Harness v. Horne

• Decision Date: 10 May 1898
• Docket Number: 2,427
• Citation: 50 N.E. 395,20 Ind.App. 134
• Parties: HARNESS ET AL. v. HORNE
• Court: Indiana Appellate Court

50 N.E. 395

20 Ind.App. 134

HARNESS ET AL. v. HORNE

No. 2,427

Court of Appeals of Indiana

May 10, 1898

From the Howard Circuit Court.

Reversed.

C. N Pollard, B. F. Harness and W. R. Voorhis, for appellants.

B Borders and James O'Brien, for appellee.

BLACK J. Wiley, J., took no part in this decision.

OPINION

BLACK, J.

This was an action brought by the appellee against the appellants Benjamin F. harness and William W. Harness, upon a promissory note for $ 500,00 made by the appellants to the appellee. The appellants answered by general denial and by a paragraph alleging want of consideration; and the appellant Benjamin F. Harness separately answered failure of consideration and also separately answered in two paragraphs by way of counterclaim for alleged fraud. The appellee replied, and the issues of fact were tried by jury. There was a special verdict, in which the facts were stated in substance as follows: On or about the 1st day of March, 1893, the appellee sold a certain electric belt and truss business, including stock, material and machinery on hand, at Chicago, to the appellant Benjamin F. Harness and one Charles E. Ellis, to each of them one-half thereof. Benjamin F. Harness paid the appellee $ 2,000.00 in cash, and the appellants executed to him two promissory notes, one for $ 500.00 due in six months, and one for $ 500.00 due in one year, each with interest at six per cent. per annum, for the one-half of said business. These notes were signed by the appellant William W. Harness as surety. The former note was paid; the latter, being the note in suit, amounting with the interest thereon to $ 587.00, was due and unpaid. The jury stated that there was not sufficient evidence to show what Ellis paid for his one-half interest in the business. About the time of this transaction, the appellee made out an inventory of the material and goods on hands, and delivered it or a copy of it, to Ellis or Benjamin F. Harness. It was found that this inventory did not contain substantially a correct statement of the articles and goods so sold, but that the purchasers about that time received from the appellee substantially the articles and goods mentioned in the inventory. Soon after the sale, the purchasers incorporated the business under the name of The Dr. Horne Electric Belt and Truss Co. The stock of the corporation was divided into two hundred and fifty shares of $ 100.00 each, said Ellis subscribing for one hundred and twenty-five shares, Benjamin F. Harness seventy-five shares and his wife fifty shares, the shares subscribed by Harness and his wife representing the whole interest so purchased by Benjamin F. Harness. The business was afterward carried on by this corporation. Benjamin F. Harness and his wife attending to the business at the home office, and Ellis attending to the advertising of the business; and up to the time Harness and wife sold their shares to one Gallear the corporation received $ 4,507.47 in money from the sale of goods at retail and paid for advertising in goods taken out of the stock of the business a bill amounting to about $ 2,400. It was found that at or prior to his said sale the appellee made false statements concerning said business; that he stated to Harness, for the purpose of inducing him to purchase the business, that said purchasers could easily clear $ 10,000.00 a year out of the business; that the statements made to Benjamin F. Harness by the appellee at and before the sale, were not all substantially correct and true; that the appellee had conducted the business for ten years in Chicago; that Harness and Ellis and said corporation sold and disposed, at retail, of all the stock on hand, manufactured goods and material, except a small amount, for their own benefit, and afterward Harness and his wife sold their one-half of the stock in the company to said Gallear for $ 1,200; that the sole inducement for Gallear to make said purchase was the fact that he had about five hundred thousand names and addresses, worth from $ 3,000 to $ 5,000, which he could use in advertising the business, without paying out any money for advertising, and which were of no value to him in any other way. Benjamin F. Harness did not at any time offer to return anything which he had received from the appellee. It was found that prior to the appellee's sale, he represented to Benjamin F. Harness that the business was worth $ 10,000 or more, and that he could make that amount per year in the business; that the appellee verbally insured him that he could do so; that the appellee represented to said Harness, before the purchase, that the former had names and addresses upon his books pertaining to said business, of the value of from $ 5,000 to $ 10,000 to said business. It was also found that said representations were made for the purpose of inducing said Harness to purchase the one-half interest in said business; that the representations were false; that Harness believed them to be true, and relied upon them as being true in making the purchase, and was induced by them to make the purchase. It was found that the first information Benjamin F. Harness had that the appellee desired to sell his business was obtained through Charles E. Ellis, in February, 1893; that Ellis at the time represented to said Harness that said business was of great value, and that a large amount of money could be made out of it, and immediately thereafter Ellis took Harness and his wife to the appellee's office and introduced them; that the...