Lindsay v. Sonora Gold Mining & Milling Company

• Decision Date: 29 June 1912
• Citation: 148 S.W. 849,244 Mo. 438
• Parties: ERNEST M. LINDSAY, Administrator, v. SONORA GOLD MINING & MILLING COMPANY, et al., Appellants
• Court: Missouri Supreme Court

148 S.W. 849

244 Mo. 438

ERNEST M. LINDSAY, Administrator, v. SONORA GOLD MINING & MILLING COMPANY, et al., Appellants

Supreme Court of Missouri, First Division

June 29, 1912

Appeal from Buchanan Circuit Court. Hon. L. J. Eastin, Judge.

Reversed and remanded.

Kendall B. Randolph and James W. Boyd for appellant.

(1) There is a complete failure of consideration as to the instrument pleaded in the answer. Failure of consideration and partial failure of consideration are always available as a defense. R. S. 1909, sec. 1974; Tinker v. Kier, 195 Mo. 183; Barr v. Baker, 9 Mo. 854; Tucker v Bartle, 85 Mo. 114; Bank v. Crandall, 87 Mo 208; Hess v. Draffen, 99 Mo.App. 580; Brolaski v. Carr, 127 Mo.App. 279; Kerwin v. Friedman, 127 Mo.App. 519; Beland v. Brewing Co., 157 Mo. 593; Brown v. Weldon, 27 Mo.App. 251, 99 Mo. 564; Comings v. Leedy, 114 Mo. 454; Smith v Hutchison, 61 Mo. 83; Tube Works Co. v. Machine Co., 201 Mo. 30. (2) The excluded depositions were properly admissible in evidence as tending to show a fraudulent purpose on the part of the individual defendants to induce the belief in the minds of investors that they owned the mines in Old Mexico, and as showing their course of dealing with Ernest Lindsay. Smalley v. Hale, 37 Mo. 102; Lockwood v. Doane, 107 Ill. 235; Porter v. Stone, 62 Ia. 442; Bank v. Phillips, 22 Mo. 85; Holmes v. Harrington, 20 Mo.App. 661; Cottrell v. Krum, 100 Mo. 397; Wannell v. Kem, 57 Mo. 478; Bank v. Hunt, 76 Mo. 439; Caldwell v. Henry, 76 Mo. 254; Crump v. Wright, 97 Mo. 13. (3) Fraudulent statements made to others than the deceased Lindsay were admissible in evidence as tending to show a general scheme on the part of the promoters to sell stock on the representation that they owned the mines in Mexico. Rowley v. Bigelow, 12 Pick. (Mass.) 311; Barber v. Martin, 93 N.W. 722; Lockwood v. Doane, 107 Ill. 235; Porter v. Stone, 62 Ia. 422; Smalley v. Hale, 37 Mo. 102; 6 Ency. of Ev., pp. 25, 26, 33 and 36. (4) There is a broad distinction between the admissibility of evidence and the weight of evidence, and there is also a broad distinction between indulging a presumption for the purpose of arriving at a conclusion and in opposing a presumption against a proven fact. State v. Jones, 64 Ia. 349; State v. Pike, 49 N.H. 444; Graves v. Caldwell, 90 Ill. 612; Railroad v. Chambless, 54 Ark. 214; Shirts v. Overjohn, 60 Mo. 308. (5) It was error in the lower court to hold that a person held an option on real estate, for which only a small percentage of the value of the real estate had been paid, was not guilty of a fraudulent representation when he asserted that he owned the title. Hess v. Draffen, 99 Mo.App. 580; Tinker v. Kier, 195 Mo. 183. (6) It was not necessary to show that false representations were actually made directly to Lindsay himself, he being now dead. Any false representation held out and made to the world at large as being a public statement of the condition of the corporation and intended by the promoters to be relied on by the purchasers of stock is competent evidence when coupled with the fact admitted in this record, that Lindsay purchased stock, and the further fact that he was in frequent contact with the promoters and others to whom those representations were made. Bank v. Phillips, 22 Mo. 35; Holmes v. Harrington, 20 Mo.App. 661; Barr v. Baker, 9 Mo. 54; Smalley v. Hale, 37 Mo. 104; Bank v. Crandall, 87 Mo. 212; Cottrell v. Krum, 100 Mo. 397; Wannell v. Kem, 57 Mo. 478; Bank v. Hunt, 76 Mo. 439; Caldwell v. Henry, 76 Mo. 454; Crum v. Wright, 97 Mo. 13. (7) The statements of the deceased Lindsay offered in evidence should have been admitted. The declarations of the party charging the fraud accompanying the transaction or so nearly connected therewith in time as to free them from suspicion of device are relevant and admissible to explain the influences that moved him to enter into the transaction. McLean v. Clark, 47 Ga. 24; Cook v. Carr, 20 Md. 403; 6 Ency. of Ev. 26; Smalley v. Hale, 37 Mo. 102. (8) The prospectus introduced in evidence, coupled with the testimony that the deceased Lindsay had one of them in his possession upon his return from the trip to Mexico, and at the time he signed the writing set up by the defendants in their answer, was sufficient to take this case to the jury. Bispham's Equity (2 Ed.), p. 264, par. 208; Railroad v. Muggeridge, 1 Dr. & Sm. 363; Railroad v. Kisch, L. R. 2 H. L. Cas. 113; 3 De G. J. & S. 125; Hallows v. Fernie, L. R. 3 Ch. 475; Smith's Case, L. R. 2 Ch. 609; Swift v. Winterbotham, L. R. 8 A. B. 244; Paddock v. Fletcher, 42 Vt. 389; McClellan v. Scott, 24 Wis. 81; Bagshaw v. Seymours, 4 C. B. (N.S.) 873; Clarke v. Dickson, 6 C. B. (N.S.) 453; Peek v. Gurney, L. R. 6 H. L. Cas. 377; Railroad v. Schuyler, 34 N.Y. 30; Phelps v. Wait, 30 N.Y. 78; Suydam v. Moore, 8 Barb. 358; Bruff v. Mali, 36 N.Y. 200.

William E. Stringfellow for respondents.

(1) Appellant attempts to avoid the payment of his note by alleging failure of consideration and fraudulent representations. On this point and most of the points raised by him, he states law with which respondent has no quarrel. Most of the abstract propositions of law contended for by appellant are sound. However, they do not affect the issues in this case. Appellant's points 1 to 8 all relate to fraud and failure of consideration, and may be considered together. Unless there was fraud there was no failure of consideration, as Lindsay received the certificate of stock which he bought. It was a good consideration unless there were fraudulent representations as to the ownership of the property. Smalley v. Hale, 37 Mo. 102; Gore v Mason, 18 Me. 84; 9 Cyc. 371; Note, 5 L.R.A. 856. The question is simply one of alleged fraudulent representations. While plaintiff makes general allegations of fraud, his defense narrows down to one specific allegation: That defendants claimed to have "owned" the property. The sole question left in the case and the sole question contended for by him in his brief is that defendants committed a fraud when they stated that they owned the Union Minera properties. The alleged prospectus and the statements said to have been made to visitors on the first trip, that the company owned the Bastilla mine, have no place in this case unless that of confusing the issue. The alleged prospectus and the alleged newspaper clipping, both said to have been published almost a year before Lindsay made his investment, were rightly considered by the trial court as too remote to have any possible influence on Lindsay, who purchased at a time when the company's plans and properties had entirely changed and when they had purchased a much larger group of properties including a prior and superior title to the Bastilla itself. Plaintiff himself places little reliance on the reference to the Bastilla, and the complaint in his brief relates almost exclusively to the exclusion of the depositions of witnesses to whom the directors of the Sonora Co. pointed out the Union Minera properties as their property. We wish to keep constantly in mind the fact that the question of there being any fraud in any representations made is not in the case, because of the fact that plaintiff entirely failed to offer any competent evidence to show that any statements whatever which defendants might have made were not true. The whole record shows that the representations made were not fraudulent. Assuming for the purpose of the argument that some statement or representation made by defendants be considered inaccurate or untrue, nevertheless that fact alone is not sufficient to sustain the charge of fraud. To constitute fraud certain essential elements must always be proved. One of them is that the party who claims to be defrauded must have acted in reliance upon the alleged fraudulent statements. First of all therefore it must be proved that he knew of such statements. 20 Cyc. 39; Priest v. White, 89 Mo. 609; Anderson v. McPike, 86 Mo. 293; Dunn v. White, 63 Mo. 181; Felix v. Shirey, 60 Mo.App. 621; McNeely v. Bartlett, 123 Mo.App. 58; Holmes v. Harrington, 20 Mo.App. 661; Tinker v. Kier, 195 Mo. 183; Bigelow on Fraud, 87; 2 Addison on Torts (Wood's Ed.), 412. "And all of them must be found to exist. The absence of any one of them is fatal to a recovery." 20 Cyc. 12, 13; Brackett v. Griswald, 112 N.Y. 454; Tinker v. Kier, 195 Mo. 199; Peers v. Davis, 29 Mo. 184, syl. 2. To support an action of deceit the existence of a fraudulent intent must in some way be manifest. 20 Cyc. 35; Dunn v. White, 63 Mo. 181; Summers v. Ins. Co., 90 Mo.App. 691; Tootle v. Lysaght, 65 Mo.App. 139; Brooking v. Shinn, 25 Mo.App. 277; Lovelace v. Suter, 93 Mo.App. 429; Snider v. Stemmons, 151 Mo.App. 156. It must appear that deceit was practiced and for the purpose of putting the vendor off his guard, or that special confidence was reposed in the representations of the vendor, and that the contract was entered into on the strength of the statements; and the proof of the fraudulent representations must be clear. Dunn v. White, 63 Mo. 181; Redpath v. Lawrence, 48 Mo.App. 427, syl. 3; Kilpatrick v. Wiley, 197 Mo. 159; Hume v. Brelsford, 51 Mo.App. 651; 20 Cyc. 108. There must have been a specific representation brought to plaintiff's knowledge. 20 Cyc. 14; Hume v. Brelsford, 51 Mo.App. 651. (2) Appellant makes the statement that testimony of Donovan that subsequent to Lindsay's contract he was present at a conference at which defendants said they owned the Union Minera properties was excluded. This is another erroneous statement. This testimony was not excluded and all oral testimony of this kind was admitted by the court throughout the trial. The only evidence in connection with Donovan that was excluded was an offer by attorneys to prove that Lindsay made a self-serving...