Johnson v. Caldwell
| Decision Date | 25 May 1937 |
| Docket Number | 26792. |
| Parties | JOHNSON v. CALDWELL. |
| Court | Oklahoma Supreme Court |
Rehearing Denied July 13, 1937.
Application for Leave to File Second Petition for Rehearing Denied Sept 21, 1937.
Syllabus by the Court.
1. To constitute actionable fraud it must be made to appear: (1) That defendant made a material representation; (2) that it was false; (3) that he made it when he knew it was false; or made it recklessly, without any knowledge of its truth, and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; (6) that he thereby suffered injury. All these facts must be proven with a reasonable degree of certainty, and all of them must be found to exist. The absence of any one of them is fatal to a recovery.
2. Fraud, in actions at law, is never presumed, but must be shown by evidence that is clear and satisfactory or convincing.
3. Where there is no testimony reasonably tending to support the verdict of a jury, the judgment of the court based thereon will be reversed.
4. It is the duty of a litigant to offer all the evidence which the law permits him to offer, at the first trial, and when it is apparent to this court that he has substantially done so, and that he could not recover on a second trial on any theory contended for by him, the cause will be reversed and remanded with instructions to dismiss the action.
Appeal from District Court, Greer County; John B. Wilson, Judge.
Action by Mrs. A. B. Caldwell against George W. Johnson. Judgment for plaintiff in the amount of $3,500, and the defendant appeals.
Reversed with directions.
Rehearing denied; HURST, J., dissenting.
Hollis Arnett, of Mangum, for plaintiff in error.
W. T Jeter, of Mangum, for defendant in error.
In effect this is an action for deceit to recover the sum of $3,500 as damages claimed by plaintiff for the alleged fraudulent acts of the defendant. For convenience the parties will be designated as they appeared in the court below.
Mrs Caldwell, plaintiff, had on deposit in a bank in Mangum Okl., the sum of $3,500. Defendant Johnson was a druggist in Mangum and plaintiff traded at his store. Defendant had invested $72,000 in the Century Building & Loan Association of Dallas, Tex., $42,000 in stock of the Amarillo Building & Loan Association, and $15,000 in stock of the Chieftain Royalty Company. He acquired knowledge that plaintiff kept such a deposit, and in a number of interviews with her told her of his investments, and agreed to invest her money. He advised her that his dividends came in regularly, assured her that his investments were good, safe, and profitable, and exhibited to her various statements of the Century Building & Loan Association based on audits made by the State Banking Department of Texas, showing that association to be a solvent and going concern. He made a similar showing to her relative to the other two concerns, and told her that all of them were paying regular and satisfactory dividends.
Concerning her deposit, he called her attention to the fact that banks were failing all over the country at that time, which was during the years 1928 and 1929; that the bank where she kept her deposit might fail and her money be lost. That a deposit in a bank did not produce the amount of income it would produce if invested in some of his stocks; that her deposit was unsafe and if invested in such stocks would be safer than on deposit in any bank. All the information which be gave her was in general conversations in his store and in response to her inquiry as to how she might make a better investment of her money to assure her of its safety. She had confidence in him and considered him one of the best "financial" men in the city.
From time to time she withdrew her money from the bank, took it to the defendant and permitted him to invest it in some of said stocks, delivering her checks to him, and receiving from him, or direct from the association issuing it, stock in the proper amount.
Johnson had been elected vice president of the Century Building & Loan Association; he did not assume any part in its management and had no connection with its operation or general business affairs, and was not conversant with the details thereof. He was elected because he was a large investor. Living some 300 miles from its office, he knew no more about its affairs than any other stockholder. He made sales of stock in all of these companies from time to time; on some sales he received a nominal commission and on others none. He was not a designated stock salesman or broker, but made sales merely because of his interest in the success of each of said concerns.
After Mrs. Caldwell had placed her money in stocks through defendant, $1,900 in the Amarillo Building & Loan Association; $600 in the Chieftain Royalty Company; and $1,000 in the Century Building & Loan Association of Dallas, Johnson invested $37,000 in the stock of the Century Building & Loan Association and $36,000 in the stocks of the other two companies. This was done during the two years immediately following the transactions of which plaintiff complains.
More than four years subsequent to Mrs. Caldwell's investments the Banking Department of the state of Texas, whose duty it was to audit building and loan associations in that state ascertained that through manipulations and defalcations, which were not reflected in the regular books and records of the association, the president of said association, one Frank A. Loftus, had plundered its treasury. That his abstractions had been going on since the beginning of business, and that he maintained a duplicate, unlawful, and independent record of his own; and the regular books and accounts of the concern were so kept that they reflected a solvent and dividend paying business. The fact of insolvency could not have been ascertained, and was not ascertainable from the association's records. This condition was unknown to the secretary-treasurer, and the cashier, who officed with the president and was unknown to all officers and stockholders of the corporation, except the defaulting president. All reports of the condition of the association were based by the Banking Department's audits on the books and accounts of the association. No suspicions had been aroused to cause an independent verification of the authenticity of the records of the association and of the various items reflected therein until immediately prior to July, 1933, and the result of the independent investigations then made caused the said president to become a fugitive from justice, and his peculations to be discovered. These disclosed that the...
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