Hornblower v. Crandall

• Decision Date: 20 May 1879
• Citation: 7 Mo.App. 220
• Parties: EDWARD T. HORNBLOWER, Respondent, v. ELI J. CRANDALL ET AL., Appellants.
• Court: Missouri Court of Appeals

7 Mo.App. 220

EDWARD T. HORNBLOWER, Respondent,

v.ELI J. CRANDALL ET AL., Appellants.

St. Louis Court of Appeals, Missouri.

May 20, 1879.

1. Where the record-entries sufficiently show that the judgment is made to follow a confirmation of the referee's report, that there was an informality in making up the record, which would work no injury to the appellant, is not a ground for reversing the judgment.

2. An objection that the finding of a referee is against the weight of evidence can be raised only in the trial court, and is properly raised there only by specifying the particular findings objected to and the distinct grounds of objection.

3. Where several persons engage in business jointly, and, to facilitate such business, use a corporate name and issue stock, and, in the promotion of the scheme, false representations are made by those holding themselves out as promoters and managers of the business as to the material facts of inducement and as to matters peculiarly within the knowledge of all the associates or their agents, all those engaged in the promotion of the business as associates of those making the false representations are liable to those who, relying upon such representations, purchase stock to their hurt.

4. That one of the associates thus connected is ignorant of the details of the business will not avail him where he had the means of knowing but trusted to his associates, and where he, with the others received the benefits of the wrong-doing.

5. While the trial issues must be within the paper issues, they may be less.

APPEAL from St. Louis Circuit Court.

Affirmed.T. C. FLETCHER, R. F. WINGATE, and J. B. BOWMAN, for appellants: Representations as to the original cost of property under such circumstances, where there is no fiduciary relation between the parties, furnish no ground for rescission.-- Holbrook v. Connor, 60 Me. 578; Hamer v. Cooper, 8 Allen, 334; Mooney v. Miller, 102 Mass. 202; Cooper v. Levering, 106 Mass. 79; New Phosphate Co. v. Erlanger, 4 Cent. L. J. 510. Caveat emptor applies.-- Bishop v. Small, 63 Me. 13; Long v. Woodman, 58 Me. 49; Laidlaw v. Organ, 2 Wheat. 178; Bench v. Sheldon, 14 Barb. 66; Kintzing v. McElrath, 5 Pa. St. 467. The representations made are not shown to have operated as the inducement to purchase.-- Slaughter v. Gerson, 13 Wall. 383; Union Bank v. Hunt, 7 Mo. App. 42; Jolliffe v. Collins, 21 Mo. 338; Parker v. Marquis, 64 Mo. 42. Mere expressions of opinion are not sufficient.-- Page v. Bent, 2 Metc. 374; Tucker v. White, 8 Cent. L. J. 67; Haycraft v. Creasy, 2 East, 92; Littlefield v. Hutchinson, 117 Mass. 193; Stevens v. Rainwater, 4 Mo. App. 293. The finding by the court of a material fact, wholly without evidence, and against undisputed evidence, is an error of law, and reviewable by this court.-- Sheldon v. Sheldon, 51 N. Y. 354; Mann v. Lord, 51 N. Y. 447; Illinois v. Northup, 51 N. Y. 114. To hold McKeen as joint tort-feasor, a combination with Crandall to deceive Hornblower must be shown. In the entire absence of any proof of such conspiracy, the acts or declarations of Crandall are not competent evidence against the others, especially against McKeen, to whom the referee finds they were not even communicated.-- Brinkley v. Pratt, 40 Md. 529; Cramer v. Hornstad, 41 Texas,--. The mere fact of allowing his name to be used as a director, in the absence of any evidence of knowledge on his part of any unfairness in the enterprise, which all the parties well understood was speculative, and in the face of the unquestioned fact that he did not make or sanction any false representation, does not constitute actionable fraud.-- Morgan v. Skiddy et al., 62 N. Y. 319; Wakeman v. Dally, 31 N. Y. 27; Arthur v. Griswold, 55 N. Y. (Ct. App.) 400. When the stock is once all taken, no person can become a stockholder except by transfer.-- Lathrop v. Kneeland, 46 Barb. 432. There is no allegation in the petition as to who transferred the stock to plaintiff. Even if the stock had been spurious, an over-issue, or unauthorized by the charter, the recourse of plaintiff would be first against the party who transferred the stock to him. There is no partnership nor agency averred, except as embodied in the averment of conspiracy. His remedy is alone against the party from whom he purchased.-- Seizer v. Mali, 32 Barb. 76; Kendall v. Stone, 1 Seld. 14; Gomportz v. Bartlett, 75 Eng. Com. Law, 849; Kempson v. Saunders, 4 Bing. 5; Nockels v. Crosby, 3 Barn. & Cress. 814; Bank v. Railroad Co., 3 Kern. 599; Bank v. Bank, 16 N. Y. 125; Zabriskie v. Smith,--Kern. 330. The respondent had the same means of knowing as did the appellants, and the law imputes to him a knowledge of all the facts which an inquiry would have disclosed.--Kerr on Fraud, 262; Ogilvie v. Insurance Co., 63 U. S. 380. It should affirmatively appear that the report was approved, and that the court founded its judgment on the testimony reported by the referee.-- Pomeroy v. Benton, 6 Mo. App. 596; Ely v. Owenby, 59 Mo. 437; O'Neil v. Cappel, 62 Mo. 202.

GLOVER & SHEPLEY and E. T. ALLEN, for the respondent: Misrepresentations may sustain an action for deceit though not made directly to the party influenced by them, and who acted upon them to his injury.-- Cazeaux v. Mali, 25 Barb. 578; Wardell v. Fosdick, 13 Johns. 325; Crocker v. Lewis, 3 Sumn. 1 (Story, J.); Cross v. Sackett, 2 Bosw. 617; Swift v. Winterbotham, L. R. 8 Q. B. 253; City Bank v. Phillips, 22 Mo. 85; Van Kleek v. Leroy, 4 Abb. App. Dec. 479; Gerhard v. Bates, 2 El. & Bl. 476-488; Pilmore v. Hood, 5 Bing. N. C. 97; Scott v. Dixon,29 L. J. Exch (N. S.) 62; Seymour v. Bagshaw, 18 C. B. 903; Clarke v. Dickson, 6 C. B. (N. S.) 453; 2 Add. on Torts, sects. 1010-1014; Cooley on Torts, 494, and cases cited in notes. They are bound civiliter by Crandall's acts, whether “they were joint owners, engaged at the time in the joint undertaking, [viz., the sale of this property] and therefore equally responsible for each other's statements in regard to it” ( White v. Sawyer, 16 Gray, 586; Henslee v. Cannefex, 49 Mo. 295; Locke v. Stearns, 1 Metc. 560; Greenl. on Ev., sect. 112; St. Aubyn v. Smart, L. R. 5 Eq. 153; L. R. Ch. App. 646; Colt v. Woolaston, 2 P. Wms. 154; Cook v. Cartner, 9 Cush. 266; McKnight v. Ratcliffe, 44 Pa. St. 586; Linton v. Hurley, 14 Gray, 191; Lloyd v. Bettis, 27 L. T. 203; 37 Eng. Law & Eq. 545; Vreeland v. Stone Co., 29 N. J. Eq. 188), or were all conusant to his “““““acting as agent for the whole, and did not forbid him to go on, but rather acquiesced in the bargains he had made, and thus gave him credit and standing ( Mason v. Crosby, 1 Woodb. & M. 359; Pickard v. Sears, 6 Ad. & E. 469; Bronson's Executor v. Chappel, 12 Wall. 683), or whether such agency is to be inferred in law, with all its consequences and adjuncts, because they chose to carry into effect his contracts and thus ratify his actions.--Woodbury, J., in Mason v. Crosby, 1 Woodb. & M. 358, and cases cited. Nor need they have known the falsity or fraud (of his representations and acts), in order to be charged with its civil consequences, if they have undertaken to receive the benefit of the contract made under it.-- Castle v. Bullard, 23 How. 189; Taylor v. Green, 8 Car. & P. 316. “All who get gain by fraud, must bear the legal consequences of the wrong they do.”-- Vreeland v. Stone Co., 29 N. J. Eq. 195; Simons v. Vulcan Oil and Mining Co., 61 Pa. St. 202; Chester v. Dickerson, 54 N. Y. 1; Miller v. Barber, 66 N. Y. 558. Or whether they converted the money obtained from plaintiff to their own use or not, or carried out their fraudulent scheme after obtaining the money.-- Paddock v. Fletcher, 42 Vt. 389. “If the agent acts fraudulently, even without the knowledge of the principal, the contract is vitiated.”-- Wilson v. Fuller, 3 Ad. & E. 58; Doggett v. Emerson, 1 Story, 735; Hough v. Richardson, 3 Story, 689; Miller v. Barber, 66 N. Y. 558; Chester v. Dickerson, 54 N. Y. 1. It is no objection to the report of the referee that it discloses acts of fraud not alleged in the petitions. It was competent for plaintiffs to prove representations made by defendants to other persons, at or near the same time, and of a similar character, and under similar circumstances, upon the question of fraudulent intent.-- Miller v. Barber, 66 N. Y. 558; Carey v. Houghtaling, 1 Hill, 311; Hall v. Naylor, 18 N. Y. 508; Warren v. Daniels, 1 Woodb. & M. 90; Bradley v. Chase, 22 Me. 511; Wood v. United States, 16 Pet. 342, 360; 14 Pet. 430; 1 Stark. on Ev. 64; 2 Id. 220; 1 Ph. on Ev. (Con. ed.), 179, 458, 463. The finding of a referee will not be reversed on the suggestion that it is against the weight of evidence, where there is any evidence to support it.-- Park v. Kitchen, 1 Mo. App. 357; Wood v. Missouri Zeitung Co., 3 Mo. App. 602; Home Life Ins. Co. v. Potter, 4 Mo. App. 594; Reilly v. Russell, 4 Mo. App. 581; Brooks v. West, 3 Mo. App. 357; Franz v. Dietrick, 49 Mo. 95; Western v. Kribben, 48 Mo. 37.

HAYDEN, J., delivered the opinion of the court.

The petition, which contains the allegations necessary to an action on the case for deceit, charges that the defendants, of whom only two, Conlogue and McKeen, have appealed, conspired together to form a “bubble company,” nominally for the purpose of working lead-lands in Missouri; issued stock, and by false representations and other means fraudulently induced the plaintiff to purchase worthless shares. The defendants denied these allegations; but the issues thus raised it is unnecessary to give, as by consent the case went to a referee, who found the facts upon questions propounded.

It appears that the defendant Crandall and his associates, who afterwards formed the company in question, called the Pioneer Mining and Smelting Company, in the spring of 1871 purchased and partly paid for certain mineral lands in Missouri, and these lands were being worked by the parties as a voluntary association. The interests of these parties were not defined, as it was in...