Miss. Power Co. v. May
| Decision Date | 29 April 1935 |
| Docket Number | 31616 |
| Court | Mississippi Supreme Court |
| Parties | Mississippi Power Co. v. May. |
(In Banc.)
LICENSES.
Buyer of stock held not entitled to recover against corporation under Blue Sky Law for fraud in sale thereof, where there was no proof that corporation ever qualified under Blue Sky Law (Laws 1916, chap. 97).
ON SUGGESTIONS OF ERROR. (In Banc.) June 3, 1935. No. 31616.
APPEAL AND ERROR. Supreme Court must review case on theory on which it was presented below, especially theory on which case was submitted to jury.
Suit by Mrs. Pearl House May against the Mississippi Power Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded.
On suggestions of error. Suggestions of error overruled.
Eaton & Eaton, of Gulfport, Heidelberg & Roberts, of Hattiesburg, J M. Morse, of Poplarville, and Wilbourn, Miller & Wilbourn, of Meridian, for appellant.
It is not the law, and, we submit, never has been and never should be, that the failure to perform a promise may, in the absence of a conscious purpose not to perform it, and in the absence of any design or intent to deceive or defraud by virtue of the making of the promise, be made the basis of an action for fraud. If, forsooth, that were the law, then in each and every case for breach of contract, the opposing party would have the election, either to sue for breach of the contract or for fraud. Carrying it on to a logical conclusion, the result would be that every unfulfilled promise would warrant an action for fraud, and suits for damages for the breach of contract and suits for specific performance of contracts would pass into innocuous desuetude.
26 C J., page 1087, par. 25, page 1093, sec. 26, and page 1095; 51 A. L. R., pages 63 to 67; Restatement of Law of Contracts sec. 473; McCain v. Cochran, 120 So. 823, 153 Miss. 237; Rogers v. Harris, 76 Okla. 215, 184 P. 459; 12 R. C. L., page 261.
No authority can be found applying to fraud predicated upon an alleged false and fraudulent promise the doctrine that it is unnecessary to show any intent to deceive. The Mississippi cases wherein it is said it is unnecessary to prove an intent to deceive all relate to a false representation of an existing physical fact.
McNeer & Dood v. Norffeet, 113 Miss. 611, 74 So. 577; Lundy v. Hazlett, 112 So. 591, 147 Miss. 37; Oldham v. Memphis Stone & Gravel Co., 111 So. 357, 145 Miss. 851; Vincent v. Corbett, 94 Miss. 46, 47 So. 641; Oswald v. McGehee, 28 Miss. 340; Rimer v. Dugan, 39 Miss. 477; Davis v. Heard, 44 Miss. 30: Alexander v. Meek, 96 So. 101, 132 Miss. 298; McFerrin v. Taylor, 3 Cranch 270, 2 L.Ed. 436; Smith v. Richards, 13 Peters 26, 10 L.Ed. 24; Cross v. McKee, 53 Miss 536; Drug Co. v. Mercantile Co., 86 Miss. 423; Townsend v. Hurst, 37 Miss. 579; 27 C. J. 44; Witt v. Cuenod, 50 P. 328; Sternberg v. True-blood, 186 S.W. 836; Smith v. Vosika, 203 N.W. 428; 14 C. J. 606 to 609; 51 A. L. R. 49; Southern Development Co. v. Silva, 126 U.S. 247, 31 L.Ed. 678; Sawyer v. Prickett, 86 U.S. 146, 22 L.Ed. 105; Bartel v. Walton & Whanm Co., 92 F. 13; Collins v. Collins, 150 So. 660; Clopton v. Cozart, 13 S. & M. 363; 1 Black on Rescission and Cancellation, page 47, sec. 24; White v. Stewart, 145 So. 747; A. L. I. Rest. Cons., sec. 474; Deshatreaux v. Batson, 159 Miss. 236, 131 So. 346; Walker v. M. & O. R. R. Co., 34 Miss. 245; Saffold v. Barnes, 39 Miss. 399; Wight v. Shelby R. R., 16 B. Mon.; Irvin v. Turnpike Co., 2 Penn. 466; Andrews v. Ohio & Miss. R. R. Co., 14 Ill. 169; Ellison v. M. & O. R. R. Co., 36 Miss. 572; Reed v. Cooks, 55 S.W.2d 275; Kennebec v. Barton, 122 A. 852, 123 Mc. 293; Railroad v. Anderson, 51 Miss. 829; Bucher v. Federal Baseball Club of Baltimore, 101 A. 535; Howard v. Merrick, 27 P.2d 891.
Mere proof of failure to perform a promise is not sufficient to establish the fraud.
Maguire v. Maguire, 214 N.W. 666; C. T. & M. C. Ry. Co. v. Titterington, 84 Tex. 218, 19 S.W. 472. 31 St. Rep. 39; Carr v. Craig, 138 Iowa, 526, 116 N.W. 721; Smith v. Vosika, 163 Minn. 12, 203 N.W. 428; Roman v. Lorence, 162 Minn. 198, 202 N.W. 707; Hansen v. Daniel Hayes Co., 152 Minn. 222, 188 N.W. 317; Arcade Inv. Co. v. Hawley, 139 Minn. 301, 166 N.W. 347; Holmes v. Wilkes, 130 Minn. 170, 153 N.W. 308; Cox v. Edwards, 120 Minn. 512, 139 N.W. 1070; Nelson v. Shelby Mfg. & Imp. Co., 96 Ala. 515, 11 So. 695, 38 Am. St. Rep. 116; Brison v. Brison, 75 Cal. 525, 17 P. 689, 7 Am. St. Rep. 189; Lawrence v. Gayette, 78 Cal. 126, 20 P. 382, 12 Am. St. Rep. 29; Cerny v. Paxton & Gallagher Co., 78 Neb. 134, 110 N.W. 882, 10 L. R. A. (N. S.) 640; Sallies v. Johnson, 85 Conn. 77, 81 A. 974. Ann. Cas. 1913A 386; Blackburn v. Morrison, 29 Okla. 510, 118 P. 402, Ann. Cas. 1913A 523; 12 R. C. L. 261, sec. 28; 26 C. J. 1093, secs. 26 and 1087, sec. 25; Phelps v. Aurora State Bank, 186 Minn. 479, 243 N.W. 682; Crosby v. Crescent Oil Co., 255 N.W. 855; Markowsky v. Rubenstein, 80 So. 278.
Signing the written applications for the stock, as she did, and then accepting and retaining, as she did, the stock certificates mailed her by appellant after reading part of the certificates, and noting the fine print thereon, which was difficult to read, constituted a waiver of the contention now made that the alleged prior promises constituted a fraud.
Milling Co. v. Russell, 89 Miss. 437, 42 So. 233; Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609; Home Mutual Fire Ins Co. v. Patterson, 71 So. 739, 111 Miss. 420; Springfield Fire & Marine Ins. Co. v. Nix, 138 So. 518, 162 Miss. 669; Corley et al. v. Reed et al., 164 Miss. 678, 145 So. 241; American Oil Co. v. Williamson, 122 So. 488; Gunter et al. v. Henderson-Molpus Co., 115 So. 720; Continental Jewelry Co. v. Joseph, 140 Miss. 582, 105 So. 639.
Failure of appellee to notify the appellant promptly, as soon as she knew, or should have known of the alleged fraud, defeats her right to rescind.
Restatement of the Law on Contracts, sec. 485; Selma v. Anderson, 51 Miss. 829; Collins v. Collins, 150 So. 669; 13 C. J., Contracts, page 616, sec. 671.
It is not requisite that the defrauded party shall be acquainted with all the evidence constituting the fraud before the duty to act by way of rescission arises.
Richardson v. Lowe, 149 F. 625.
Anything which will put a party on inquiry is notice of everything to which such attention or inquiry may lead.
Baldwin v. Anderson, 103 Miss. 462, 60 So. 578; Parker v. Foy, 43 Miss. 260; Figh v. Tuber, 82 So. 495; 13 C. J. 611, section 653.
When a party claims to have been defrauded, he has the election, either to pursue the remedy of rescission, or to affirm the contract and claim damages for the deceit. He cannot do both, and is bound by his election.
Wilson v. New U.S. Cattle Ranch Co., 73 F. 994; Elgin v. Snyder, 115 P. 280; 2 Black on Rescission and Cancellation of Contracts (2 Ed.), sec. 542, page 1336; Grant v. Lovekin, 132 A. 342.
Immediately after the purchase of her stock, the appellant began to pay her dividends, the checks therefor being introduced in evidence, and she was immediately put on notice of the fact that she was not receiving interest on her money but she was receiving dividends as a stockholder. This was nearly four years before she offered to rescind.
Section 484, Restatement of Law of Contracts; Ga. Pac. R. R. Co. v. Brooks, 66 Miss. 583, 6 So. 467; Whittington v. Cotton, 130 So. 748, 158 Miss. 554; Scott v. Freeland, 7 S. & M. 418; Ware v. Haughton, 41 Miss. 382; Pintard v. Martin. 1 S. & M. 126; Hall v. Thompson, 1 S. & M. 487; Commercial Bank v. Lewis, 13 S. & M. 226; Johnson v. Jones, 13 S. & M. 580; Alig v. Lackey, 114 Miss. 396, 75 So. 139; Carter v. Preston, 51 Miss. 523; 2 Black on Rescission of Contracts (2 Ed.), page 1337, sec. 542; 4 R. C. L., Permanent Supplement Edition, sec. 26; 14 C. J. 594 and 596; Perkins v. Merchants & Farmers Bank, 60 So. 131, 103 Miss. 179; Wingo v. First National Bank of Pontotoc, 60 So. 133; 10 Cyc. 425; Hamm v. Field, 41 Miss. 712.
There is neither sufficient allegation nor sufficient proof to show so far as the record goes that appellant should have taken out a license under Chapter 97 of the Laws of 1916, if in fact it did not take out such a license.
Estes v. Memphis & Charleston R. R. Co., 152 Miss. 814, 119 So. 199; Miss. Power Co. v. Sellers, 160 Miss. 512, 133 So. 594.
So far as this record is concerned, Chapter 97, Laws of 1916, does not come into play unless the court should hold that section 6 was applicable to the transaction regardless of whether or not the company had or had not procured a license to sell its stock pursuant to the terms of Chapter 97 of the Laws of 1916. But we submit that the court cannot conclude under this record in any event that the license was required or was not procured in the absence of allegation or proof on the subject either way. The court could only presume that the license was procured and the bond was given if necessary or required. Therefore, Section 6 is not applicable unless the court also finds that the representations which the appellee testified had been made to her constitute "misrepresentations of fact concerning the stock."
White v. Stuart, 166 Miss. 694, 145 So. 747; Bankers Mortgage Co. v. McMullen, 141 So. 331, 165 Miss. 382. Hathorn & Williams, of Poplarville, and Earle N. Floyd, of Jackson, for appellee.
The representations, promises and guarantees made by appellant constitute what in law is called a contractual promise with the undisclosed intention of not performing the same, and is actionable fraud.
A. L I. Rest. Cont., par. 473; Gross v. McKee, 53 Miss. 536; Drug Co. v. Planters Mercantile Co., 86 Miss. 423, 38 So. 209; Howie Bros. v. Pratt & Co., 35 So. 216; Townsend v. Hurst, 37 Miss....
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