Barndt v. Frederick

Decision Date05 November 1890
Citation47 N.W. 6,78 Wis. 1
PartiesBARNDT v. FREDERICK.
CourtWisconsin Supreme Court

OPINION TEXT STARTS HERE

Appeal from circuit court, Washington county.

It is alleged in the complaint that, on October 15, 1883, the defendant sold and delivered to the plaintiff, at the county of Waukesha in this state, (in which county plaintiff resides,) 100 shares of stock in the Arizona Peerless Silver Mining Company, a corporation, etc., for $3,000, which sum the plaintiff then paid defendant therefor. The complaint then proceeds as follows: “That, at the time of the sale and delivery aforesaid, said defendant falsely and fraudulently represented to the plaintiff that said company was then actually and actively engaged in the business of mining silver in the territory of Arizona, and was then the owner of a large quantity of mining property in said territory; that said corporation had, for a long time prior to said date, been actually and actively engaged in said mining business, and then actually had, and owned, a quantity of silver ore, of the actual value of one and one-half millions of dollars, already excavated and upon the surface of the ground at its mines in said territory of Arizona, and ready for shipment; and that the market value of said stock was then thirty dollars per share.” It is further alleged therein that such representations were made at and before the sale and delivery of the stock, and were so made by the defendant, who well knew that each of them was false, for the purpose of fraudulently inducing the plaintiff to purchase the stock, and the plaintiff believed and relied upon them, and was thereby induced to purchase the stock, and pay therefor the said consideration, and that the stock never had any value, and was worthless. The remainder of the complaint is as follows: “That the plaintiff never learned that said representations were false and fraudulent, as aforesaid, until on or about the 1st day of December, 1887, and that thereupon, and on the 30th day of December, 1887, he offered to return said stock to the defendant, who then and there refused to accept the same, and the plaintiff avers that he has, ever since been and is now ready and willing to return said stock to the defendant; that, by reason of the premises aforesaid, the plaintiff has been damaged in the sum of three thousand dollars and interest thereon from the 5th day of October, 1883. Wherefore this plaintiff demands judgment against said defendant for said sum of three thousand dollars, and interest thereon from the 5th day of October, 1883, besides the costs of this action.” It is alleged in defendant's answer that he sold the stock in question to the plaintiff, as agent for said Peerless Mining Company, and for certain individuals; that he had never been in Arizona, and had no personal knowledge of the location, condition, or capacity of the Peerless mine; and that whatever statements he made to plaintiff concerning the same were made upon information received from others, which he deemed reliable, and he believed such statements were true when he made them. It is also alleged that at the time, and before he so purchased the stock, the plaintiff well knew the above facts. The answer then proceeds as follows: “That this defendant, as such agent, and upon such information so received at and before the making the sale of such stock, did tell the plaintiff that he had seen and talked with a Mr. Campbell, then acting as engineer and superintendent of the mine of the said Arizona Peerless Silver Mining Company, who professed to have, and whom defendant verily believed, and still believes, had full knowledge of the condition and value of the mine, and whom defendant then believed, and still believes, stated the same truthfully, and that Mr. Campbell informed him the company were engaged in opening and operating the mine, and that ‘Gunsight,’ within a few hundred feet of the Peerless, owned by said company first above mentioned, had a large quantity of silver ore, excavated and in sight, of the value of one and a half millions, and that the lodes or veins being worked by such last-named company, ran, or appeared to run, across the lands of the Peerless, whose stock he was offering for sale; all of which statements this defendant then and still believes to have been, and to be, true. And the defendant expressly denies that he made the representations stated in the complaint, or any false or fraudulent statements to his knowledge, but, on the contrary, states that the foregoing statements in his answer, by him set forth as the statements made by him in making the sale of said stock, and none other, except perhaps kindred statements, were the statements made by him to the plaintiff to effect a sale of said stock. But he expressly avers that every statement made by him was upon information and belief, and to the said plaintiff known to be so at the time of the making of each and every one of them, and that the said defendant, at the time of such representation made on information, believed said information to be true.” It is further alleged in the answer that the defendant paid over the money received from plaintiff for such stock, less his commissions, to his principals, and that plaintiff made no complaint until December, 1887, when he offered to return the stock, and take back his money; but the defendant declined the offer, and refused to recognize the transaction as an individual one on his part, or to purchase the stock, or refund what plaintiff had paid for it. Except as thus alleged in the answer, and except the allegations in the complaint of the organization of the Peerless Mining Company, and the residence of the plaintiff, there is a general denial in the answer. Further statement of the case, in connection with the rulings of the court on the trial, will be found in the opinion. The jury found for the plaintiff, and assessed his damages at the sum claimed in the complaint. Motions on behalf of defendant for a nonsuit, and for a new trial, were denied, and judgment for the plaintiff entered pursuant to the verdict. The defendant appeals from the judgment.E. S. Bragg, for appellant.

Barney & Kenchenmeister, for respondent.

LYON, J., ( after stating the facts as above.)

I. On the trial of the cause, counsel for defendant claimed that the action, as characterized by the complaint, is to recover the corsideration paid for the mining stock, on a rescission of the contract of purchase, because of the alleged false representations made by the defendant, which the plaintiff believed to be true, and on the faith of which he made the purchase. Such also is his contention in the argument here. On the other hand, counsel for plaintiff maintained on the trial, as he does in this court, that the action is to recover damages for the alleged fraud and deceit of the defendant in the sale of the stock. If the first position is correct the action is based upon the implied promise of the defendant to refund the consideration paid for the stock by the plaintiff, in case such representations should prove to be false, and the plaintiff should elect to rescind the contract, and return, or offer to return, the stock. In such case, it is an action ex contractu. If the other position is the correct one, it is an action ex delicto. Before the plaintiff can recover on the implied assumpsit, he must show that the defendant made representations of fact materially affecting the value of the stock; that the plaintiff relied upon such representations, and purchased the stock on the faith of them, believing them to be true; that they were false; and that, within a reasonable time after discovering they were false, the plaintiff rescinded the contract of purchase by returning, or offering to return, the stock to the defendant. It need not be averred or proved that the defendant knew his representations were false. His legal liability remains, although he believed, and had good reason to believe, his representations true. It must also appear either that the defendant was the owner of the stock, or, if he was not the owner, but was acting as agent of the owner in making the sale, that he failed to disclose such agency to the plaintiff, but dealt with him as though he (the defendant) was the owner. If such agency existed, and the principal was disclosed to plaintiff at the time of the sale, the action ex contractu must be brought against the principal, and the agent is not liable, especially after he has (as in this case) paid over the proceeds of the sale to his principal. If the action is to recover damages for the alleged fraud and deceit, the plaintiff must, as in the other form of action, show the representations, their materiality, his reliance upon the truth of them in making the purchase, and that they were false; but he must also aver and prove that the defendant knew they were false, or had no good reason to believe they were true, when he made them. No offer to return the stock need be averred or proved, and the facts that the defendant acted as agent for others in selling the stock, and disclosed his principals to the plaintiff at the time of the sale, will not relieve the defendant from liability for his fraud. Neither will any delay in bringing such action ex delicto necessarily defeat it, unless some statute of limitation has run against the cause of action. The rules above stated are quite elementary, and neither of the learned counsel question or controvert them. The defendant proved, on the trial, that he sold the stock in question as the agent of the mining company, and the proofs are quite satisfactory that the plaintiff had knowledge of that fact when he made the purchase. If he had such notice, (and we do not doubt he had,) the plaintiff cannot recover against the defendant on the implied assumpsit; hence, if this is an action ex contractu, it cannot be maintained, and the judgment for the plaintiff must necessarily be reversed. On the other...

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28 cases
  • Zochrison v. Redemption Gold Corporation
    • United States
    • Minnesota Supreme Court
    • 2 Julio 1937
    ...District of Minnesota, August 19, 1936, Nordbye, J.); Cottrill v. Crum, 100 Mo. 397, 13 S.W. 753, 18 Am.St.Rep. 549; Barndt v. Frederick, 78 Wis. 1, 47 N.W. 6, 11 L.R.A. 199; Klerlein v. Werner, 307 Pa. 16, 160 A. 719; 27 C.J. 26, § Some of the fraudulent acts were committed before and some......
  • Burnett v. Taylor
    • United States
    • Wyoming Supreme Court
    • 31 Enero 1927
    ...who need the protection of law the most, would be left a prey to the fraudulent and artful practices of evildoers." In Barndt v. Frederick, 78 Wis. 1, 11, 47 N.W. 6, 9; L.R.A. 199, it is said: "If the representations were so extravagant that sensible, cautious people would not have believed......
  • Kempf v. Ranger
    • United States
    • Minnesota Supreme Court
    • 14 Enero 1916
    ...gullible and the credulous with an improbable falsehood, as it is to deceive the average man with a plausible one. Barndt v. Frederick, 78 Wis. 1, 47 N. W. 6, 11 L.R.A. 199. The question is not whether the representations would deceive the average man. It is a question whether they were of ......
  • Kempf v. Ranger
    • United States
    • Minnesota Supreme Court
    • 14 Enero 1916
    ...gullible, and the credulous with an improbable falsehood as it is to deceive the average man with a plausible one. Barndt v. Frederick, 78 Wis. 1, 47 N. W. 6,11 L. R. A. 199. The question is not whether the representations would deceive the average man. It is a question whether they were of......
  • Request a trial to view additional results

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