Crosby v. Emerson

• Decision Date: 19 January 1906
• Docket Number: 41.
• Citation: 142 F. 713
• Parties: CROSBY v. EMERSON.
• Court: U.S. Court of Appeals — Third Circuit

142 F. 713

CROSBY v. EMERSON.

No. 41.

United States Court of Appeals, Third Circuit.

January 19, 1906

C. L Cole, for plaintiff in error.

Henry D. Hotchkiss, for defendant in error.

Before DALLAS and GRAY, Circuit Judges, and BUFFINGTON, District judge.

GRAY Circuit Judge.

George W. Crosby, by this writ of error, seeks to secure the reversal of a judgment recovered against him in the Circuit Court of the United States for the District of New Jersey, by Jabez O. Emerson, the defendant in error, for $8,640.97 entered on a verdict in a trial before said court and a jury. The declaration is upon a promissory note for $10,000, dated New York, July 8, 1903, made by said George W. Crosby defendant below, and payable to one W. P. Harlow, at the Guardian Trust Company, New York City, six months after date. Indorsed upon the note are the following words:

'The time for the payment of this note is hereby extended six months from January 8th, 1904. The receipt of $2,000, on account, and the accrued interest to January 8th, 1904, is hereby acknowledged.

'(Signed)

W. P. Harlow.'

Below this appears the following:

'Pay to the order of J. O. Emerson without recourse.

'(Signed)

W. P. Harlow.'

Emerson, the plaintiff below, as indorsee, sued for $8,000, the balance due on the note, with interest from January 8, 1904. The defendant pleaded 'non assumpsit,' with notice under the statute of New Jersey of special matter, which was stated to be fraud in the procurement of said note, and want of consideration.

The undisputed facts, as they appear from the record and as summarized in brief of defendant in error, are: That on the 1st day of November, 1902, George W. Crosby, the plaintiff in error, was introduced to W. P. Harlow, the payee of the said note, by one Van Amburgh, at Harlow's office in New York City. At this meeting, plaintiff in error brought from Harlow 1,000 shares of Yaquie Copper Company stock, at $12.50 per share, and gave therefor his note, dated November 1, 1902, for $12,500, payable 90 days after date, to the order of W. P. Harlow. There were three persons present at this transaction, viz., plaintiff in error Crosby, Harlow, and Van Amburgh. Harlow died the 6th day of December, 1904, after the bringing of this suit but before the trial thereof. Van Amburgh was not called as a witness by either party. Crosby, as a witness in his own behalf, testified to certain representations made by Harlow at this meeting, on which the defense of fraud was predicated. He testified that he met Colonel Harlow in his office in New York, on the 1st of November, the day of the purchase of the stock, and said:

'I had a talk with him about the stock, and he told me of its merits, and he told me it was the most valuable stock in the country. It was capitalized at fifteen millions, par value of stock ten dollars, and that the capitalization was very low for the value of the property. That the property was located in Mexico, and had been worked between two and three years, and they had blocked out, ready for milling, $2,500,000 of copper ore, and the value of that ore, according to the price of copper then, was worth $60,000,000 and they were going to put in the smelter at once. It would be smelting ore within six months. The price of stock would advance rapidly, and would sell readily at twenty dollars a share inside of six months, and there would be no stock sold after the 15th of November for less than fifteen dollars a share; that there was a car load of supposed purchasers going to the mine on the 5th of November, and that on their departure the stock would be advanced to fifteen dollars per share. He said that within six months I could sell my stock for twenty dollars or more, and that within six months they would have the mill going, and that if I kept it I would get big dividends. That the company had no debts, and paid cash for everything, and that Colonel Harlow, president of the company, had a controlling interest in the stock, and would retain it and see that the work was pushed thoroughly.' Defendant testified that he had never received any dividends, or anything else on account of the stock.

There was no evidence whatsoever produced to show that any representations of fact imputed to Harlow as existing at the time of the interview testified to by Crosby, as distinguished from mere opinion or prognostication, were untrue. Plaintiff in error further testified that on November 20, 1902, relying upon the statements previously made to him, he bought from Harlow another 1,000 shares of the Yaquie Copper Company stock, and gave him his second note for $12,500 in payment thereof, due ninety days from date, and as collateral security for this note, he pledged the stock 1,000 shares, to Harlow; that when these notes became due, he was 'dunned' for payment by both Harlow and Van Amburgh, and that he refused to pay, because of the misstatements which had been made to him. He does not, however, testify as to what was said or took place between the parties after the two notes became due, except 'they said they had been disappointed. ' It was shown, however, on cross-examination, that on May 18, 1903, some three months after the second note had matured, Crosby wrote Van Amburgh, stating that he was no longer in the practice of medicine, had no income, was hard pushed for money, and could not pay, closing as follows:

'If things had gone on as they were going when I bought the stock, I could have paid the notes long ago. Colonel (Harlow) has been very lenient with me, and I appreciate his kindness, but I am simply caught in the meshes. I can't sell this stock if I should try. The Colonel must take it back. That is the only way I can see out of it.'

Crosby further testified that, on July 8, 1903, he saw Harlow in New York, and refused to pay the notes, on the ground that the transaction had not panned out as Harlow had said it would, and that at that meeting Harlow returned to him the note dated November 20, 1902, and that he, Crosby, paid $2,500 on the note dated November 1, 1902, and delivered to Harlow a new note for $10,000 (the note in suit), upon the understanding that:

'If they were smelting ore as he had told me, and the stock worth at least twenty dollars a share, if I was dissatisfied, he would give me back my money and note and take his stock.'

Crosby also testified that, on January 8, 1904, when the second note became due, he met Harlow again and expressed his dissatisfaction with the outcome of the transaction, and that Harlow asked him 'to allow it to go six months more. He said if I would do that, if I was not satisfied at the end of the next six months, that he would take the stock and give me back my paper and give the money back. ' At this time, January 8, 1904, Crosby paid $2,000 on account, and the note so reduced to $8,000 was renewed for six months.

The note was bought by defendant in error, the plaintiff below, from Harlow, for $1,000 cash, on the 28th day of May, 1904, and was on that day indorsed to him without recourse by Harlow.

It is not contended that, as such indorsee, plaintiff below, though a holder for value, was in the position of an indorsee before maturity, without notice of any equity that might exist between payee and maker. About a month prior to the expiration of the six months extension on the balance due on said note, the plaintiff below wrote to Crosby, notifying him that he was the holder of the note, and that it would become due on the 8th day of July, 1904, and that it would be forwarded to the trust company, where it was payable, for collection. Crosby replied, under date of June 18, 1904, stating that it would be impossible to raise the whole amount by the 8th of July, and that it would be a great favor to him if plaintiff would accept $3,000 and interest, and extend the time for the payment of the balance.

The assignments of error, which raise the question seriously discussed before the court, relate to a portion of the charge of the court below to the jury, and to its refusals to charge certain requests made by the defendant. Also to certain admissions of testimony, against objection by defendant, and to the overruling of certain offers of testimony by him.

The fourth assignment of error is:

'The court erred in refusing to charge the fifth request of the defendant, as follows: 'If the jury believe that any statement or representation made by Harlow to defendant, was material and fraudulent, and that defendant relied upon them as true in the purchase of the stock, defendant is entitled to judgment although he may afterwards have promised to pay the note."

As to this request, the learned judge of the court below, at the close of his charge, said:

'There is...