McDonough v. Williams
| Decision Date | 18 May 1908 |
| Citation | 112 S.W. 164 |
| Parties | McDONOUGH v. WILLIAMS. |
| Court | Arkansas Supreme Court |
Appeal from Circuit Court, Sebastian County; Daniel Hou, Judge.
Action by George T. Williams against James B. McDonough for fraud. From a judgment for plaintiff, defendant appeals. Modified and affirmed.
Instruction No. 6 was as follows:
"I charge you that, in order to render a transaction void on account of fraud, it must appear that the defendant intentionally and falsely misrepresented some material fact to the plaintiff, or intentionally concealed some material fact from plaintiff, when he knew plaintiff was relying on him to disclose same, or intentionally made some false or fraudulent statement to him, or intentionally caused some false or fraudulent statement to be conveyed to him, of a material existing fact, with a view to influencing him to enter into the transaction, and that such false and fraudulent statement was believed by the plaintiff and acted upon by him."
Requested instructions 14, 15, and 29 were as follows:
"(29) Even if the jury should find that the defendant made the alleged false representations set out in the complaint, if after said representations were made, if they were made, the plaintiff was informed by the defendant that he had a deal on hand concerning the sale of the stock, and that if said deal went through, he, the said defendant, would make $5,000 or $10,000, and if, after such statement by the defendant to the plaintiff, the plaintiff then sold his stock to the defendant, it will be the duty of the jury to find for the defendant."
Jas. F. Read, F. A. Youmans, and B. R. Davidson, for appellant. Oscar L. and Lovick P. Miles, for appellee.
This is the second appeal in this case, and the issues and facts are sufficiently set forth in the statement and opinion on the former appeal, to be found in 77 Ark. 261, 92 S. W. 783. As was stated in that opinion, the action is for damages, grounded on fraud and deceit, alleged to have been practiced by appellant upon the appellee in the purchase, by the former, of shares of corporation stock from the latter. The relation of trust and confidence is set up by the appellee as having existed between him and appellant at the time of the sale of the stock, and it is alleged that certain false and fraudulent representations were made by appellant, and certain false and fraudulent concealments were indulged in by him, on which appellee relied, and by which he was induced to sell $12,500 shares of stock at its par value when it was worth more. Our former opinion narrowed the issues to the question of whether the alleged confidential relation existed between appellee and appellant at the time of the sale of the stock, and if so, whether appellant concealed the terms of the Bache option, which he should have disclosed. Judge McCulloch concluding the opinion for the court said: "It is therefore a question of fact for a jury to determine, under proper instructions, whether the confidential relation continued up to the time of the sale, and, if so, whether the plaintiff, on account of that relation, relied upon the defendant to disclose information concerning the prospective resale to Bache at a higher price than the par value, and whether the defendant, knowing of such reliance, concealed the information from plaintiff or from Ball and Boone, when he knew that they were the trusted advisers of plaintiff, and consummated a purchase of plaintiff's stock at par, in view of a certain resale at a much higher price."
On the second trial appellant introduced J. M. Spradling, who testified that he had been engaged in the coal mining business for 10 years; that he was familiar with the values of coal land in Sebastian county; was familiar with the Montreal Coal Company property, in a general way; knew the property very well, had not been under ground in the mines. He was mining coal about 1½ miles distant on the same vein. He knew of the thickness of the vein of the coal of the Montreal Coal Company from others, was familiar with the price of coal throughout that section of country, and had a fair knowledge of same. The appellant then offered to prove by this witness that the mines and property of the Montreal Coal Company on January 11, 1903, were not worth over $55,000. By the terms of the option, Bache paid appellant $33,000 for the stock of the Montreal Coal Company. Bache was to pay the indebtedness of the corporation, which appellant guaranteed would not exceed $50,000. There was evidence tending to prove that the indebtedness of the corporation, at the time of the option, was about $53,500. In our former opinion we said: Evidence of the value of the physical property, the corpus, of the Montreal Coal Company at the time of the sale of the stock of appellee to appellant certainly tended to show what the value of the stock was at that time. On the former appeal we held that the measure of damages "would be the difference between the price paid to the plaintiff for his stock and the actual value thereof at the time, if the latter exceeded the former." Under this rule the testimony of J. M. Spradling, supra, was very important to appellant. For there was evidence tending to show that, if the debts were equal to the value of the property of the corporation, the stock would not be worth anything. One witness testified that if the debts were as much as $50,000, the stock was not worth anything: that the property of the corporation did not exceed in value $50,000. In view of this evidence, the refusal to allow the testimony of the witness above mentioned was exceedingly prejudicial. While there was other evidence to the same effect admitted, the jury did not accept it. We cannot say that this evidence was cumulative. The witnesses were not sufficiently numerous for that; and, if the jury had been given an opportunity to consider the testimony of Spradling, ...
To continue reading
Request your trial