Crowley v. Goodrich.

• Decision Date: 02 October 1945
• Docket Number: No. 298.,298.
• Parties: CROWLEY et al. v. GOODRICH.
• Court: Vermont Supreme Court

44 A.2d 128

CROWLEY et al.

v.GOODRICH.

No. 298.

Supreme Court of Vermont.

Oct. 2, 1945.

Exceptions from Caledonia County Court; Stephen S. Cushing, Presiding Judge.

Action by Russell V. Crowley and another against Ernest E. Goodrich to recover damages for alleged fraud and deceit. Judgment for plaintiffs, and defendant brings exceptions.

Judgment affirmed in part and reversed in part, and cause remanded.

Witters & Longmoore, of St. Johnsbury, for plaintiffs.

Ernest E. Goodrich, of St. Johnsbury, Hubert S. Pierce, of Newport, and Raymond Trainor, of White River Junction, for defendant.

Before MOULTON, C. J., and SHERBURNE, BUTTLES, STURTEVANT, and JEFFORDS, JJ.

JEFFORDS, Justice.

This is an action of fraud and deceit based on alleged false and fraudulent representations in procuring a loan from the plaintiffs to the Goodrich-Daniell Lumber Corporation, of which the defendant was the president and principal stockholder. Trial was by court with a resulting judgment for the plaintiffs. The case is here on exceptions by the defendant.

The loan in question was for $2,000. The court found that the defendant told Crowley that this amount was needed to take up an option on a certain timber lot which was worth more than that amount and was ample security for the loan. A mortgage on the timber on the lot was given after the procuring of the loan by the Lumber Corporation as security. The value of the timber on the lot thus became material and both parties introduced testimony as to the amount of timber standing on the lot at various times and as to its value.

A witness for the plaintiffs gave his estimate of the amount of timber as of December 10, 1943. The defendant later attempted to introduce entries in a ledger of the Lumber Corporation and certain checks to workmen as tending to show that between the time of the alleged fraudulent representations and the above date a certain amount of timber had been cut on the lot. This evidence was excluded and an exception granted the defendant to the ruling of the court.

The witness through whom the entries and checks were attempted to be introduced was the bookkeeper of the Lumber Corporation. She testified that the entries in the ledger were made by her from scale slips furnished her each week by the foreman on the job showing the cutting done by each workman and that the entries were made in the due course of business immediately upon receipt of the information from the foreman. The witness also testified that the ledger entries showed the names of the men who did the cutting, the amounts paid them and the amount of timber cut by each man. It also appeared from this witness that after she made the entries the scale slips or memoranda from which the entries were made were destroyed by her.

By No. 48 of the Acts of 1939 the Legislature passed what is known as the Uniform Business Records as Evidence Act. Section 2 of No. 48 reads as follows:

‘Business records. A record of an act, condition or event, shall, in so far as relevant, be competent evidence if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the regular course of business, at or near the time of the act, condition or event, and if, in the opinion of the court, the sources of information, method and time of preparation were such as to justify its admission.’

This act governs here and makes unnecessary a discussion of the cases cited by both parties of the rules of the common law from this and other jurisdictions relating to the admission of ledger entries as evidence, especially those made in the book of a person not a party to the action being tried.

By the terms of the act the admissibility of a record is conditioned on the opinion of the trial court that ‘the sources of information, method and time of preparation were such as to justify its admission.’ It is to be inferred from the transcript that the foreman who gave the scale slips or memoranda was present in court during most of the time that the bookkeeper was on the stand and he later, as a witness for the defendant, gave his opinion as to the amount of timber on the lot in issue. At no time was he interrogated as to the scale slips or memoranda which he had given the bookkeeper. The noncalling by the defendant of the foreman to testify in respect to the scale slips or memoranda afforded sufficient grounds for the ruling of the court excluding the ledger entries. Squires v. O'Connell, 91 Vt. 35, 39, 99 A. 268.

The defendant says that the offered evidence was excluded because the entries were not the original tally slips. But this is not necessarily so. It is true that before it appeared that the slips had been destroyed the court stated that these slips were the best evidence of the amount of timber cut. This statement was approved by counsel for the defendant who stated that the foreman who made them would later be present in court. Later the court again stated that the best evidence would be the tally cards and upon being reminded that they had been destroyed said that it did not believe that this fact in and of itself made the ledger entries primary evidence. When the court ruled on the offer of the entries no grounds for the exclusion were stated.

Since there was a sufficient ground for the ruling it is sustained as we uphold rulings made below if there be any legal ground for the same. Bristol v. Noyes, 106 Vt. 418, 422, 174 A. 924; Andrews v. Aldrich, 104 Vt. 235, 237, 158 A. 676.

The defendant claims no grounds for error in the exclusion of the checks different from those advanced for the ruling on the ledger entries.

The defendant excepted to the judgment for the plaintiffs. The only question for our determination raised by this exception is whether the judgment is warranted by the facts found. Campbell v. Ryan, 112 Vt. 238, 240, 22 A.2d 502.

The court found that the actual loss sustained by the plaintiffs by reason of the fraud perpetrated upon them by the defendant is $2,214.33. Judgment was entered for the plaintiffs for this amount, with costs, and their motion for a certified execution was granted. Both parties agree that the above amount represents the face value of a note given by the Lumber Corporation to the plaintiffs with interest. The court found the giving of this note and it is also found that the standing timber on the lot in question on January 6, 1943, the date of the alleged fraudulent representations, was not worth more than $600.

The defendant claims that the amount of the judgment should be reduced by $600 and further that a judgment for nominal damages only should have been rendered in the absence of any finding that the Lumber Corporation, the maker of the note, was insolvent.

Where a plaintiff has lost money through making a loan on collateral, induced by false representations as to the value of the property given as collateral, the measure of his damages is the net amount of money actually lost which is ordinarily held to be the amount by which the loan exceeded the actual value of the collateral at the date of the loan with interest. 37 C.J.S., Fraud, § 142, p. 473; White v. Gordon, 130 Or. 139, 279 P. 289; Briggs v. Brushaber, 43 Mich. 330, 5 N.W. 383, 38 Am.Rep. 187; Ganow v. Ashton, 32 S.D. 458, 143 N.W. 383. Also see McKinley v. Warren, 218 Mass. 310, 105 N.E. 990 and Whittier v. Collins, 15 R.I. 90, 23 A. 47, 2 Am.St.Rep. 879.

In our own cases we have recognized that the value of any security or judgment received or obtained by a plaintiff from a defendant as an incident of, or resulting from, a fraudulent transaction must be credited to the defendant in an action of fraud and deceit based on such transaction.

In Merchants National Bank v. Taylor, 66 Vt. 574, 29 A. 1012, it appears that as a result of fraudulent representations of the defendant the plaintiffs received the defendant's note and a mortgage as purported security therefor. The defendant was adjudged insolvent and the plaintiff presented the note and received as a dividend part of the value of the note. The plaintiff then brought an action in tort for the false representations of the defendant. It was found by the trial court that the defendant had no equity in the property mortgaged. Judgment was entered for the plaintiff for the amount of the defendant's note less the dividend which the plaintiff had received. Upon appeal this judgment was affirmed.

Oben v. Adams, 89 Vt. 158, 94 A. 506, was an action in case for fraud. Here also the plaintiff had received the defendant's note as a result of fraudulent representations of the latter. The plaintiff first brought an action of contract on the note and recovered a judgment against the defendant. He later brought this tort action. It was held that the bringing of the first action did not preclude him from later suing in tort to recover damages for the fraud perpetrated on him. The Court in the course of its opinion says at page 166 of 89 Vt., at page 509 of 94 A.: ‘Surely the plaintiff can collect what he may by a suit on the note, without losing his right to recover the balance by way of damages for the fraud. * * * A recovery in assumpsit will be taking only what the defendant agreed to pay, and will reduce by so much the damage caused by his fraud.’

Bartlett & Fortney v. Bonazzi, 91 Vt. 192, 99 A. 886, was an action in tort for deceit. The plaintiffs were induced by fraudulent representations to sign a note as sureties for the defendant. At the time of the signing the defendant gave one of the plaintiffs a chattel mortgage...