Loughery v. Central Trust Co.

Decision Date06 January 1927
Citation258 Mass. 172
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court
PartiesJAMES J. LOUGHERY v. CENTRAL TRUST COMPANY & others.

March 23, 24, 1926.

Present: BRALEY CROSBY, PIERCE, CARROLL, & WAIT, JJ.

Actionable Tort. Deceit. Conspiracy. Fraud.

There can be no recovery in an action of tort for damage resulting from reliance upon false statements of belief, of conditions to exist in the future, or of matters merely promissory in nature.

Except where criminal conduct is involved, the law favors settlements of disputes, although some of the parties may have been in the wrong. Per

WAIT, J.

A demurrer admits only facts well pleaded: it does not admit inferences from those facts unless they are necessary inferences.

Allegations in a declaration in an action of tort by one who had been the owner of the majority interest in the voting capital stock of a corporation against a trust company and four individuals were, in substance, that the plaintiff for his own benefit and for the benefit, as he saw it, of the corporation was pressing action which the defendants, who may have been in the wrong, were opposing as injurious to themselves; that efforts were being made to compromise and dispose of disputes; that the plaintiff's signature was desired to a contract in writing which would settle the existing controversies and provide for the immediate future of the parties thereto; that, previous to the making of the contract and to induce the plaintiff to execute it, the defendants conspired together to defraud the plaintiff and represented and agreed that certain of them would take over certain offices in the corporation, would properly finance it, and would handle and manage the company's affairs actively and intelligently for the benefit of its creditors stockholders and the plaintiff; that such representations and agreements were made by the defendants with knowledge of their falsity and with no intent to perform the agreements "in good faith in accordance with the fiduciary duty thereby undertaken and represented to be undertaken" that the defendants intended the plaintiff to rely on them that the plaintiff in ignorance of their falsity relied on them and executed the agreement; that the defendants did not carry out their agreements or representations made before the execution of the agreement; and that by reason thereof the value of the corporation and of its stock was lost; that the plaintiff to his damage acted upon such misrepresentations and agreements. The contract in writing did not contain any of the alleged representations or agreements and there was no allegation that the defendants did not perform all that the contract in writing called for or that the alleged preliminary agreements were kept out of the contract in writing by fraud on the part of the

defendants. The defendants demurred.

Held, that

(1) None of the statements alleged to be representations was the affirmation of an existing fact;

(2) There was no allegation of any peculiar power of coercion or any fiduciary relation on the part of the defendants toward the plaintiff; it appeared that the plaintiff acted on his own judgment and freely;

(3) Even if conspiracy could be an independent cause of action, no actionable conspiracy appeared; distinguishing Willett v. Herrick, 242

Mass. 471, Martell v.

White, 185 Mass. 255 , and Pickett v. Walsh, 192

Mass. 572; (4) It was not a necessary inference from the facts alleged in the declaration that the plaintiff's loss would not have occurred had the defendants performed everything which the plaintiff alleged they promised they would perform;

(5) The declaration was an effort to avoid the consequences of the rule of law which forbids the admission of evidence of conversations, agreements and representations preceding the execution of a contract in writing to modify and contradict or add to that contract;

(6) The situation disclosed by the declaration was not that of one induced to act by false representations of an existing intent to perform the contractual relations provided for by the contract entered into;

(7) No actionable tort was shown by the declaration.

TORT against the Central Trust Company of Cambridge, Elmer H. Bright, Walter G. Davis, George B. Howard and Morton B. Howard, with a declaration described in the opinion. Writ dated July 30, 1925.

The defendants demurred to the declaration on the ground, among others, that it did "not state any cause of action entitling the plaintiff to recover against the defendants or any of them." The demurrer was heard by Morton, J., and was sustained, and by his order judgment was entered for the defendants. The plaintiff appealed.

J.A. Locke, (E.S. Abbott with him,) for the plaintiff. H.D. McLellan, (J.A. Daly with him,) for the defendants.

WAIT, J. This is an appeal from an order for entry of judgment for the defendant after the plaintiff's declaration had been held bad on demurrer and no amendment thereto had been made. The action is at law, in tort. The declaration is very long, but in a single count. After the recital of transactions in which the plaintiff, the defendants, one Richard Hittinger, and the American Ammonia Company were concerned, the declaration alleges that, knowing these things, the defendants conspired to defraud the plaintiff and, in pursuance of the conspiracy, to obtain control of the plaintiff's majority interest in the voting capital stock of the American Ammonia Company and to obtain releases of the claims of that company against the estate of Richard Hittinger and the defendants George B. and Morton B. Howard, by falsely and fraudulently representing and agreeing that if the plaintiff would do certain things, particularly set out, the defendant Bright, acting for himself and for the other defendants, would become trustee under a voting trust for the purpose of making it possible properly to finance the company and to handle and manage its affairs, actively and intelligently, for the benefit of its creditors and stockholders; the defendant Central Trust Company would designate a treasurer of the company in place of the plaintiff until a time to be determined in accord with the terms of a written agreement dated August 12, 1922, a copy of which was annexed to the declaration as Exhibit C; the defendants Davis, Morton B. Howard, and one Richard Hittinger, Jr., would serve as directors of the company until that time; the Central Trust Company and Morton B. Howard would choose a general manager for the company in place of the plaintiff; Bright and the other defendants would properly finance the company; and Bright would handle and manage the company's affairs actively and intelligently for the benefit of its creditors, stockholders and the plaintiff, who was to be employed on terms fixed in said agreement. It alleges that in reliance on these representations, the plaintiff signed the written agreement referred to, resigned as treasurer and general manager of the company, and transferred his shares of voting capital to Bright to be held upon the terms of the agreement of August 12, 1922. It fails, however, to allege that he did all the things set out to be required of him, and to allege that he did certain of the things which he sets out to be done by him. It...

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