Clark v. Dunham Lumber Co.

• Decision Date: 21 February 1889
• Citation: 5 So. 560,86 Ala. 220
• Parties: CLARK v. DUNHAM LUMBER CO.
• Court: Alabama Supreme Court

5 So. 560

86 Ala. 220

CLARK v. DUNHAM LUMBER CO.

Supreme Court of Alabama

February 21, 1889

Appeal from circuit court, Montgomery county; JOHN P. HUBBARD Judge.

This action was brought by the Dunham Lumber Company against H. W Clark, for damages on account of defendant's alleged false representations, whereby plaintiff was induced to sell and did sell, on credit, to the Wetumpka Lumber Company, a private corporation, of which the defendant was president, a large quantity of lumber, which had never been paid for, and which was wholly lost to plaintiff; said Wetumpka Lumber Company being insolvent. Defendant demurred to the complaint assigning 12 grounds of demurrer, among which were "(11) that it is not alleged that defendant knew that any alleged fact which he represented to be true was at the time untrue; (12) that said alleged misrepresentation does not constitute a fraud in law." The demurrer was overruled. On the trial the defendant requested the court to give the following charges in writing, and duly excepted to the refusal of each: "(1) If the jury believe from the evidence that Clark believed what was stated was true, then, though the statement was false in fact, plaintiff cannot recover. (2) Though the jury may believe that the Wetumpka Lumber Company was in fact insolvent, yet, if they believe that Clark, when he made the statements, believed them to be true, then the plaintiff cannot recover. (3) If the jury believe from the evidence that the statements made by Clark were true, or that Clark believed them to be true, then the plaintiff cannot recover. (4) Though the jury may believe that the Wetumpka Lumber Company was insolvent, yet, unless they are satisfied that it was in fact insolvent, and that Clark knew it was insolvent, and misrepresented its condition to plaintiff, then plaintiff cannot recover." The several rulings of the court to which exceptions were reserved are here assigned as error.

Tompkins, London & Troy, for appellant.

Roquemore, White & Long, for appellee.

SOMERVILLE J.

The action is one based on an alleged false representation made by defendant as to the credit and business of the Wetumpka Lumber Company, a corporation of which the defendant was president, by which representation credit was given to said company by the plaintiff, resulting in the loss of certain goods sold. The substance of the alleged representation is that the Wetumpka Lumber Company had already negotiated for the sale of such large quantities of lumber that it was unable to fill these sales, thus contracted to be filled, without obtaining lumber from other mills, and that the lumber proposed to be purchased from plaintiff would be appropriated to filling these sales. It is alleged that this representation was false; that the company of which the defendant was president did in fact consign the lumber thus purchased to lumber brokers, to be sold on its account, in pursuance of a previous intention to do so, which intention was known to defendant. The insolvency of the defendant corporation is also alleged.

This representation is one relating to the conduct, ability trade, or dealings of the Wetumpka Lumber Company, within the meaning of section 1734 of the Code, which is a part of our statute of frauds, and provides as follows: "No action can be maintained to charge any person by reason of any representation or assurance made concerning the character, conduct, ability, trade, or dealings of any other person, when such action is brought by the person to whom such representation or assurance was made, unless the same is in writing, signed by the party sought to be charged." Code 1886, § 1734; Code 1876, § 2123. The representation is made by the defendant, not as to his own credit, but concerning the credit of a corporation or third person, for whose obligations he is in no manner responsible, apart from such representation. The incidental interest which the defendant has in the matter as president of the defendant corporation does not alone take the case out of the operation of the statute of frauds. A well-recognized and solid distinction exists between contractual guaranties and fraudulent representations as to the credit of another person. "Every special promise to answer for the debt, default, or miscarriage of another" is void, under the statute of frauds, unless reduced to writing, and the consideration is therein expressed. Code 1886, § 1732. The established doctrine of the English courts, however, has always been, since the case of Pasley v. Freeman, 3 Term R. 51, (decided by the king's bench in 1789,) that an action would lie for a false and fraudulent representation, knowingly made, as to the solvency or credit of a third person, acted on by the plaintiff to his damage. That case settled...