Crocker v. Manley

• Decision Date: 23 November 1896
• Citation: 164 Ill. 282,45 N.E. 577
• Parties: CROCKER v. MANLEY.
• Court: Illinois Supreme Court

164 Ill. 282

45 N.E. 577

CROCKER

v.MANLEY.

Supreme Court of Illinois.

Nov. 23, 1896.

Appeal from superior court, Cook county; Theodore Brentano, Judge.

Bill in chancery by William F. Manley against Alvin E. Crocker and others to set aside conveyances made by plaintiff to defendant Crocker on the ground of fraudulent misrepresentations. Judgment for plaintiff. Defendant Crocker appeais. Reversed.S. S. Gregory, for appellant.

Walter Olds, C. F. Griffen, and W. S. Oppenheim, for appellee.

This was a bill in equity, brought by William F. Manley against Alvin E. Crocker, the appellant, the San Javier Mining & Milling Company, and T. C. Mills, to set aside conveyances from Manley to Crocker, and from latter to Mills, of certain real estate in Oak Park, a suburb of Chicago, claimed to be worth $22,500, which it was alleged were procured by fraud and false representations. The superior court decreed in favor of the complainant, and from that decree Crocker appeals.

The record is somewhat voluminous, but the principal question presented is whether the evidence sustains the decree. In the year 1892 the appellant, who has for a number of years resided in Richmond, Ind., purchased a silver mine near La Ventura, in Mexico. After making the purchase, he organized a corporation under the laws of New Jersey, with a capital of $500,000. The appellee, Manley, who also resided at Richmond, learned of the mine through a man named Leonard, and entered into negotiations with Leonard, who acted as agent for the company or Crocker, to purchase stock in the company. Leonard, as the complainant testified, made various statements to him in regard to the mine and its rich qualities, and he agreed to take 1,000 shares of stock, provided Crocker's statements agreed with those of Leonard when he returned from Mexico. Crocker returned about March 6, 1893, and complainant had an interview with him at Leonard's store, where Crocker made a few statements in regard to the mine. Manley requested that the statements be reduced to writing, which was done within a few days, and upon securing the statement in writing Manley took 1,000 shares of stock for $5,000, and gave two notes in payment,-one for $2,000, payable to Leonard; and the other for $3,000, payable to Crocker. On the 11th day of March, Manley took 1,000 shares more of stock at $5 per share, and executed his note for the same. On the 23d day of March he agreed with Leonard to take 1,000 shares more, but the stock was not issued until in July. In the last week in April Manley went to Mexico for the purpose of making a personal examination of the mine. Upon arriving at the mine, he made an examination of the property, went into the shafts, took specimens of the ore from the shafts and dumps, and, after making all the investigation and examination he desired, he returned to Chicago, and had the specimen assayed, and expressed himself well satisfied with the mine and its prospects. Some time after Manley returned, he made an effort to sell his Chicago property, for the purpose of raising money to pay his notes given for stock, but, not being able to do so, he proposed to Crocker to return the stock and cancel the notes, but Crocker expressed a desire to have him remain in the company, and on June 10th submitted the following proposition: ‘Richmond, Ind., June 10, '93. Wm. F. Manley-Dear Sir: I will give you $75 a front foot for lots 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50,-300 feet fronting on Madison street, and 140 feet on Waller avenue, Austin, a suburb and part of Chicago, Illinois, making the total price $22,500, less the school-fund mortgage, and that portion of the mortgage held by the Home National Bank of Chicago. which may apply to and cover on lots 39 and 40, as shown by plat submitted to me this day; also less the taxes for this year, due in August or September next, and the assessments for improvements heretofore made upon the lots by the city, and the interest which has accrued up to the date of transfer. The payment shall be: I will surrender two notes which I hold against you for $3,500 each, and take up the notes which Valentine Leonard holds against you of $5,000, and pay the balance, whatever it may be, in stock at par in the San Javier Mining & Milling Company of La Ventura, Mexico, certificates for said stock to be issued to you as soon as the titles are all right, and transfers made by a good and sufficient deed of general warranty. [Signed] Yours, truly, Alvin E. Crocker. June 13, 1893.’ Manley accepted the proposition in writing as follows: ‘I hereby accept the above proposition, with the following stipulations: The said Crocker is to pay a certain note for $3,000, which has been discounted at the First National Bank, and given by me to him on March 3, 1893, due in six months from date, and assume the payment of $1,000 of the mortgage which covers on lots 39 and 40, held by the parties named above. [Signed] W. F. Manley.’ On the 3d day of July, 1893, in pursuance of the contract, Manley conveyed the property to Crocker, who issued to him 1,000 shares of stock, as specified in the contract. At the same time the 1,000 shares of stock purchased through Leonard on March 23d were also issued, and delivered to Manley. A mill having been erected at the mine, the company, through Crocker, as manager, operated the mine during the summer and a part of the fall of 1893, but the results did not prove satisfactory, and the work at the mine was discontinued. In the meantime one Ewing, who had been in charge of the mining under Crocker, was discharged, and on the 9th day of November he wrote Manley a letter, in which he informed him that he had been imposed upon; that the mine was worthless, etc. Finally, in the month of March, Manley tendered back the stock he held in the company, and demanded a reconvyance of the Chicago property. This being refused, he filed this bill.

The fraudulent representations alleged in the bill are substantially as follows: That there was a certain valid corporation by name of the San Javier Mining & Milling Company, duly organized under the laws of the state of New Jersey, owning and operating certain silver mines and mill and machinery for operating the same, situate near La Ventura, Mexico; that said defendant, Crocker, was treasurer of said corporation, and manager of the mill and mines owned and operated by the mining and milling company, in Mexico; that he, the said Crocker, was the owner of a large proportion of stock of company; that said defendant, Crocker, by himself and agents, and defendant company, by its agents, falsely and fraudulently represented to your orator that said mines were rich with silver, and that they would pay a dividend of from 20 to 100 per cent. per annum upon the par value of the stock of said company; that there was enough silver ore on the dump at the mines to pay the par value of all of the stock that had been issued by the said mining and milling company, which was one-half million dollars; that the vein of ore in said mine was 16 feet in width, and assayed over $1,000 per ton; that the depth of the vein of ore was 200 feet, and the assays of the ore ran in richness from 30 ounces troy per ton to 1,500 ounces; that said vein ran from east to west, lacking 40 feet of one-half mile, and varied in width from 6 to 50 feet; and further represented that the manager of the mine for the company said unqualifiedly that he would pay 100 per cent. dividend, using the ore alone then developed and on the dump; that he also stated that, to reduce 50 tons per day, you could not use up the body of ore on hand in five years, without going any deeper in the shafts; that the said Crocker, the mining and milling company, and their agents and representatives, further represented that the mine was what was known as a ‘fissure vein,’ and that it grew richer the deeper you went into the mine; that there never had been such a development of rich ore in such a large body as was shown by the shafts in this mine; that they had recently sent a car load of ore taken from their said mine to a smelter in Monterey, Mexico, which assayed 68 ounces per ton of 2,000 pounds; that the average assays of the ore of said mine were over 200 ounces per ton; that they had a proposition from bankers in New York that they would list the stock on exchange, and capitalize the company at $10,000,000, and dispose of all the stock within 60 days, if said mine paid 20 per cent. on the stock the first year; that he further represented that said defendants had at that time machinery in Mexico for the mill of 50 tons capacity per day; that they had shipped the boiler and the engine from Richmond, Ind., and the stamping machinery from Brooklyn, N. Y.; that all of said machinery was then in the City of Mexico, and would be put up and operated within 90 days from that time, and from thenceforward the company would pay dividends upon the stock. It is also alleged in the bill that in first instance, and before the issuance of said stock and acceptance of it by your orator, the said defendant, Crocker, made said statements to your orator orally, but at the time said he would, in addition to that, make a written statement covering the same statements that he made orally to your orator, and in pursuance of said statement the said defendant, Crocker, made and signed certain written statements, in which he detailed in part the representations that he had made to your orator orally in order to induce him to purchase and accept 1,000 shares of stock, and delivered said written statement to your orator, which is in the words and figures following, to wit: ‘March 10, 1895. Wm. F. Manley, Esq., Richmond, Ind.-Dear Sir: Inclosed I hand you cost of reduction of ore from the San Javier mines in Mexico, which I wish you to examine, and which I hope may meet with your approval, because it is very conservative, and can be verified at any time, and, with the...