Automobile Finance Co. v. Rosenheim

• Decision Date: 28 February 1920
• Docket Number: 48-1919,51-1919,49-1919
• Citation: 73 Pa.Super. 546
• Parties: Automobile Finance Co. v. Rosenheim et al., Appellants
• Court: Pennsylvania Superior Court

73 Pa.Super. 546

Automobile Finance Co. v. Rosenheim et al., Appellants

Nos. 48-1919, 49-1919, 51-1919

Superior Court of Pennsylvania

February 28, 1920

Argued October 7, 1919

Appeals by defendants, from judgment of C.P. No. 3, Phila. County-1918, Nos. 536, 537 and 538, in the cases of Automobile Finance Company v. Harry T. Rosenheim, John E O'Brien and Harry J. Hogg.

Assumpsit under written contract for sale of stock. Before Ferguson, J.

Rule for judgment for want of a sufficient affidavit of defense.

The facts appear in the opinion of the Superior Court.

The court made absolute the rule. Defendants appealed.

Errors assigned were the orders of the court.

Albert T. Bauerle, for appellants. -- The defendants were entitled to rescind the contracts because of fraud: Shisler v Vandike, 92 Pa. 447; Smith v. Webster, 2 Watts 478; Eagan v. Call, 34 Pa. 236; McDowell v Meredith, 4 Wharton 311; Riegel v. American Life Ins. Co., 153 Pa. 134.

The contracts were severable: Fullmer v. Poust, 155 Pa. 275; McLaughlin v. Hess, 164 Pa. 570; Crawford v. McKinney, 165 Pa. 605; Morgan v. McKee, 77 Pa. 228.

George J. Edwards, Jr., for appellee. -- Having elected to affirm their contracts, the defendants could make an allegation of fraud as a defense to the action: Robinson v. Coal Mining Co., 58 Pa.Super. 136; Zeller v. Haupt, 41 Pa.Super. 647; Howard v. Turner, 155 Pa. 349; Dunn v. Columbia Nat. Bank, 204 Pa. 53; Bristol Iron & Steel Co. v. Selliez, 175 Pa. 18.

Before Orlady, P. J., Porter, Henderson, Head, Trexler and Keller, JJ.

OPINION

TREXLER, J.

The plaintiff's claim was founded upon the following written contract:

" Philadelphia, __ Pa. __, March 22, 1917.

" Gentlemen:

" I hereby agree to purchase 100 shares of the 7% Cumulative Preferred Stock of the Automobile Finance Company, at $ 10.00 per share, and enclose $ 250.00, and agree to pay the balance from commissions of Ten (10%) percent from stock sales.

" It is understood that this stock is full paid and non-assessable, and dividends are to accrue from date of final payment. Also, that I am to receive a bonus of Common Stock equal to one-half of the above Preferred Stock, also a further bonus of One Hundred (100%) percent of Common Stock when preferred as and when fully paid as a directors bonus.

" (S) Harry T. Rosenheim."

The defendant, in his affidavit of defense states that since August, 1917, he could not conscientiously recommend the said stock to any prospective purchaser, and that he, therefore, could not for the present sell any of it. His reason, as he sets forth, is that he in company with other directors of the plaintiff company, became possessed of certain information that 20,000 shares of stock of the plaintiff company were illegally transferred to the Central Security Company without consideration, and that a bill in equity had been filed in the Delaware courts, praying for the return of the said shares of stock of the plaintiff company, that the demurrer which had been filed against the bill had been dismissed, and that the defendant was awaiting the final decision of said cause before attempting to make any further sales. The court entered judgment for want of a sufficient affidavit of defense. The reason assigned for the entry of judgment by the learned court below, is that the defendant having elected to affirm the contract, is bound to comply with its terms. It will be noticed that, the agreement is for the purchase of preferred stock, that in no place of the affidavit of defense is the allegation that issuing of the preferred stock has been made the subject of any inquiry, nor has its legality been questioned.

The statement of claim avers that defendant refused on July 12 1917, to make any further sale of said preferred stock, and refuses to pay the balance due under said contract. This statement is not categorically denied by the defendant. When defendant was put in the position that he could not conscientiously recommend the purchase of said stock to prospective purchasers, the course open to him was to repudiate the contract and return the stock. He could not retain the subject-matter of the contract, and at the same time allege its fraudulent character. The following...