Bank of Atchison County v. Byers

• Decision Date: 08 June 1897
• Citation: 41 S.W. 325,139 Mo. 627
• Parties: Bank of Atchison County v. Byers et al., Appellant
• Court: Missouri Supreme Court

41 S.W. 325

139 Mo. 627

Bank of Atchison County v. Byers et al., Appellant

Supreme Court of Missouri, Second Division

June 8, 1897 ^[*]

Appeal from Jackson Circuit Court. -- Hon. E. L. Scarritt, Judge.

Affirmed.

Karnes Holmes & Krauthoff for appellants.

(1) A distinguishing characteristic of this case is the total want of any connection whatever of the appellants with the transaction in which the plaintiff claims to have been deceived. The New Hampshire Investment Company of which they were officers was not even connected with it. It was wholly between the plaintiff and the Winner Investment Company. No advantage could in any way accrue to appellants from the transaction, and with the exception of Mr. Perkins they were totally ignorant that any such transaction was about to take place. There could, therefore, have been no motive whatever to deceive. Bigelow on Fraud [1888 Ed.], 465, 466. (2) There is no evidence in the case of any intention on the part of these appellants that the statement on the bonds that they were first mortgage bonds should be acted upon by any person ignorant of the facts. There was not only no evidence in this case of any intention that said statement should be acted upon by any person ignorant of the facts, but the evidence goes further and entirely negatives any such inference. Derry v. Peek, 61 L. T. Rep. 265; S. C., L. R. 14 App. Cas. 337. (3) The court erred in giving plaintiff's instruction numbered 5. It is ambiguous and misleading to the jury in that it makes no distinction between an "expectation, understanding and belief" that the Holmes deed of trust would be paid off before the Winner Investment Company would dispose of any of the bonds to ignorant parties, and an "expectation, understanding and belief" that said deed of trust would be paid off after such bonds were so disposed of. (4) The court also erred in giving plaintiff's instruction numbered 3. The words "and be deceived thereby" so far color this instruction as to submit the case to the jury on the theory that under the evidence they might find that defendants intended that ignorant persons might purchase these bonds before the Holmes deed of trust was paid off, because in that way only could they "be deceived." (5) Instruction 4 is also erroneous. It asserts that, on the hypothesis assumed, plaintiff "had the right to presume that the matters contained in such statement and recitals were true and to rely and act thereon as true in purchasing said bonds" and that, as a matter of law, the failure to examine the land records constitutes no defense. Clark v Edgar, 84 Mo. 106. (6) Plaintiff's ninth instruction is also erroneous because it permits the plaintiff to recover if it relied on the representations engraved on the bonds regardless of whether in the opinion of the jury, the representations were such as would impose upon one of ordinary prudence and justify him in relying upon them without examination of the records. This instruction virtually took the case away from the jury. (7) Plaintiff's sixth instruction is not based on the evidence in the case. (8) Plaintiff's seventh instruction is erroneous. It tells the jury that if appellants put it within the power of the Winner Investment Company to market any of these bonds without paying off the Holmes deed of trust, then they were liable for the consequences to purchasers of said bonds from the Winner Investment Company. This proposition is little short of monstrous. (9) Plaintiff's third instruction is also erroneous because it tells the jury that as a matter of law the statement on the bonds that they were first mortgage bonds "both at the time of the issue of said bonds and at the time of their purchase by plaintiff, except as to a part of the lots described in the deed of trust securing the same, was false." (10) The court erred in refusing to give defendants' thirteenth and fourteenth instructions. (11) The court erred in refusing to give defendants' instructions 7, 8 and 9, being separate demurrers to the evidence. If the pleadings and evidence in this case show that the plaintiff sustained no legal damage by the alleged fraud, it follows that the several demurrers to the evidence ought to have been sustained. Doran v. Eaton, 41 N.W. 244; Hubbell v. Meigs, 50 N.Y. 480; 3 Suth. Dam. [2 Ed.], sec. 1171; 1 Sedg. Dam. [8 Ed.], sec. 257; Murray v. Stanton, 99 Mass. 345; Doran v. Eaton, 41 N.W. 244; Deck v. Feld, 38 Mo.App. 674. (12) The court also erred in permitting plaintiff to prove that after it acquired the bonds in question the lands unreleased from the Holmes deed of trust were sold and conveyed under a decree foreclosing said deed of trust in the federal court. (13) The court committed error by refusing to "instruct the jury that neither defendant is responsible for the acts of the other defendants, and you are instructed to render a separate verdict as to each defendant." (14) Plaintiff can not recover from appellants because of the want of any transaction between them. This arises from the inherent nature of deceit as understood in the law. 1 Big. on Fraud [1888 Ed.], p. 465. (15) So far as appellants, Bunker and Perkins, are concerned their demurrers to the evidence should have been sustained as coming within the statute of frauds. R. S. 1889, sec. 5188. (16) Clark v. Edgar, 84 Mo. 106, so far as it furnishes a basis for this action, is unsound and ought to be overruled. Van Weel v. Winston, 115 U.S. 223.

James S. Botsford for respondent.

(1) The very facts that the defendants in issuing these lithographed bonds of the New Hampshire Investment Company amounting to $ 1,000,000, used the words in the face of the bonds "New Hampshire Investment Company, First Mortgage Debenture Bonds," and on the back of the bonds the words, "New Hampshire Investment Company, Kansas City, Mo., First Mortgage Debenture Bonds," conclusively show that defendants in this case intended to deceive and defraud the purchasers of those bonds. (2) The law of this case is pretty well stated in the following decisions in this State: Clark v. Edgar, 84 Mo. 106, which is a precise authority for this case; also Arthur v. Wheeler & Wilson Co., 12 Mo.App. 335; Scott v. Haynes, 12 Mo.App. 596 and 597; Hornblower v. Crandall, 7 Mo.App. 220; Watson v. Crandall, 7 Mo.App. 233; Watson v. Crandall, 78 Mo. 583; Caldwell v. Henry, 76 Mo. 254; Bailey v. Smock, 61 Mo. 213; Delaney v. Rogers, 64 Mo. 201. The action of the court in giving and refusing instructions in this case was in harmony with the foregoing authorities, cited both by us and appellants' counsel. The instructions given for plaintiff were properly given and those refused for defendants were properly refused. (3) The court would have been well justified in giving an instruction directing a verdict for plaintiff and submitting to the jury only the question of damages. In Bigelow on Fraud, the following elements are set out as being the only elements required in a case like this to be established by the evidence on the part of the plaintiff, namely: First, false representation; second, knowledge by the person who made it of its falsity; third, ignorance of its falsity by the person to whom it was made; fourth, intention that it shall be acted upon; fifth, acting upon it with damage. (4) It is contended by appellants' counsel that the plaintiff was not entitled to recover any damages. The evidence in this case shows that The New Hampshire Investment Company bonds all sold at par. Undoubtedly, The New Hampshire Investment Company bonds, if they had been first mortgage bonds on the property conveyed in The New Hampshire Investment Company deed of trust, would have been worth par, the amount for which they sold in the markets of the world; but these bonds proved to be worthless.

Marcus T. C. Williams also for respondent.

(1) That the facts stated in the petition are actionable at law in a suit by one injured thereby is clear both upon reason and authority. Derry v. Peek, L. R. 14 App. cases 374. (2) It is a settled principle of law and of morals that everyone is presumed to intend the natural and probable consequences of his own acts; and the natural and probable consequences of the acts of defendants in making and disposing of bonds, negotiable in form and declaring on their face that they are first mortgage bonds, were that they would be negotiable in the markets of the world on the faith of the statement that they were first mortgage bonds, which alone gave them value as commercial securities. Cowley v. Smith, 46 N. J. L. 380, and cases cited; Bank v. Buck, 123 Mo. 154; State v. Patterson, 116 Mo. 513; Snyder v. Free, 114 Mo. 375; Dulaney v. Rodgers, 64 Mo. 204; Joliffe v. Collins, 21 Mo. 342; Peers v. Davis, 29 Mo. 189; Brooking v. Shinn, 25 Mo.App. 282. (3) These representations were made for the purpose of circulation. They go along with the bonds. Clark v. Edgar, 84 Mo. 110; Bruff v. Mali, 36 N.Y. 200; Morgan v. Skiddy, 62 N.Y. 319; Bartholemew v. Bentley, 15 Ohio St. 659; Clark v. Dickson, 6 C. B. (N. S.) 453; Railroad v. Kisch, L. R. 2 English and Irish App. 100; Bank v. Thayer, 2 McCrary (C. C.), 1; Nash v. Minn. Title Co., 159 Mass. 440. (4) And defendants are liable for the damages resulting from these false and fraudulent representations, although they might not have fraudulently converted the proceeds of the bonds sold to their own use or did not reap any personal advantage from the fraudulent transaction. Paddock v. Fletcher, 42 Vt. 389; Bustered v. Farrington, 36 Minn. 320, and cases cited; Fisher v. Mellen, 103 Mass. 503; Pasley v. Freeman, 2 Smith's Lead. Cases [8 Ed.], p. 66 and cases; Watson v. Crandall, 78 Mo. 583; McBeth v. Craddock, 28 Mo.App. 396. (5) The bonds are made in negotiable commercial paper, and upon such a recital plaint...