Beare v. Wright

Decision Date09 January 1905
CourtNorth Dakota Supreme Court

Appeal from District Court, Grand Forks county; Fisk, J.

Action by Thomas Beare against J. A. Wright and E. C. Bates. Judgment for plaintiff. Defendants appeal.


Judgment reversed and a new trial granted as to both appellants.

Tracy R. Bangs, for appellant.

Where one is deceived or defrauded, he can recover as damages the difference between the value of what he would have obtained had the statement been true and the value of what he received. Fargo G. & C. Co. v. Fargo G. & E. Co., 4 N.D. 219, 59 N.W. 1066, 37 L. R. A. 593. The instruction "If you believe from the evidence that any witness has willfully sworn falsely as to any material issue in the case then you are at liberty to disregard his entire testimony except in so far as it has been corroborated by other credible evidence or by the facts and circumstances proved on the trial," was erroneous. Roth v. Wells, 29 N.Y. 471; Wells on Quest. Law and Fact, pp. 279 and 425; Blashfield Instr. to Jury, p. 566; Hurlbut v. Leper, 81 N.W. 631; State v. Sexton, 72 N.W. 84; Minich v. People, 9 P. 4; Fraser v. Haggerty, 49 N.W. 616 (Mich.); People v. Sprague, 53 Cal. 491; Wilkins v. Earle, 44 N.Y. 172; The Sanctissima Trinidad v. The St. Ander, 7 Wheat. 283; Gillitt v. Wimer, 23 Mo. 77; People v. Strong, 30 Cal. 151.


A material representation is one that relates to condition, kind and quality of the property at the time it is described, and which is believed and relied on by the persons to whom it is made, and which moves and induces them to act in a manner that they would not have acted had such representations not been made. The representation of the price paid for the stock by the parties named, standing as it does alone and not associated with any other representations of the condition, quality or kind of the property purchased, or any other matters affecting its value, is of a matter wholly collateral to the subject matter of the transaction, and will not constitute a basis for recovery for deceit in a material matter. Blair v. Buttolph, 33 N.W. 349; Palmer v. Bell, 85 Me. 352; O'Brien v. Lugues, 81 Me. 46; Hedden v. Griffin, 49 Am. Rep. 25; Fulton v. Hood, 75 Am. Dec. 664; Am. B. & L. Assn. v. Boer, 67 N.W. 500; Medbury v. Watson, 6 Met. 259; Hemmer v. Cooper, 8 Allen, 334; Way v. Ryther, 42 N.E. 1128; Cooper v. Lovering, 106 Mass. 77; Gasnett v. Glazier, 43 N.E. 193; Halbrook v. Conner, 60 Me. 578, 11 Am. Rep. 212; Bishop v. Small, 63 Me. 12; Bourn v. Davis, 76 Me. 223; Long v. Woodman, 58 Me. 49; Martin v. Jordon, 60 Me. 531; Ellis v. Andrews, 56 N.Y. 83; Banta v. Palmer, 47 Ill. 99; Noelting v. Wright, 72 Ill. 390; Tuck v. Dowing, 76 Ill. 71; Dillman v. Nadelehoffer, 7 N.E. 88; Hawk v. Brownell, 11 N.E. 416; Graffenstein v. Eppstein, 33 Am. Rep. 171; Barns v. Mahannah, 17 P. 319; Sowers v. Parker, 51 P. 888; Cole v. Smith, 58 P. 1086; McKenzie v. Seeberger, 76 F. 108.

Frank B. Feetham and Scott Rex, for respondents.

The actual damage sustained by the respondent in this case was the difference in value between what he got and what he parted with; therefore the rule given the jury by the court was correct. Reynolds v. Franklin, 44 Minn. 30, 46 N.W. 139; Wallace v. Hallowell, 56 Minn. 501, 58 N.W. 292; Redding v. Godwin, 44 Minn. 355, 46 N.W. 563; Tacoma v. Tacoma Light & Water Co., 50 P. 55; Glaspell v. Nor. P. R. Co., 43 F. 900; Zeiley v. Palliser, 80 Hun. 603; High v. Berret, 148 Pa.St. 261, 23 A. 1004; Connor, v. Levinson (Mich.) 73 N.W. 232; Rockerfeller v. Merritt, 76 F. 909; Weaver v. Shriver (Md.) 30 A. 189; Nashua Sav. Bank v. Burlington Elec. Co., 100 F. 673; Smith v. Bolles, 132 U.S. 125, 10 S.Ct. 39; Sigafus v. Porter, 179 U.S. 116.


The true rule is: That whether a representation of value is or is not actionable, depends entirely upon the facts and circumstances of the particular case, which is simply another way of stating that such a false representation is actionable, if it be the inducing cause. The following cases sustain the contention that the misrepresentation in question was material and the basis for damages: Sanford v. Handy, 23 Wend. 260; Smith v. Countryman, 30 N.Y. 655; Miller v. Barber, 66 N.Y. 558; Coles v. Kennedy, 46 N.W. 1088 (corporate stock, subscription by others at same rate); Dorr v. Cory, 78 N.W. 682 (a "ground-floor" case); Stoney Creek Woolen Co. v. Smalley, 69 N.W. 722 (purchase of real estate); Moon v. McKinstry, 65 N.W. 546 (purchase of real estate); French v. Ryan, 62 N.W. 1016 (purchase of corporation stock; representation as to subscriptions to stock by others); Zang v. Adams, 48 P. 509 (purchase of corporation stock; representation as to cost of the property); Mountain v. Day, 97 N.W. 883 (sale of land); Shelton v. Healy (Conn. ) 50 A. 744 (purchase of corporation stock; representation it was worth par); Stoll v. Wellborn (N. J.) 56 A. 894 (representation that whiskey had certain market value); Andrews v. Jackson, 168 Mass. 266 (that a note was as good as gold); Coulter v. Clark, 66 N.E. 739 (that the stock was as good as bank stock, and that promoter was himself a subscriber on the same terms); Coles v. Kennedy, 46 N.W. 1088; Teachout v. Van Hoesen, 40 N.W. 96; Byers v. Maxwell, 73 S.W. 437.



This is an appeal from a judgment for plaintiff in an action to recover damages for alleged deceit in the exchange of property. The case was submitted to the jury for a special verdict, upon which judgment was ordered and entered against these appellants. A motion for new trial was made, based in part upon a statement of the case specifying as grounds for a new trial numerous errors of law, and the insufficiency of the evidence to justify some of the findings of the jury, and the insufficiency of the verdict to support the judgment. The motion for a new trial was denied. This appeal is from the judgment.

The appellants contend that the facts found by the jury are insufficient to sustain the judgment, and we think the point is well taken. The facts upon which plaintiff must base his right to recover are those established by the admissions in the pleadings and by the special verdict. So far as material on this appeal, the pleadings disclose substantially the following facts: On or about December 28, 1901, respondent purchased and received from the appellants 750 shares of stock in a coal mining corporation in which the appellants were stockholders. The par value of the stock was $ 100 per share, but it was sold to the respondent at a valuation of $ 20 per share, or $ 15,000; and in exchange for said stock he sold and conveyed to the appellants a lot and business block owned by him, worth, exclusive of incumbrances, $ 15,000. The respondent did not avail himself of the right to rescind the transaction when he discovered the alleged fraud on the part of appellant. He retained the stock and has affirmed the contract. He seeks to recover compensation for the loss which he avers he has suffered by reason of the falsity of the representations of the appellants.

All that the jury found touching misrepresentation by these appellants appears in the following questions and answers of the special verdict: "Question 5. Did the defendant Wright represent to plaintiff, with intent to induce him to purchase said stock, that defendants Pringle and Bates, or either of them, had purchased stock of said corporation at the price of $ 20 per share, for which they had paid the sum of $ 20,000? Answer. Yes." In answer to question 6 the jury found that Bates made the same representation set forth in question 5. "Question 9. Did the defendant Wright represent to plaintiff, with intent to induce him to purchase such stock of said corporation, that said corporation then had in its treasury a large amount of money available for the development of the mine of said corporation? Answer. Yes." In response to question 10 the jury found that Bates did not make the representation embodied in question 9. In response to other questions the jury found that the representations found to have been made were known by the persons making them to be false, and that plaintiff relied thereon, and was induced thereby to purchase the stock.

The only finding as to damage was the following "What detriment did the plaintiff suffer by reason of purchasing such stock? Answer. $ 9,995.75." The form of this question indicates the erroneous theory upon which the case was submitted to the jury. Bearing in mind that the plaintiff had voluntarily affirmed the trade after knowledge of the alleged deceit, it will be seen that the jury were asked to award the plaintiff compensation not solely for the deceit, but also for the plaintiff's own folly in adhering to a bad bargain. The jury were instructed that the measure of damages was the difference between the actual value of the stock purchased and the value of the property given in exchange. It was undisputed that the real property traded for the stock was worth $ 15,000. The method by which the jury were instructed to arrive at the answer to the question as to damages is shown by the following instruction:: "The proof shows that at this time (December 28, 1901) there were 9,100 shares of the capital stock of this corporation outstanding, and each of such shares was therefore worth and of the value of the one ninety-one hundredth part of the entire assets of the corporation. Having, then, first determined the actual market value of the entire assets and business of said company at the time, you will divide such value by 9,100, the number of shares of stock then outstanding. This will give the actual value of each of such shares of stock at that time. Plaintiff...

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