Ivey v. Neyland, 1281-5335.

Decision Date12 March 1930
Docket NumberNo. 1281-5335.,1281-5335.
PartiesIVEY et al. v. NEYLAND et al.
CourtTexas Supreme Court

Holland & Moore and George K. Holland, all of Dallas, for plaintiffs in error.

Crosby & Estes, of Greenville, for defendants in error.

CRITZ, J.

This suit was instituted in the district court of Dallas county, Tex., by Mrs. T. C. Ivey, formerly Mrs. J. W. Benson, and her husband, against Mayo W. Neyland, Jr., Robert R. Neyland, and Mayo W. Neyland, Sr., for cancellation and rescission of a contract of sale of a one-fourth interest in 231 shares (par value $100 each) of stock in the First National Bank of Montgomery, Ala. The suit is based on fraud. No damages were sought. The case was transferred to the district court of Hunt county, Tex., where a trial was had before the court without the intervention of a jury, resulting in a judgment for Neyland et al. The case was duly appealed to the Court of Civil Appeals for the Sixth District at Texarkana, which court affirmed the judgment of the trial court. 11 S.W.(2d) 608. The case is now before the Supreme Court on writ of error granted on application of Mrs. Ivey and her husband.

The Court of Civil Appeals makes a very comprehensive statement of the facts and issues of the case, and, for the sake of brevity, we refer to the opinion of that court for a full statement. However, in order that this opinion may be complete within itself, we make the following brief reference to the facts:

It seems that one C. A. M. Pitts, at the time of his death in 1919, owned 231 shares of stock of the First National Bank of Montgomery, Ala. Pitts left a will dated August 13, 1916, which was duly probated in this state, where he lived at the time of his death, which will contained the following bequest to Mrs. Mary Grace Benson:

"First: I give and bequeath to my sister, Mary Grace Benson (231) two hundred and thirty one shares of First National Bank stock, of Montgomery, Alabama.

"Face value ($100.00) one hundred dollars per share or (23100.00) twenty three thousand one hundred dollars.

"My valuation this stock ($200.00) two hundred dollar per share. The aforesaid bank stock of the First National Bank of Montgomery, Alabama, is to remain intact can neither be sold or traded, and only the interest amounting to ($1848.00) one thousand eight hundred and forty eight dollars annually, or (.08) eight per cent. face value pays (.02) two per cent quarterly as follows:

"January first, April first, July first and October first. Each quarterly payment amounting to ($462.00) Four hundred and sixty two dollars.

"At the death of Mary Grace Benson, this aforesaid bank stock of First National Bank, of Montgomery, Alabama, shall become the property of her four sons, namely: John William Benson; James Coleman Benson; Joseph Eugene Benson; and Walter Lee Benson; but this stock shall still remain intact, and can neither be sold or traded by any of the four, said sons of Mary Grace Benson, individually or collectively, but only the interest of ($1848.00) One thousand eight hundred and forty eight dollars annually or ($462.00) four hundred and sixty two dollars quarterly, to be equally divided among the aforesaid four sons of Mary Grace Benson."

John William Benson, one of the four sons of Mrs. Mary Grace Benson, mentioned in the above will, married the plaintiff Mrs. Ivey in April, 1920, and died intestate, and without children, in January, 1924. Mrs. Ivey, then the widow of John William Benson, on June 12, 1925, by written instrument sold her undivided one-fourth interest in the bank stock which she heired from her deceased husband, John William Benson, to the defendant R. R. Neyland, Mayo W. Neyland, Jr., acted as R. R. Neyland's agent, in making the purchase. Mrs. Ivey later married T. C. Ivey, and joined by him prosecuted this suit against the defendants seeking to cancel the transfer above mentioned, and to recover back her interest in the stock on the ground of fraud. The trial court finds that the stock, at the time of the transfer, was of the par value of $100 per share; that it had no market value at that time; and that its intrinsic value was $151.98 per share. It is further shown that Mrs. Mary Grace Benson was living at the time of the sale, and at the time of the trial. Her life expectancy at the time of the transfer was eleven years. Neyland paid $500 for Mrs. Ivey's interest in the stock.

It will thus be seen that at the time of the transfer in question Mrs. Ivey owned an undivided one-fourth interest in the 231 shares of stock burdened with the right of Mrs. Grace Benson to enjoy the same, and collect the dividends thereon during her natural life. Her life expectancy, as above shown, was eleven years; but of course no one knows how long she will live.

Plaintiff's first assignment of error is as follows: "The Court erred in its holding to the effect that the value of appellant's interest in the bank stock on June 12th, 1925, the date of the sale transaction, was not the value to be used in determining whether appellant sustained any damage by reason of the transaction, but that the value of the stock as of the time when Mrs. Mary Grace Benson might die should be looked to to so determine."

We are of the opinion that this assignment should be sustained.

In an ordinary suit for damages based on fraud, the measure is the difference between the price paid and the value of the thing sold at the time of the sale. Moore v. Beakley, 215 S. W. 957 (Tex. Com. App. Opinion approved); Butler v. Anderson, 107 S. W. 656 (Tex. Civ. App. Writ. Ref.); Reed v. Holloway, 127 S. W. 1189 (Tex. Civ. App.); p. 27 C. J. 91.

This is not a suit for damages, but in order for plaintiff to recover in rescission it must appear that she suffered legal injury by the transaction. In order to show injury in this case, she must prove that her interest in the stock, at the time of the transfer, was worth more than the $500 paid. We think the evidence conclusively, and as a matter of law, shows that the price paid was substantially less than the legal value of Mrs. Ivey's interest in the stock. Of course, Mrs. Ivey's interest was not worth what it would have been had it...

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    ... ... Griffith, supra; Holland v. Brown, 66 S.W.2d 1095 (Tex.Civ.App.--Beaumont 1933, writ ref.); Ivey v. Neyland, 25 S.W.2d 313 (Tex.Com.App., holding approved); Henyan v. Trevino, 137 S.W. 458, 482 ... ...
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