Missouri Loan & Investment Company v. Federal Trust Company of St. Louis

• Decision Date: 24 June 1913
• Parties: MISSOURI LOAN & INVESTMENT COMPANY, Respondent, v. FEDERAL TRUST COMPANY OF ST. LOUIS, Appellant
• Court: Missouri Court of Appeals

158 S.W. 111

175 Mo.App. 646

MISSOURI LOAN & INVESTMENT COMPANY, Respondent, v. FEDERAL TRUST COMPANY OF ST. LOUIS, Appellant

Court of Appeals of Missouri, St. Louis

June 24, 1913

Appeal from Dunklin Circuit Court.--Hon. W. S. C. Walker, Judge.

Judgment reversed.

Jamison & Thomas for appellant.

A representation, to constitute fraud, must relate to a past or existing fact, and a promise or statement of intention inducing a contract, though made with the intent to deceive will not be ground for a rescission thereof. Wade v Ringo, 122 Mo. 322; Estes v. Shoe Co., 155 Mo. 577; Younger v. Hoge, 211 Mo. 444; Funding & F. Co. v. Heskett, 125 Mo.App. 531; Terry v. Ins. Co., 3 Mo.App. 595; Matthews v. Eby, 149 Mo.App. 157; 2 Pomeroy on Eq. Jur., sec. 877; 14 Am. & Eng. Ency. of Law (2 Ed.), p. 47; Knowlton v. Keenan, 146 Mass. 86; Wiegand v. Cannon, 118 Ill.App. 635; Clark Co. v. Rice, 106 N.W. 231; Miller v. Sutliff, 241 Ill. 521.

J. L. Fort for respondents.

Ordinarily false promises are not fraudulent, or evidence of fraud, and only false representations of past or existing facts are actionable or can be made the ground of defense; but when a promise is made with no intention of performance, and for the very purpose of accomplishing a fraud, it is a most apt and effectual means to that end and the victim has a remedy by action or defense. 14 Am. & Eng. Ency. Law (2 Ed.), 50-53; Chicago v. Teterington, 19 S.W. 472; White v. White, 95 S.W. 733; Carter v. Company, 101 S.W. 526; Rapid, etc., v. Smith, 86 S.W. 323; St. Louis v. Burgess, 50 S.W. 486; Touchstone v. Staggs, 39 S.W. 89.

NORTONI, J. Allen, J., concurs. Reynolds, P. J., concurs in the result only.

OPINION

NORTONI, J.

This is a suit in equity wherein the cancellation of a contract is sought on the grounds of fraud and deceit in its inducement. The finding and judgment were for plaintiff and defendant prosecutes the appeal.

Plaintiffs are copartners, engaged in conductinga farm loan business under the firm name of the Missouri Loan & Investment Company. Defendant is a trust company, incorporated under the laws of Missouri. It appears that, immediately after defendant was incorporated and while it was yet placing its capital stock throughout the State, an agent for it, possessing full authority in that behalf, called upon plaintiffs and negotiated a sale of ten shares of its capital stock to them. The stock was sold to plaintiffs by defendant through its agent at $ 150 per share--that is, for a total sum of $ 1500 for the ten shares. Plaintiffs paid defendant $ 500 cash on account of the transaction at the time, and executed their four promissory notes of $ 250 each for the balance of the purchase money. A few weeks thereafter, they paid defendant the amount of two of the notes so executed, and later instituted this suit to cancel the contract of purchase and likewise the two promissory notes yet unpaid and to recover as well the amount theretofore paid on the stock and in liquidation of the notes. The cancellation is sought on the grounds of fraud and deceit, in that defendant, through its agent, promised at the time plaintiffs purchased the stock, to commence thirty days thereafter and furnish them all the money they desired to loan on real estate in Dunklin county at six per cent interest; in no case, however, should the loan exceed fifty per cent of the value of the real estate offered as security. It is averred that defendant promised this as an inducement for plaintiffs to purchase the stock; that they relied upon such promise and were thus induced to subscribe for the stock in defendant corporation and make the payment and execute their notes therefor; and that plaintiffs were deceived and defrauded thereby, in that defendant did not intend to keep the promise when made and has since repudiated it.

Plaintiffs, copartners, are engaged in negotiating loans in Dunklin county for others on commission. Upon receiving an application for a loan on real estate, they procure the money from some person desiring to invest in such security, examine the title to the land and cause the papers, etc., to be executed, for all of which a commission is exacted from and paid to them by the borrower. Of course, to successfully conduct a business of this character, it is essential to have money available at a reasonable rate of interest with which to consummate the proffered loans. Defendant's agent called upon plaintiffs and induced them to purchase the ten shares of stock involved here, at $ 1500.

The evidence tends to prove, and the court so found the fact to be, that defendant's agent, in order to induce plaintiffs to purchase the stock, make the cash payment thereon and execute the notes therefor, promised that the defendant trust company would furnish them all of the money required to take care of such real estate loans as they might procure at six per cent interest, but in no case to loan more than fifty per cent of the value of the land offered as security. While such agreement appears to have been made, it appears conclusively, too, that defendant's agent represented to plaintiffs it was not then prepared to take care of the farm loan business but would do so after thirty days from that date if plaintiffs would purchase the stock as above stated. More than thirty days afterward, and subsequently, plaintiffs submitted to defendant a number of good farm loans and applied for the money to consummate them in accordance with this agreement, but defendant rejected them in each instance. Finally, defendant asserted it had failed to make proper connections with eastern financial concerns and therefore would not abide its agreement to furnish plaintiffs money for the loans contemplated. No other misrepresentation of fact is revealed in the case and it therefore appears the ground for the relief relied upon relates alone to the breach of the promise so made concurrently with the contract sought to be rescinded.

There is evidence tending to prove, when the facts and circumstances attending the transaction are all considered together, that defendant did not intend to keep this promise at the time it was made. The court found the issue for plaintiffs and decreed the relief prayed for, on the theory that this promise so made in bad faith on the part of defendant as an inducement to the purchase vitiated the contract in its entirety, in that defendant did not intend to keep and comply with its terms. From the special finding of fact made by the court in compliance with defendant's request under the statute, it appears the judgment is predicated solely on the proposition so stated. Touching this matter the court found, "That the sole consideration and inducement to plaintiffs was the promise and agreement stated above. That plaintiffs were deceived by said representations and promises on the part of defendant. That said representations were not made in good faith, but were so made as a device to induce plaintiffs to enter into said contract of...