Grabow v. Bergeth
| Decision Date | 13 February 1930 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Ward County, Lowe, J.
Reversed and remanded.
E R. Sinkler and G. O. Brekke, for appellants.
"An averment that the plaintiff was deceived to his damage by certain representations of the defendant, is of no avail if the representations were not of such a nature or made under such circumstances as to justify the belief upon which the plaintiff claims to have acted." Marshall-McCartney Co. v. Halloran, 15 N.D. 71, 106 N.W. 293.
"Fraud involves the idea of intentional deception and exists where there is a misrepresentation with intent to deceive, or with actual knowledge of its falsity." 12 R.C.L. 322.
"Prima facie a chose in action is worth what appears to be due upon it, and unless the presumption is rebutted by legal evidence it is conclusive." Anderson v. Bank, 6 N.D 497, 72 N.W. 916.
"In the absence of evidence to the contrary the law presumes that the amount apparently due upon a promissory note is its value." Wylie v. Grigsby, 78 N.W. 957.
"For the purpose of estimating damages, the value of a written instrument is presumed to be equal to that of the property to which it entitles the owner." Grigsby v. Day, 70 N.W. 881.
"A false representation in order to be cognizable by the law, as a fraud, must be relied on as an inducement to action or injurious change of position." 12 R.C.L. 352.
"The representation must have come to the knowledge of the complaining party." 12 R.C.L. 355.
"Plaintiff has the burden of showing not only that he had the right to rely, but that he did, in fact, rely upon the representations in question." Curtis v. Hoxey, 59 N.W. 931.
"An essential element of actionable fraud is the fact that it is relied on and acted on, and it is competent for the party claiming to have been defrauded to testify to such fact." Arnstine v. Treat, 39 N.W. 749.
"Fraud is fully proved by evidence that satisfied the conscience of a common man, so that he would act upon his conviction in matters of the highest importance to his own interest." Guild v. More, 32 N.D. 432, 155 N.W. 44.
"Fraud is never presumed, and its existence must be established by clear and satisfactory proof in order to justify a court in rescinding a sale on such ground." McLennan v Plummer, 34 N.D. 269, 158 N.W. 269.
William Langer and McGee & Goss, for respondent.
"A chose in action arising from a tort is assignable where it involves directly or indirectly, a right of property." Sullivan v. Curling, 5 A.L.R. 124, 99 S.E. 533.
"It is a general principle, according to the weight of authority, that statutes making actions ex delicto survivable, make them assignable." 5 A.L.R. 130, note.
An action pending on appeal is not abated by the death of the plaintiff. McDonough v. Russell Miller Mill. Co. 47 N.D. 237, 192 N.W. 251.
"A thing in action arising out of the violation of a right of property or out of an obligation, may be transferred by the owner." Comp. Laws 1913, § 5446.
Beulah Coal Min. Co. v. Heihn, 46 N.D. 646, 180 N.W. 787.
This is an action to recover damages for deceit alleged to have been practiced, in pursuit of a conspiracy between the two defendants, in the sale of bank stock in the Aurelia State Bank at Aurelia, North Dakota. In the trial court the plaintiff had judgment. The defendants moved for a judgment notwithstanding the verdict or for a new trial. The motion being denied, the defendants appeal from the judgment and from the order denying the motion.
Prior to the 29th of March, 1926, the defendant Bergeth was the owner of thirty-seven shares of the stock of the bank and was its president and in active control of the institution. Hillis was the owner of thirty shares, was vice president and lived at Berthold some twenty miles distant from the village where the bank was situated. He was engaged in the practice of his profession of physician and surgeon. Both had been connected with the bank for many years. Hillis in his testimony claimed that prior to 1926 he had paid into the bank $ 20,000 in money for the purpose of keeping up the reserve, taking out in exchange paper that was not readily convertible into cash. It appears that just prior to the 29th of March, 1926, the reserve of the bank was depleted and the officers contemplated its immediate closing on this account, Hillis claiming that he was no longer willing or able to put up additional money to keep up the reserve. On Saturday, the 27th of March, 1926, five men in the community who had heard that the bank was likely to close called upon Hillis in Berthold. They talked about the condition of the bank and of the possibility of its being reorganized. On the Monday following this meeting a meeting of the interested people of Aurelia was held to consider ways and means of keeping the bank open. Hillis attended that meeting and presided as chairman. This action is predicated largely, if not entirely, upon statements made at this meeting. Hillis claims he stated to those present his willingness to turn in his stock so that it could be sold at par value and the amount received put in the bank to build up the reserve. He says he made no statement concerning the condition of the bank aside from the fact that its reserve was depleted, and that he did not expect to get anything for his stock. There is testimony, however, to the effect that the bank was represented to be in A-1 condition, excepting that the reserve was low; that he would turn over all his stock and when the bank again became prosperous it could pay him for it. After this meeting fifty-five shares of stock held by Hillis and Bergeth were transferred. There was a reorganization of the bank, Grabow, the plaintiff in this action, being elected president and one H. B. Lysne, cashier. Grabow claims that he at the time disclaimed knowledge of the banking business and did not want to act but that Hillis told him to take the presidency for a few days and as soon as he could buy some more stock he would take it off his (Grabow's) hands. The bank remained open some five or six weeks on the strength of the reserve derived from the sale of the Hillis and Bergeth stock to the new stockholders. Twenty-four of the purchasers assigned their causes of action to the plaintiff, who sues in his own name.
On this appeal errors are assigned which present, among other questions, prejudicial error in the charge of the court to the jury and the assignability of the causes of action upon which the judgment is based. Having come to the conclusion that a new trial must be had and it appearing that the other questions are such as are not likely to arise upon another trial, we shall consider but the two questions stated and these in the inverse order of their statement.
The complaint, briefly summarized, charged the defendants with knowledge of the condition of the banking corporation on the 29th of March, 1926; that they conspired and confederated to sell the stock of each to persons named by falsely and fraudulently representing to them that the corporation was solvent and the stock worth par; that in pursuance of the conspiracy and for the purpose of carrying the same into effect, the defendant Hillis falsely and fraudulently represented to the plaintiff and the other persons named that the bank was solvent; that such persons believed the statements so made by Hillis and in reliance thereon purchased from him and from Bergeth fifty-five shares, the purchasers and the number of shares purchased being alleged; and that the purchasers paid to the defendants $ 100 for each share. The statements and representations are alleged to be false in that the corporation was hopelessly insolvent and known by the defendants to be so. The purchasers are alleged to have sustained damages in proportion to the amount of stock purchased and each of them is alleged to have assigned his claim against the defendants "accruing by reason of the false and fraudulent representations" to the plaintiff.
At the commencement of the trial the attorneys for the defendants requested to know whether the plaintiff was suing to recover upon an unlawful conspiracy and for fraud and deceit or to recover for a breach of warranty. It was then announced by the attorneys for the plaintiff that they expected to recover for fraud and deceit and for conspiracy. The defendants' attorneys then moved that they be required to elect as between fraud and deceit based upon conspiracy and for breach of warranty. One of the plaintiff's attorneys asserted the right to elect after proof was in, and in ruling on the motion the court stated that if it appeared an election was proper he would require the plaintiff to elect at the end of the plaintiff's case. No election was made. Hence, in this court the question is presented as to whether the various causes of action for deceit in the sale to the various purchasers of the stock are assignable.
In support of the contention that such a cause of action for deceit is assignable, counsel for the respondent stress the more liberal rule favorable to assignments than existed at the common law and also rely upon specific statutory provisions in this state which will be quoted below. They urge that while there may still be some distinctly personal choses in action which can be sued only by or in the name of the owner, the...
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