Budd v. Budd

• Decision Date: 27 June 1938
• Docket Number: No. 19177.,19177.
• Citation: 122 S.W.2d 402
• Parties: JAMES W. BUDD, RESPONDENT, v. CAL BUDD ET AL., APPELLANTS.
• Court: Missouri Court of Appeals

122 S.W.2d 402

JAMES W. BUDD, RESPONDENT, v. CAL BUDD ET AL., APPELLANTS.

No. 19177.

Kansas City Court of Appeals. Missouri.

June 27, 1938.

Appeal from Vernon Circuit Court. — Hon. Thomas W. Martin, Judge.

REVERSED.

Collins & Osborn and Ewing, Ewing & Ewing for appellants.

(1) The court erred in not sustaining appellants' demurrer (Instruction Y) at the close of all the evidence, and directing a verdict for the defendants. McKee v. Budd, 222 Mo. 344, l.c. 367; Sedgwick v. National Bank, 295 Mo. 230, l.c. 258-259; Knight v. Rawlings, 205 Mo. 412, l.c. 433; Gaines v. Massey, 190 Mo. App. 199, l.c. 303; Brown v. Lead Company, 194 Mo. 681, l.c. 700; Williams v. Jackson, 187 Mo. 135; Norman v. Oberle, 90 Mo. 66; Bondurant v. Coal Co., 25 S.W. (2d) 566, l.c. 574: Saunders v. McClintock, 46 Mo. App. 216; Anderson v. McPike, 86 Mo. 293; 14 A.N.E. of Law (2 Ed.), pp. 33, 40, 41: and Swann v. Mathre, 103 Iowa, 261. (2) Respondent should not have been permitted to amend his petition at the close of a third trial after the testimony was all in, so as to incorporate therein the allegation of fraud never before made. The court erred in admitting the hearsay testimony of the witness, Robertson, wherein he stated that the appellant, Pleas (James P. Budd), was offering to exchange his (witness') stock and stock of Swartz for building and loan stock; because there was not a scintilla of evidence in the case going to prove that James P. Budd ever exchanged or ever offered to exchange any stock of either Swartz or Robertson in the Associated Agency, Incorporated, for any stock of Associated Savings and Loan Association, other than this hearsay testimony of Robertson. State ex rel. v. Ellison, 270 Mo. 645, l.c. 653; Sills v. Burge, 141 Mo. App. 148, l.c. 153-154; Bindbeutal v. Street Ry. Co., 43 Mo. App. 463, l.c. 468-9; and Langston v. Southern Electric R.R. Co., 147 Mo. 457, l.c. 463-464, 466-467.

Waldo P. Johnson, Lee E. Crook and W.T. McCaffree for respondent.

(1) Sec. 2970, R.S. Mo. 1929, does not apply where the representations are made by a party to the contract or transaction. This section is applicable only where the representations are made by a stranger to the contract. Singman v. Kotsrean Realty Co., 107 S.W. (2d) 196, 199; Jeck v. O'Meara, 107 S.W. (2d) 783, 787; Boyd v. Farmers Bank, 14 S.W. (2d) 6, 8; Williams v. Ravanna Bank, 289 S.W. 34, 37; Zeitinger v. Steinberg, 277 S.W. 953, 957. (2) The court in its discretion can permit an amendment to conform to proof and the amendment of plaintiff's petition was proper. Sec. 819, R.S. Mo. 1929; Callaghan v. McMahan, 33 Mo. 111; Cornet v. Cornet, 248 Mo. 184, 154 S.W. 749; Blair v. Ry. Co., 89 Mo. 383, 1 S.W. 350; Garver v. Garver, 145 Mo. App. 353, 130 S.W. 369; Scheerer v. Waltner, 225 Mo. App. 837, 29 S.W. (2d) 193; Oliver v. Wilkey, 62 S.W. (2d) 776. (3) Instructions Nos. 1 and 4 are correct. Instruction No. 1 is in the form passed upon by the Springfield Court of Appeals (97 S.W. (2d) 149) as modified to meet the requirements of the opinion of that court. Instruction No. 4 is the usual instruction relative to credibility of witnesses and is certainly proper where there is a direct conflict in the testimony of witnesses as there is in this case. (4) The credibility of the witnesses and the weight of the evidence are for the determination of the jury and the appellate court will not review these questions. Parrent v. Mobile & Ohio R. Co., 70 S.W. (2d) 1068, 1073; Rexford v. Phillippi, 337 Mo. 389, 84 S.W. (2d) 628; White v. McCoy Land Co., 229 Mo. App. 1019, 87 S.W. (2d) 672; Power v. Frischer, 229 Mo. App. 1056, 87 S.W. (2d) 692. (5) Judgment will not be reversed for the admission of improper evidence, unless it is clearly shown to be injurious to the party objecting. Mundy v. Missouri Power and Light Co., 101 S.W. (2d) 740; Hellums v. Randol, 225 Mo. App. 1092, 40 S.W. (2d) 500; Span v. Jackson, Walker Coal & Mining Co., 16 S.W. (2d) 190; Meservey v. Misner, 227 Mo. App. 291, 53 S.W. (2d) 401.

REYNOLDS, J.

This is an action for damages for alleged fraud and deceit in the exchange of stocks. The cause originated in the circuit court of Cedar county and was transferred therefrom to the circuit court of Vernon county, in which court it was tried at the May term, 1937, resulting in a verdict and judgment for the plaintiff in the sum of $1000; and, from this judgment, the defendants have appealed.

The plaintiff is a nephew of the defendant Cal Budd and a cousin of the defendant J.P. Budd, who is a son of Cal Budd. The plaintiff is also sometimes known as Cal or Cally Budd and is sometimes so referred to in the testimony. The defendant J.P. Budd is sometimes referred to as Ples Budd.

In June, 1931, the plaintiff was the owner of four shares of stock in the Associated Savings & Loan Association of Kansas City, Missouri (hereinafter called the loan association), of the par value of $500 each or of the aggregate par value of $2000, which he had purchased about a month earlier. On June 15 or 16 of that year, he exchanged this stock in the loan association for twenty shares of stock of the par value of $100 each in the Associated Agency, Inc., also of Kansas City, Missouri (hereinafter referred to as the agency).

The plaintiff contends that, at the time of the exchange, the stock in the loan association was worth the par value thereof and that the stock in the agency was entirely worthless and that he was induced to make such exchange by the defendants through certain false and fraudulent representations made by them to him touching the value of the stock in the agency, its desirability as an investment, its ready marketability, and the assets of the agency.

The cause was tried on the plaintiff's second amended petition, which is as follows:

"Plaintiff states that on the 15th day of May, 1931, defendants sold to plaintiff two thousand dollars par value of full paid stock in the Associated Savings and Loan Association, a corporation organized and existing under the laws of the State of Missouri, being a mutual Savings Association; that said association was at that time and at all times since has been a solvent and safe mutual savings association and the stock thereof was at said time worth the par value thereof and under the bylaws and regulations of said association could be surrendered to said association and said association would pay the par value thereof in cash.

"Plaintiff states that thereafter on, or about the 15th day of June, 1931, the defendants proposed that plaintiff exchange said stock in said Associated Savings and Loan Association for twenty shares of stock of the par value of One Hundred ($100.00) Dollars each of the Associated Agency Incorporated, a corporation organized and existing under the laws of the State of Missouri; that the defendants represented that the said Associated Agency Incorporated had tangible assets consisting of real estate loans and other securities exceeding its capital stock and all liabilities; that its stock was reasonably worth the par value thereof; that the same was a safe, conservative and sound investment. Defendants further represented to plaintiff that they were selling said stock for said Associated Agency Incorporated for the purpose of raising additional capital for said corporation, and that the same was treasury stock.

"Plaintiff further states that said representations were untrue; that said Associated Agency Incorporated had no tangible assets of substantial value; that said stock at said time was and has since remained valueless and unmarketable; that the stock sold and delivered to plaintiff was not treasury stock of said corporation, but was stock which had been issued to and was owned by individual stockholders.

Plaintiff further states that the defendants knew the condition of said Company, i.e., Associated Agency Incorporated, and knew that said representations were false and fraudulent; that said representations were made by defendants for the purpose of inducing said exchange of stock and with the intention that plaintiff should believe, rely upon and act on said representations; that the plaintiff did not know that said representations were false and untrue, but did believe and rely upon said representations and acted thereon and in pursuance thereof exchanged and delivered his said stock in the Associated Savings & Loan Association in exchange for said twenty shares of stock in the Associated Agency Incorporated.

"Plaintiff further states that the defendants sold said stock to plaintiff not as an isolated transacion, but as part of a general sales campaign conducted by them and others for the sale of stock in said Associated Agency Incorporated; that neither the defendants nor the said Associated Agency Incorporated were authorized by the Securities Commissioner of the State of Missouri to sell said stock and that said sale was made in violation of the provisions of the security Act of the State of Missouri; that thereby said sale was illegal and invalid and contrary to law.

"Plaintiff states that by reason of the facts herein stated he has been damaged in the sum of Two Thousand ($2,000.00) Dollars.

"Wherefore, Plaintiff prays judgment against the defendants for the sum of Two Thousand ($2,000.00) Dollars with interest at the rate of six (6) per cent from the 15th day of June, 1931, together with the costs of this action."

Such amended petition, at the conclusion of the trial, was by permission of the court amended by the plaintiff to conform to the evidence, after all the evidence was in, by interlineation in the second paragraph thereof with the words, "and that it was a good deal for plaintiff and a better deal than the stock in the savings and loan association and would pay better dividends," following the words therein, "that the same was a safe, conservative and sound investment."

The answer to the second amended petition is as follows:

"Come now the defendants and file their...