Gloeser v. Moore

• Decision Date: 04 April 1938
• Docket Number: No. 118.,118.
• Citation: 278 N.W. 781,284 Mich. 106
• Parties: GLOESER v. MOORE et al.
• Court: Michigan Supreme Court

284 Mich. 106

278 N.W. 781

GLOESER

v.MOORE et al.

No. 118.

Supreme Court of Michigan.

April 4, 1938.

Action by Anna Gloeser against John Moore and others to recover damages suffered because of the alleged fraudulent sale of participation certificates in an oil and gas syndicate. Judgment for plaintiff, and defendants appeal.

Reversed and remanded.Appeal from Circuit Court, Washtenaw County; George W. sample, judge.

Argued before the Entire Bench.

Arthur C. Lehman and Andrew J. Sawyer, both of Ann Arbor, and Arthur R. Morris, trustee, and Morris-Van Kueren Oil & Gas Syndicate No. 2, for appellants.

William M. Laird, of Ann Arbor, for appellee.

POTTER, Justice.

Plaintiff sued defendants for damages claimed to have been suffered because defendants sold to her for $1,400 certificates of participation in an oil and gas syndicate, which certificates she alleges were worthless and which defendants by fraud induced her to buy. Her declaration contains four counts. In counts 1, 2, and 3, she tenders the certificates to defendants and seeks to rescind and to recover damages on the basis of rescission. In count 4, no tender of the certificates is pleaded, but recovery is sought because the certificates delivered to her by defendants were worthless and tender of them was unnecessary. All material allegations of plaintiff's declaration were denied by all defendants, except Moore, who did not answer. Summary judgment was entered for plaintiff, and defendants appeal.

In 1934, Arthur R. Morris and Charles Van Keuren organized the Morris-Van Keuren Oil & Gas Syndicate No. 2, which owned oil and gas lands in Isabella and Ogemaw counties. John Moore was employed by them to sell undivided interests in the syndicate. In January, 1935, Moore sold plaintiff an undivided interest in the syndicate for $1,400. She claims Moore represented to her this syndicate had made profits and paid monthly dividends out of profits and would continue to do so. Moore, it is said, had no express authority to make any representations as to past or future dividends from the syndicate. Plaintiff claims, in reliance upon these representations by Moore, she parted with her money and later received certificates for her proportionate interest in the syndicate. The syndicate did not pay dividens as plaintiff claims it was represented by Moore it would, and she claims the certificates of interest in the syndicate delivered to her were not of the kind represented and promised to be delivered.

Plaintiff executed a pre-organization subscription contract which contained a clause providing: ‘The Syndicate will not be bound by representations other than those printed herein.’ In this contract, there is no statement in relation to past or future dividends to be paid.

Plaintiff claims she first learned the syndicate had not paid certificate holders monthly dividends in the summer of 1935, and was not in such a financial position it would do so regularly. She admits the certificates delivered to her did not provide she was to receive from profits of the syndicate regular monthly dividends. She made demand for return of her money. Defendants refused to return the money or accept return of the certificates. In July, 1936, plaintiff brought suit against Moore alone for fraud in the sale of the certificates of interest to her. This suit was tried in March, 1937, and ended in a disagreement by the jury. The present suit was started May 3, 1937. A motion for summary judgment was filed August 18, 1937, supported by plaintiff's affidavit. An affidavit of merits was filed by defendant Van Keuren individually, and as trustee. Andrew J. Sawyer, an attorney, filed an affidavit on behalf of defendants Morris, trustee, and Morris-Van Keuren Oil & Gas Syndicate No. 2. Philip Neudeck, an attorney who examined Moore on the previous trial, filed an affidavit in which it is stated he attempted to and was unable to communicate with Moore, that he is advised and believes Moore is out of the state and unavailable, and he (Neudeck) knows the facts and circumstances of the case which would constitute Moore's testimony in a future trial. There was no affidavit filed on behalf of Moore individually or as trustee, nor for Morris individually. Plaintiff's affidavit contains substantially the facts claimed by her as above set forth and in addition showed she had disposed of 1/1000 interest in the syndicate and had 13/1000 interests left. Her affidavit stated: ‘* * * that said syndicate was not in a financial position to pay regular monthly dividends to the certificate owners, and that the certificate of interests in said syndicate delivered to this deponent was not of the kind or character promised by the said Moore. * * * Deponent further says that by reason of the failure of the defendants to furnish and to deliver to this deponent, as the said John Moore had agreed, income-producing certificate, that deponent had lost all of her money turned over by her to the said syndicate except the price of the 1/1000 interest disposed of by her and that deponent has lost the sum of Thirteen Hundred Dollars, which was turned over by her to the said John Moore, together with interest thereon at the rate of 5% per annum, or a total of Thirteen Hundred Ninety-one and 41/100 Dollars.’

The affidavits of Sawyer and Van Keuren deny any authority having been given Moore to make any statements not contained in the pre-organization subscription contract and allege plaintiff had knowledge of such limitation on Moore's authority from the stipulation in the contract, and they cannot be bound by any statement in violation thereof. It is denied the certificates are worthless but asserted they are now valuable.

Neudeck's affidavit states claimed representations were made concerning Morris-Van Keuren Oil & Gas Syndicate No. 1, a separate and distinct enterprise; and the only representation as to Syndicate No. 2 was that it had in the past paid dividends upon investments, which was true, and the certificates promised were the ones delivered.

The motion was heard as prescribed by 3 Comp.Laws 1929, § 14260, and Court Rule No. 30. The trial court, finding plaintiff's affidavit attached to the motion for summary judgment was sufficient and the affidavits filed by defendants raised no valid defense, granted the motion, assessing plaintiff's damages at $1,391.41, and costs.

Section 3 of Court Rule No. 30 provides: ‘The affidavit verifying the plaintiff's cause of action shall be made on the personal knowledge of the affiant; shall set forth with particularity the facts upon which the plaintiff's cause of action is based; * * * shall not consist of conclusions but of such facts as would be admissible in evidence; and shall show affirmatively that the affiant, if sworn as a witness, can testify competently thereof. If all the facts to be shown are not within the personal knowledge of one person, then two or more affidavits may be used.’

Defendants' affidavit of merits, according to section 4 of Court Rule No. 30, to prevent the entry of summary judgment, ‘shall be drawn in the same manner as the affidavit mentioned in Section 3, supra, and in addition shall set forth that all the facts pertaining to the action have been fully and fairly stated to the defendant's counsel, naming him, and that the defendant, upon such statement, has been advised by such counsel that he has a defense to the action or to some portion thereof upon the merits, or a set-off thereto.’

Section 6 of Court Rule No. 30 provides: ‘Should the affidavit of either party contain a statement that any of the material facts which ought to appear in such affidavit are known only to persons whose affidavits affiant is unable to procure, by reason of hostility or otherwise, naming such persons and showing why their affidavits cannot be procured, and what affiant believes they would testify to if sworn, with his reasons for such belief, the court may make such order as may be just, * * * The interrogatories and sworn answers thereto, depositions so taken, and sworn copies of papers and documents so furnished, shall be considered as a part of the affidavit in support of plaintiff's claim or of the affidavit of merits, as the case may be.’

It is necessary the statute above cited and the court rule above mentioned be complied with. The rule is mandatory and not directory. A failure by either party to follow the procedure prescribed will preclude the granting of a motion for summary judgment or the substantiation of a claim of defense. Plaintiff claims in her affidavit the syndicate was financially unable to pay regular monthly dividends, that the certificates delivered to her were not of the kind or character promised, and by reason thereof she lost $1,300. That portion of the rule which prescribes it must be affirmatively shown the witness could testify competently is mandatory. Birgbauer v. Aetna Casualty, etc., Co., 251 Mich. 614, 232 N.W. 403;La Prise v. Wayne Circuit Judge, 234 Mich. 371, 208 N.W. 449. The affidavit of plaintiff does not in any part of it set forth such knowledge of the financial affairs of the syndicate in question as would enable her to testify to the difference between the certificates of interest which she received and what she claims it was represented she would receive. She could testify as to the promises of monthly dividends and to the fact such dividends were not received. In her affidavit, she says the syndicate was not in a financial position to pay as she claims was promised. This was a conclusion. Financial inability to pay need not necessarily follow a failure to pay dividends. Her affidavit indicates that because she did not get certificates of the kind and character it was represented she would get, she lost $1,300. This, too, is a conclusion of plaintiff, and it is not shown she was competent to express such conclusion or opinion.

One need not be an expert to testify to the value of property, but must have knowledge...