Boulden v. Stilwell

• Decision Date: 22 March 1905
• Citation: 60 A. 609,100 Md. 543
• Parties: BOULDEN v. STILWELL et al.
• Court: Maryland Court of Appeals

60 A. 609

100 Md. 543

BOULDEN v. STILWELL et al.

Court of Appeals of Maryland

March 22, 1905

Appeal from Superior Court of Baltimore City; Charles E. Phelps Judge.

Action by Charles N. Boulden against William T. Stilwell and another. From a judgment for defendants, plaintiff appeals. Affirmed.

Argued before McSHERRY, C.J., and FOWLER, BRISCOE, BOYD, PAGE PEARCE, and SCHMUCKER, JJ.

Howard Bryant and C. Dodd McFarland, for appellant.

Leon Greenbaum, for appellees.

PEARCE J.

The plaintiff in this case complains that by means of certain false and fraudulent representations made to him by the defendants he was induced to sell to Leroux, one of the defendants, certain stock held by the plaintiff in the Structural Iron & Steel Company of Baltimore City, whereby he has sustained damage. The declaration, in substance, alleges that Stilwell was president and Leroux vice president and general manager of the company, each holding a large number of shares therein; that plaintiff was acting secretary and treasurer, holding 215 shares therein; that defendants desiring to obtain from the plaintiff his said shares of stock at a less sum than their real value, entered into a conspiracy, fraudulent combination, and arrangement between them, by which defendant Stilwell should represent to the plaintiff that he had sold his shares of stock in said company to Leroux; that the company was losing money; that it was about to "fall down" (meaning thereby that it was about to fail and become insolvent); that he (Stilwell) would not carry it financially much longer; that Leroux should represent to plaintiff that he had bought Stilwell's stock, which would give him a majority of the stock in the company, and would result in removing plaintiff from his employment in the company; that these representations were made to him by the defendants in pursuance of said conspiracy, and by reason thereof he was induced to sell and deliver his 215 shares of stock for $5,625, whereas they were of the value of $21,500, which value was then unknown to him, and of which he had no means of knowledge, though such true value was then known to defendants; that these representations were falsely and fraudulently made, with intent to deceive and defraud him, and did so deceive and defraud him, and that, if the same had not been so made and relied on, he would not have sold his stock; and that by means of the premises he had sustained damage to the extent of $15,850. The general issue plea was filed, and at the close of the plaintiff's testimony the defendants moved the court to strike out certain evidence which had been admitted subject to exception, which motion was granted, and thereupon the court granted a prayer offered by the defendants that there was no evidence legally sufficient to entitle the plaintiff to recover, and that the verdict must be for defendants. The single exception is to the granting of this motion and prayer, and in considering the instruction given, which will be first taken up, we are required to assume the truth of all the plaintiff's evidence, and all inferences fairly deducible from it.

The general principles which must control our judgment in this case have been established in a series of cases in Maryland, the most important of which are McAleer v. Horsey, 35 Md. 439; Buschman v. Codd, 52 Md. 202; Robertson v. Parks, 76 Md. 118, 24 A. 411; Byrd v. Rautman, 85 Md. 414, 36 A. 1099; Cahill v. Applegarth, 98 Md. 493, 56 A. 794. When the decision in McAleer v. Horsey was rendered it was there said that we then had for our guidance no express decision of this court upon several points involved; but that decision has ever since been regarded as a notable contribution to the learning upon this subject, and later cases have covered almost every point likely to arise in such actions. Most of these decisions have been made in cases where damages were claimed as the result of purchases induced by false and fraudulent representations, but there can be no good reason why sales, so induced, and resulting in damage, should not be governed by the same principles, and these have been so applied in this state in Byrd v. Rautman, supra. In McAleer v. Horsey, Judge Miller observed that: "Neither the common law nor any code of human laws seeks to enforce the rule of perfect morality declared by Divine authority, which acknowledges as its one principle the duty of doing to others as we would that others should do to us, and which, by consequence, absolutely excludes and prohibits all cunning and craft or astuteness practiced by any one for his own exclusive benefit. And it hence follows that a certain amount of selfish cunning passes unrecognized by courts of justice, and that a man may procure to himself, in his dealings with others, some advantages to which he has no moral right, but to which he may succeed in establishing a perfect legal title." In determining in each case whether the fraud complained of is one which falls within the class above described, or within that other class which courts of justice will recognize and redress "by stepping in and annulling what has been done, or rectifying the wrong by sustaining an action for the deceit," we must be governed by certain precedents and rules which have been established as the result of all the cases, and which, in general terms, may be stated as follows: The foundation of the action is actual fraud, and nothing short of this will suffice. Consequently, a misrepresentation, believed by the speaker to be true, though induced by his ignorance or negligence, will not sustain an action for deceit. There must be either knowledge of the falsity of the representation, or such reckless indifference to truth in making it as is held equivalent to actual knowledge. The fraud must be material; by which is meant that without it the transaction would not have been made. It must be a statement of an alleged existing fact or facts, and not merely of some future or contingent event, or an expression of opinion as to the subject of the statement. The party to whom it is made must rely upon its truth, and must have the right, as a person of ordinary business prudence, to rely upon it, "otherwise it is his own folly or fault, for the consequences of which he cannot ask relief of the law"; and, finally, there must be damage directly resulting from the fraud. Nearly all the Maryland cases, and a number of the leading English cases, have been carefully considered in the recent case of Cahill v. Applegarth, supra, and there is no occasion to review them here. Keeping in view the principles stated above, we will now briefly consider the testimony upon which this case was withdrawn from the jury.

In support of the averments of the narr., a summary of which we have given, the plaintiff testified that in June, 1900, while he was employed by the receivers of the Columbian Dry Dock & Ironsworks Company, having been with that company for 24 years previously, Stilwell proposed to him to go with a company which he and Leroux were about to reorganize as the Structural Iron & Steel Company, and said, if he would go with them, they would appoint him secretary and...