Hines v. Royce

• Decision Date: 06 January 1908
• Citation: 127 Mo. App. 718,106 S.W. 1091
• Parties: HINES v. ROYCE.
• Court: Missouri Court of Appeals

106 S.W. 1091

127 Mo. A. 718

HINES v. ROYCE.

Kansas City Court of Appeals. Missouri.

January 6, 1908.

1. FRAUD — ACTIONS — SUFFICIENCY OF EVIDENCE.

In an action to recover money invested in corporate stock, because of defendant's fraud in representing the corporation's condition, evidence examined, and held to show that defendant's representations as to the proposed increase of capital stock and the quality and value of the corporation's goods were false, and induced plaintiff to make the investment.

2. SAME — LIABILITY THEREFOR — MEANS OF KNOWLEDGE OF FACTS.

Neither law nor equity will afford relief for false representations, where the subject-matter is equally known to both parties, or where both parties have equal means of information, and regarding which one or the other is negligent.

3. SAME.

Where plaintiff, in response to defendant's advertisement that the capital stock of a corporation was to be increased on account of the prosperous condition of its business, and that the new stock would be issued to purchasers, bought from defendant, without examining them, certain shares which showed on their face that they were a part of the original stock, and no new stock was ever issued by the corporation, plaintiff could not recover on the ground of defendant's false representations, since he had every opportunity to inform himself concerning the stock purchased, and negligently failed to use such opportunity.

4. SAME.

Plaintiff, in response to defendant's advertisement that a corporation was doing a prosperous business and carrying a stock of goods to a certain amount, purchased from defendant, after looking over the goods, certain shares of the corporate stock. Plaintiff was not qualified to determine the quality and value of the goods, and relied upon defendant's representations. The business was in a failing condition, and the goods of less value than represented. Plaintiff remained in the corporation for some time, but was not an accountant, and there was nothing to show that he knew the exact conditions of the corporation until his withdrawal therefrom. Held, that plaintiff was entitled to recover for defendant's misrepresentations.

5. SAME.

A seller is liable to an action of deceit, if he fraudulently represents the quality of the thing sold to be other than it is in particulars, which the buyer has not equal means of knowing.

6. SAME—PLEADING—PROOF.

It is not required that a pleading should state the evidence upon which a party relies, and so, where a petition, in an action to recover money invested in a corporation, alleged that defendant was guilty of fraud in representing the business of the corporation to be in a flourishing condition, a prospectus giving the corporation's capital stock and stating that the corporation proposed to materially increase such stock to meet the demand of its increased business, etc., was properly admitted, even though there was no reference to it in the petition.

7. SAME—ADMISSIBILITY OF EVIDENCE—CIRCUMSTANCES OF FRAUD.

In an action for damages by a purchaser of corporate stock, because of defendant's fraud in representing the business of the corporation as being in a flourishing condition, it was proper to interrogate defendant as to the amount of the corporation's liabilities, such testimony tending to show its solvency or insolvency.

8. TRIAL—VERDICT—REFUSAL TO ACCEPT.

Where the court charged that if they found for plaintiff the verdict should be for a certain amount, and the jury returned a verdict for plaintiff in a less amount, the court properly refused to receive the verdict and ordered the jury to return to their room and further consider the case.

Appeal from Circuit Court, Jackson County; W. B. Teasdale, Judge.

Action by V. G. Hines against W. K. Royce. From a judgment for plaintiff, defendant appeals. Affirmed.

Henry C. Solomon, for appellant. Ellis, Cook & Ellis, for appellee.

BROADDUS, P. J.

This is a suit by plaintiff against the defendant for damages for an alleged fraud. The admitted facts are as follows: The defendant, who resided in Kansas City, Mo., caused to be published an advertisement soliciting persons with capital to take interest in a certain dry goods corporation known as the "Royce Dry Goods Company." At that time the plaintiff, who was a resident of Sarcoxie, Mo., answered said advertisement, and received a letter from defendant dated February 28, 1903, in which among other things was stated that said dry goods company was conducting a large and profitable business at Kansas City, Mo., with a stock of about $100,000 in value, practically all new goods bought at first hand; that the capital of the said company had been $60,000, but at a meeting held on the day of the writing of said letter the managing officers of the corporation had voted to increase the capital stock to $100,000; that the corporation was ready to issue such increased stock to purchasers; that the managing officers had concluded to install a new manager in the shoe, clothing, and furnishing goods department of their business; and that upon receiving said letter plaintiff went to Kansas City, and had an interview with defendant in which he repeated to plaintiff substantially all that was said in the letter. The plaintiff paid to the defendant $4,500, and received in exchange from the defendant 45 shares of $100 each in said corporation. The plaintiff remained in charge of the said department of the business until some time in the early part of July in that year, when on account of some altercation he had with a customer he was discharged by the defendant. The 45 shares of stock issued to the plaintiff was not additional stock of the corporation, but a part of the original stock which was owned by the defendant. There was no such additional stock issued by said corporation. The 45 shares of stock issued to the plaintiff showed upon their face that it was a part of the original stock. The plaintiff upon receipt of this stock did not examine them, but put them in a drawer in defendant's establishment to which he had access. The plaintiff's evidence tends to show that on about the 2d of July, 1903, he first learned from the defendant that the corporation had issued no increase of treasury stock, and he then learned for the first time that the shares of stock issued to himself were not increased treasury stock, but were shares of original capital stock, and owned by defendant, at which time he demanded of defendant the return of said $4,500, and offered to return to defendant the said certificates of stock issued to him; that the Royce Dry Goods Company did not have a large and prosperous business; that it was not carrying a stock of goods to the value of $100,000, and that the goods carried by it were not new and not bought at first hand, but were largely made up of secondhand, inferior goods; that it was not true that defendant had issued, prior to said transaction with plaintiff, a part of said increase of treasury stock to subscribers and purchasers; and as a matter of fact the...