Iowa Economic Heater Co. v. American Economic Heater Co.

• Decision Date: 21 November 1887
• Citation: 32 F. 735
• Parties: IOWA ECONOMIC HEATER CO. v. AMERICAN ECONOMIC HEATER CO. and others.
• Court: U.S. District Court — Northern District of Illinois

32 F. 735

IOWA ECONOMIC HEATER CO. v. AMERICAN ECONOMIC HEATER CO. and others.

United States Circuit Court, N.D. Illinois.

November 21, 1887

F. A Johnson and Edwin Bean, for plaintiff.

Payne &amp Porter, for defendants.

BLODGETT J.

This is an action on the case to recover damages for alleged fraudulent misrepresentations made by the defendants to the plaintiff. The declaration, in substance, avers that the defendant Coffey as president, and Young, an employe of the defendant company, made to certain citizens of Iowa, who afterwards united in the formation of plaintiff company certain false and fraudulent representations in regard to the merits of a heating device manufactured by the defendants under letters patent issued October 9, 1883, to one Peck which patent was owned by the defendants, and by reason of such representations plaintiff was induced to pay $15,000 for the right to sell such heater in the state of Iowa, and induced to give defendants an order for the manufacture of 100 heaters, to be supplied within 30 days, which order has never been filled.

The declaration further avers that the said representations were false, and that Coffey and Young well knew that they were false at the time they were made, and that the same were made with the intent to defraud the plaintiff, and said heaters were of no practical value, and wholly worthless, as defendants and their said agents then well knew, and that, by reason of such fraudulent conduct of the defendants, the plaintiff has sustained damages to the extent of $20,000.

To this declaration the defendants demurred, the grounds of the demurrer being: (1) That the plaintiff had no corporate existence at the time these representations were made, and that the representations complained of were not made to the plaintiff. (2) That the declaration sounds partly in assumpsit for the manufacture and delivery of 100 heaters, and partly in tort for the false representations complained of. (3) That it does not appear that there was any concealment by defendant or its officers or agents of the defects of the heater which made it a failure.

As to the first objection, it sufficiently appears that the representations complained of were made to the persons who afterwards united in the formation of the plaintiff company and that the plaintiff purchased the right of the state of Iowa by reason of said representations, as well as by reason of the statements in regard to the merits of the heater contained in a circular issued by the defendant company, and which was shown or presented to the officers of the plaintiff after the plaintiff company was organized. The allegations are that the plaintiff purchased the right and paid the $15,000 by reason of these false representations. A corporation cannot be said to know anything except through its members or agents, and representations made to individuals, by reason of which such individuals are induced to form a corporation, may be said to be made to the corporation. The statements made were the moving cause of the organization of the...