Bryan v. Hitchcock

• Decision Date: 31 March 1869
• Citation: 43 Mo. 527
• Parties: HENRY M. BRYAN, Appellant, v. BUEL T. HITCHCOCK, Respondent.
• Court: Missouri Supreme Court

43 Mo. 527

HENRY M. BRYAN, Appellant,

v.BUEL T. HITCHCOCK, Respondent.

Supreme Court of Missouri.

March Term, 1869.

Appeal from St. Louis Circuit Court

Napton, for appellant.

I. A statement of a fact or facts made by a vendor to a vendee, calculated to have, or capable of exerting, an influence on his determination to buy or refuse, which fact or facts turn out to be false, or not facts, constitutes a sufficient ground with a court of equity for setting aside the sale or contract, especially if the statement is knowingly false and intended to mislead. (Daggett v. Emerson, 3 Sto. 733; N. B. & C. R.R. v. Muggeredge, 1 Dru. & Sm. 365; Reynall v. Sprye, 1 De Gex. M. & G. 708; Rawlins v. Wickham, 28 Law Jour., N. S., p. 188; Harris v. Kemble, 2 Dow & Cl. 463-71; Henderson v. R.R. Co., 17 Texas, 579; Smith v. Countryman, 30 N. Y. 655; Mead v. Brown, 32 N. Y. 275; 2 Sto. Eq. § 799.)

II. Representations of opinions, if they form part of a scheme to mislead, or if the person making them has peculiar means of forming a correct opinion not open to the other party, are also grounds for setting aside a contract, if the opinions expressed were really not entertained or were perfectly groundless. (Sto. Eq. Jur. § 179; Henderson v. R.R. Co., 17 Texas, 579.)

III. A statement of intention made by a vendor as to his future course may be also false and fraudulent, and, as such, constitute sufficient grounds to authorize a court of equity to vacate a contract based on or induced by such false representations. (2 Duer Ins. 707; Henderson v. R.R. Co., 17 Texas, 579.)

IV. Misrepresentations of the vendor's motives in selling may materially influence the vendee's decision and thus constitute a cunning artifice to mislead; but

V. Where all these different classes of misrepresentations are combined, and as a whole are well calculated to mislead, however small might be the effect of each one singly, and where they all come from a party whose position not only enables him to know their truth or untruth, but raises the presumption in law that he does so know and is so informed, the case for the action of a court of equity is much stronger than it would be upon proof of a single false statement of facts.

Sharp & Broadhead, and Jones & Davis, for respondent.

Where a contract for exchange of property is asked to be set aside on the ground of misrepresentations, there must always be the clearest proof of the fraudulent representations, and that they were made under circumstances which show that the contract was founded upon them. (Holland v. Anderson, 38 Mo. 55; 3 Greenl. 30; 4 Mass. 502; 15 Verm. 271; 3 Wend. 236; 6 Hill, 340; 3 Johns. Ch. 23.)

CURRIER, Judge, delivered the opinion of the court.

Early in the year 1866 various citizens of St. Louis associated themselves together in corporate form, under the name of the “St. Louis Museum, Opera, and Fine-Art Gallery Company,” for the purpose of erecting and operating a Museum and Theater on the plan of similar institutions in Chicago, Boston, and New York. The company was organized and a board of directors and other officers appointed. Stock was subscribed to a considerable amount-- one of the witnesses, Lamb, the president of the company, placing it as high as $105,000.

The Museum building was erected in the course of the season, and so far completed and equipped that it was opened for the business contemplated in the month of October, and for a period the institution enjoyed an encouraging and very satisfactory measure of patronage. It promised success. In the meanwhile the collections of calls upon the stock failed to keep pace with the company's expenditures, considerable sums being advanced by the directors to meet maturing bills. Only about $60,000 appears to have been realized from the whole stock subscribed. The original estimates contemplated an expenditure of less than $100,000, while the actual cost of the building and its various furnishings reached the sum of $125,000 or more. Thus, while the company's cash resources from stock subscription shrank on the one hand, its investments increased on the other, producing the result of a heavy balance of indebtedness, amounting to some $70,000.

This, substantially, was the condition of the company in December, 1866, when the plaintiff and defendant met and entered into the transactions which form the subject of this suit. They made two contracts: by the first, the plaintiff, on the 19th of December, conveyed to the defendant three vacant lots of ground in North St. Louis, in exchange for fifty-three shares of the Museum stock; by the second, on the 22d of that month, he made a further conveyance of two other lots in the same general location for ten additional shares of the stock and forty acres of wild land. By this suit the plaintiff seeks to secure a judicial re-exchange of the property, and for that purpose asks the court, by its decree, to rescind the contracts of sale and annul his conveyances to the defendant. This is asked on the ground that the contracts and conveyances were obtained by the defendant through false and fraudulent representations and suppressions on his part in regard to the financial standing, condition, and prospects of the Museum company and the value of its stock.

The answer traverses every material allegation of the petition, and the case turns wholly upon the sufficiency of the proofs to establish the facts alleged in disparagement of the honesty and fairness on the part of the defendant of the transactions in question. The representations complained of as untrue, and as having mislead the plaintiff, relate to the defendant's statements respecting his (the defendant's) motives, intentions, and opinions, as well as his statements of fact touching the financial condition and business prospects of the Museum. These latter, however, are the main and controlling subjects of inquiry. They embrace the amount of Museum stock subscribed; the payments therefor, whether at par or otherwise; the amount actually paid in thereon; the actual total cost of the Museum property; the indebtedness of the company in December, 1866; the mode proposed for meeting that indebtedness, and the market value of the Museum stock at that time, or rather, more specifically, the price paid for it by Mr. Franciscus, and the defendant's representations in relation thereto.

It is not proposed to sift, analyze, and collate the voluminous testimony bearing on these points. It were perhaps sufficient to say that, after a careful examination of it throughout, it fails to satisfy our minds that there is any such preponderance of proof in support of the plaintiff's allegations as to justify us in overturning the judgment of the court below.

These parties met, and, after some days of negotiations, which furnished adequate opportunities of inquiry and investigation, concluded the bargain which resulted in the exchanges of property already mentioned. The transaction was not one where fraud is to be presumed, nor will it be inferred from circumstances which point to no certain and definite results, although of a suspicious character. Where mere circumstances are relied on, they must be such as to raise strong presumptions of the actual existence of the fraud imputed. This is considered to belong to that class of cases where, as Judge Story says, the court will not rescind the contract of the parties “without the clearest proof of the fraudulent misrepresentations, and that they were made under such circumstances as show that the contract was founded upon them.” (1 Sto. Eq. Jur. § 199; 38 Mo. 55.) Nor will courts of equity aid parties who neglect the use of their own judgment and discretion in their business...