrangement with Alexander except the contract of January, 1912, which he had already testified about; so the exclusion of the question was harmless.
Plaintiff's exceptions are without merit.
We take up the defendants' exceptions in the order in which they are briefed. At the close of plaintiff's evidence and again at the close of all the evidence, the defendants severally moved for a directed verdict on various specified grounds. They argue three of the grounds under their exception to the action of the court in overruling their motions, viz. : (1) That there was no evidence that the defendants or any of them made any misrepresentations as to the quality, quantity, or value of the thing sold; (2) that there was no fraud practiced upon the plaintiff; (3) that there was no evidence that the plaintiff suffered any damage because of the alleged misrepresentations of the defendants or any of them.
The rule is well settled that to constitute actionable fraud in the sale of property the representations must be of existing facts relating to the subject matter of the contract and affecting its essence and substance, made as inducements to the contract, the representations being false and at the time known by the one making them to be false, or made of his own knowledge without in fact knowing them to be true, not open to knowledge of or known by the purchaser and relied upon by him in making the purchase to his damage. Hunt v. Lewis, 87 Vt. 528, 530, 90 A. 578, Ann. Cas. 1916C, 170, and cases cited. Tested by this rule, the plaintiff was not entitled to recover on Alexander's representation that he had the means to pay for a half interest in the rights and property and would pay cash for the same. The representations, if made, did not relate to the subject-matter of the contract, but were merely collateral thereto and in part only promissory. Besides, on the evidence there was no causal connection between the alleged representations and the damage which plaintiff claimed to have suffered. See Brackett v. Griswold, 112 N.Y. 454, 469, 20 N.E. 376; Silver v. Frazier, 85 Mass. 382, 81 Am. Dec. 662, 21 Cyc. 137. He paid no more than he expected to pay and received all that he expected to receive. The loss, if any, on account of the venture was in no way attributable to the fact that Alexander did not pay for his interest in cash.
The defendants contend that the representation that the machines as then being manufactured, were perfect and the best of their kind in existence, was an expression of opinion merely and so would not afford the basis of actionable fraud. Assuming that such a representation would ordinarily be a matter of opinion and for that reason not deemed fraudulent, the circumstances may be such that a representation based upon opinion will be fraudulent. If it is made as...
To continue reading
Request your trial