Harriage v. Daley

• Decision Date: 15 November 1915
• Docket Number: 237
• Citation: 180 S.W. 333,121 Ark. 23
• Parties: HARRIAGE v. DALEY
• Court: Arkansas Supreme Court

180 S.W. 333

121 Ark. 23

HARRIAGE v. DALEY

No. 237

Supreme Court of Arkansas

November 15, 1915

[Copyrighted Material Omitted]

Appeal from Sebastian Chancery Court, Greenwood District; J. F Read, Special Chancellor; affirmed.

STATEMENT BY THE COURT.

This suit was instituted by appellant against the appellees to recover $ 5,050, alleged to be due on the purchase price of 270 acres of land sold by appellant to appellees. Appellant alleged that he sold the lands (described in his complaint) to the appellees for the sum of $ 14,500; that he was induced to accept as a part of the purchase money 202 shares of stock of the face value of $ 5,050 in the Hackett City Coal & Manufacturing Co., (hereinafter, for convenience, called the Coal Company); that these shares of stock were falsely and fraudulently issued by Daley, president, and Harrison secretary, of the Coal Company, without authority of the corporation, and without any consideration paid by them to the corporation for the stock; that Daley and Harrison falsely and fraudulently represented that they were authorized to issue the stock and that the lands purchased by them of appellant were to be held by them for the Coal Company and developed by it; that appellant relied upon these representations, and had a right to rely upon the same; that said representations were false and fraudulent; that appellees Pigg and Grayson had knowledge of the above representations and participated in the fraud that was practiced on the appellant; that the company was insolvent and the stock worthless; that the consideration failed to the extent of $ 5,050; that the appellant was deceived by the above false and fraudulent representations to his damage in the sum of $ 5,050, the face value of the stock, for which he prayed judgment and for a lien on the land to satisfy the same.

Appellees Daley, Harrison and Grayson answered denying the allegations of the complaint as to fraudulent representations, etc., and set up that they purchased the land of the appellant for the sum of $ 9,450, which they paid him; that they took the title to the lands in their own names; that they borrowed the money from a bank to pay for these lands; that when their note to the bank became due they were unable to pay the same; that appellee Pigg arranged to take care of this note, and in consideration of his paying the note which they had given to procure the purchase money they executed a deed conveying these lands land other lands to him; that all this was done with the knowledge of appellant; that the sum of $ 9,450 was the full value of appellant's land and all he demanded for it; that the stock mentioned by appellant in his complaint was not given as any part of the consideration for the purchase of the land and formed no inducement to the sale; that appellant knew of the speculative and uncertain value of this stock, etc. Pigg answered but the decision we have reached makes it unnecessary to set out his answer.

The appellant testified that after giving Daley and others two or three options on his land at different prices, beginning at $ 25 an acre, he finally sold to Daley and others the land in suit for $ 50 an acre, $ 35 in money and $ 15 an acre in stock of the Coal Company. He made his deed to the appellees according to their directions and it was deposited in the bank and delivered to them when the appellant received the cash and the stock. In making the contract of sale appellant dealt with Daley. Daley told him that he would give him $ 35 in money and $ 15 in stock of the Coal Company per acre; that the Coal Company would be in operation inside of 12 months that they had sufficient stock sold to put the company in operation as soon as his deed was executed. He knew nothing about the corporation, or the value of the stock, or of the stockholders, except what Daley told him. He accepted the stock at face value; he thought it was worth it. Witness understood from them that they were operators and not speculators; that they were the Coal Company, or a part of it, and that the company was to operate the land. Before the deal was closed Pigg told witness that he was going to join Daley and others in their deal; that he called to see the land. Witness went with Pigg to the land and when they had got only a little way out in the field Pigg said there was not any need to go further, that it looked good to him. A few days after that the deed was prepared and delivered. There was no one present except witness and Daley at the time Daley made the proposition to pay $ 35 per acre in cash and $ 15 in stock. Witness relied altogether on their statements as to the formation of the Coal Company, its officers, assets, and liabilities; that was all he had to rely upon. The value of the stock was to be its face value of $ 5,050, and witness got this information from their statements to him. He understood from them that the lands were to be held by the Coal Company for its use and benefit. It was sometime after the deal was made that he learned to the contrary. The men to whom the deed was made never did operate the land, nor attempt to do so. The first information witness got that they were not operating the land was quite awhile after the deed was made. Witness never talked much to Pigg about it, but he got satisfactory information from others that Pigg was claiming the land. Witness had never received notice of any meeting of the stockholders of the Coal Company.

On cross-examination witness testified that he bought 200 acres of land for Daley and others from Porter and the Fannin heirs. It was coal land, adjoining that which witness sold them. The price he paid for this land was $ 25 per acre. The stock given witness was not to pay him for buying that land for them. They were to pay him 10 per cent. on the purchase price of the land for buying it for them, but they never did pay him. When he asked Daley for it he said he didn't have the money. The stock was delivered to witness by Daley, Harrison or an attorney, witness was not sure which, but all three were present. Witness then reiterated that the market value of his land at the time he sold it was $ 50 per acre.

One witness testified that when Daley and Harrison came to Hackett on their deal with Harriage that he talked with Daley about the land and Daley said they were going to operate the land; that they had the money back of them.

The last option that appellant gave Daley and Harrison on the land before the deed was made recites as follows: "For and in consideration of the sum of $ 13,450.00, of which $ 8,450 is good and lawful money, and $ 5,050 is stock in the Hackett City Coal & Manufacturing Co.," etc. The recital in the deed as to the consideration is as follows: "For and in consideration of the sum of $ 9,450 cash in hand paid to us by Jno. E. Daley, J. C. Harrison, Wash Pigg and Arthur T. Grayson, and the further consideration of $ 5,050 in the capital stock of the Hackett City Coal & Manufacturing Co., of Sebastian County, Arkansas, to be issued to the said grantor herein."

Daley, a witness on behalf of the appellee, testified substantially as follows: That in November, 1908, appellant gave witness and Harrison an option on the land in controversy for sixty days at $ 30 per acre. In December, 1908, the Coal Company was organized. Witness and Harrison desired to purchase lands belonging to the Fannin heirs and Porter. These lands adjoined the appellant's land. At that time appellant wanted $ 35 per acre for his land. Appellant said that he could get the Fannin and Porter lands for them, and they told appellant that if he could get these lands they would give him $ 35 an acre for his land and $ 5,000 stock in the coal company as commission for his services in purchasing the Fannin and Porter lands. Appellant said "he didn't want that; that he didn't consider it worth anything, but said he could get the Fannin and Porter land if we would give him 10 per cent. on it and $ 35 per acre for his individual land."

They finally made appellant a proposition to give him $ 35 an acre for his individual land and $ 5,000 stock in the coal company that would be just the same as commission, "and, in that way," witness stated, "we can raise enough money to buy your land, and with this stock we can raise the money and pay you." To this appellant said: "I don't want that stock; it is no good." Witness continues: "He finally agreed to take $ 35 an acre and the five thousand dollars stock in the company as his commission for getting the Fannin and Porter lands." Witness then goes into detail showing the transaction by which they borrowed the money from the bank, as set up in their answer, substantially detailing the facts as therein alleged. Witness, further along in his testimony, stated that appellant knew when they were negotiating with him for the purchase of his land that witness and Harrison had just organized the coal company. When the negotiations first began he knew that they didn't have any company. Witness made no representations as to the value of the stock because at that time the stock had no value. He denied telling the appellant that he had sold sufficient stock in the corporation to take over his land and begin the operation of the coal company. He told appellant that it was his intention to sell sufficient stock if they could, to take over the land. The purpose of the organization of the coal company was to purchase coal properties and to start in the coal operation. Witness stated that in their negotiations with appellant $ 50 an acre, $ 15 being in stock, was never mentioned. Witness was asked by what authority he and Harrison gave $ 5,050 stock, and answered that Harrison owned the stock himself; that it was given to him for money he had spent in making...