Lowery v. Mutual Loan Soc. Inc.

• Decision Date: 30 May 1918
• Docket Number: 6 Div. 741
• Citation: 202 Ala. 51,79 So. 389
• Parties: LOWERY v. MUTUAL LOAN SOC., Inc.
• Court: Alabama Supreme Court

79 So. 389

202 Ala. 51

LOWERY v. MUTUAL LOAN SOC., Inc.

6 Div. 741

Supreme Court of Alabama

May 30, 1918

Appeal from Circuit Court, Jefferson County; E.C. Crow, Judge.

Action in assumpsit by the Mutual Loan Society, Incorporated against J.T. Lowery. Judgment for plaintiff and defendant appeals. Transferred from Court of Appeals under Acts 1911 p. 449, § 6. Affirmed.

The note, the basis of the suit, was executed by defendant in payment of his subscription for 50 shares of the capital stock of the plaintiff corporation, to be issued when the note was paid. Pleas 3 and 4 aver that the note was void, and of no effect, because defendant was inducted to subscribe for the stock by the false representation of plaintiff's selling agent (in the third plea) that it was guaranteed by the company to pay the holder 8 per cent. a year on its par value, and that this guaranty is expressed in writing on the certificate for stock issued, and (fourth plea) that the stock had a par value of $12.50 per share, whereas, in fact its par value was $10 a share. Neither plea alleges a rescission of the subscription or purchase, or any damage to defendant by reason of the alleged false statement. Plea 5 is as follows:

Defendant says that the note sued on was executed by him on the representation of R.Y. Kay that the company the plaintiff in this suit, which he was then representing in selling its stock, would pay an 8 per cent. dividend upon the par value of its capital stock per annum, and that the par value of its capital stock was $12.50 per share, and upon said representations defendant was induced to sign the notes sued on. Defendant avers that said representations made to him by said Kay were willfully to deceive, or recklessly made without knowledge, and acted on by defendant to his hurt in the execution of the note sued upon.

Plea 6:

Defendant says the note sued on, and which he was induced to sign as the result of the representation of one R.Y. Kay, who was then acting for plaintiff, and who represented defendant while acting for plaintiff, by mistake and innocently, that the par value of the capital stock of plaintiff was $12.50 per share, and that said R.Y. Kay, while acting for plaintiff by mistake and innocently, made the foregoing representation to defendant, and that defendant acted on such representation, and was thereby induced to sign the note sued upon, to his injury and damage.

Demurrers were interposed to pleas 3, 4, and 6, but sustained only as to plea 3. Pleas 7 and 8 set up the want of and the failure of consideration. The defendant's testimony supported the allegation of his pleas as to the statement of Kay, and tended to show that these statements induced him to purchase the stock. He testified, further, that he signed his subscription in duplicate on May 18, 1912, and that his copy was lost, and that he did not recall that he read the duplicate kept by Kay (which he put in evidence), and which recited that the par value of each share was $10, and that his copy had the figures $12.50 stamped over the printed figure of $10, as printed in Kay's copy, and that he did not learn that the par value of the stock was $10, or that it did not guarantee on the certificate the payment of 8 per cent. dividend per annum, until about the maturity of his note; that he then went to the company and offered to give them the $50 he had paid, if they would release him and return his note; and that they refused to do this. In order to show that plaintiff's stock issued was in fact the par value of $10, defendant offered in evidence a duplicate subscription to said stock on the same blank form as defendant made by one Swann on July 15, 1912, and also Swann's stock certificate issued on the same day. Both documents described the stock as of the par value of $10, and the certificate recited that the holders of the preferred stock shall be entitled to receive, when and as declared from the surplus or net profits of the corporation, 8 per cent dividends. Defendant also offered in evidence defendant's stock book. All these documents were excluded by the court on...