Moline Plow Co. of Kansas City, Mo., v. Carson

• Decision Date: 30 December 1895
• Docket Number: 671.
• Citation: 72 F. 387
• Parties: MOLINE PLOW CO. OF KANSAS CITY, MO., et al. v. CARSON.
• Court: U.S. Court of Appeals — Eighth Circuit

72 F. 387

MOLINE PLOW CO. OF KANSAS CITY, MO., et al. v. CARSON.

No. 671.

United States Court of Appeals, Eighth Circuit.

December 30, 1895

On June 2, 1893, the appellee, Amaziah L. Carson, made a contract with the appellant the Moline Plow Company of Kansas City Mo., a corporation, by which he resigned his position as a director, manager, secretary, and treasurer of that corporation, and agreed to sell and transfer to it within 40 days 50 shares of the capital stock of the appellant the Moline Plow Company of Moline, Ill., another corporation; and the Moline Plow Company of Kansas City, Mo., agreed to sell and transfer to him $17,500 in interest-bearing bills payable of the Moline, Milburn & Stoddard Company, a corporation, and one-third of the capital stock of that company, the par value of which was $33,333.33, and to pay him $125 in cash. Carson refused to carry out this contract, and on July 7, 1892, the appellants exhibited their bill in the court below for a specific performance of it. On September 3, 1892, Carson answered this bill, and, among other defenses, he pleaded that he was induced to make the contract by the fraudulent misrepresentations of the officers and directors of the Kansas City company relative to the value of the various assets of the Moline, Milburn & Stoddard Company, relative to the value of the one-third of its capital stock which he had agreed to buy, and relative to the refusal of the Illinois company to accept an offer to one Kingman to purchase the same at a premium of 15 per cent. above its par value a short time before the contract was made. On October 12, 1892, the appellee filed his cross bill in this case, and prayed for a rescission and cancellation of the contract on account of the fraudulent misrepresentations of the Moline Plow Company of Kansas City, referred to in his answer. The appellants answered this cross bill, and denied these charges of fraud and the suit proceeded to final hearing and decree. On December 30, 1893, by consent of the parties, the case was by order of the court referred to W. W. Morsman, Esq., to report the law and the facts therein. He reported, among other things, that the contract was obtained by the practice of gross frauds upon Carson, by which he was circumvented and lured into giving an assent to it, which would not have been given if the dealing had been fair and honest on the part of the officers of the appellants; that on account of this fraud the appellants were not entitled to a specific performance of the contract, and that the appellee was entitled to a decree for its rescission. The court below confirmed this report and rendered a decree in accordance therewith. This is the decree which the appeal brings before this court for review.

John L Webster, for appellants.

James H. McIntosh, for appellee.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge, after stating the facts as above, .

The special master, upon whose report the decree in this suit is based, was appointed by consent of the parties, not to hear and report the evidence, but to report the facts and the law in this case. The parties to this suit selected him, and made him a special tribunal to hear and decide this suit. His report has been confirmed by the court below, and it carries with it similar presumptions to those which accompany the special verdict of a jury or the special findings of a court in an action at law or its decree in a suit in equity. The settled rule of the national courts is this: The findings of fact and conclusions of law contained in the confirmed report of a special master appointed by consent of the parties to the suit to report the facts and the law are conclusive, unless an obvious error has intervened in the application of the law, or some serious or important mistake has been made in the consideration of the evidence. It relieves the appellate court from the duty of weighing testimony or considering the credibility of the witnesses where there is a substantial conflict in the evidence. Kimberly v. Arms, 129 U.S. 512, 525, 9 Sup.Ct. 355; Crawford v. Neal, 144 U.S. 585, 596, 12 Sup.Ct. 759; Furrer v. Ferris, 145 U.S. 132, 12 Sup.Ct. 821; Davis v. Schwartz, 155 U.S. 631, 637, 15 Sup.Ct. 237.

The report of the master covers 24 closely-printed pages of this record. It contains a concise and positive finding upon every issue of fact presented by the pleadings or the evidence, and a decision of every question of law which arose in the case. The findings of fact are set forth in natural and logical order, and are followed by the legal conclusions which he deduces therefrom. A more complete and finished report is not to be found among the records of this court. The evidence from which the master deduced his findings and conclusions covers more than 700 pages of the printed book before us, and, after a careful examination of the entire record of the case, we despair of stating the facts and the law applicable to them more concisely than he has done. In view of the rule to which we have adverted, any extended statement of them would be useless. Suffice it to say that many of the issues in the case which were strenously contested in the hearing, and upon which the master was compelled to find the facts and the law, are immaterial in this court, and need no consideration, in view of the conclusion that has been forced upon up upon the main issue in the case. It goes without saying that if the appellee, Carson, was induced to make this contract by the actionable fraud of the appellant the Moline Plow Company of Kansas City, its performance ought not to be enforced, the decree which rescinded it was right, and it is immaterial who made the first default in its performance, or when, how, or why it was made. The master found that Carson was induced to assent to the contract by gross frauds which were practiced upon him by the officers of the Kansas City company. But he did not find that facts in these terms. He found and set fourth in his report the existence of various facts and circumstances which were in issue at the hearing, and which, when considered together, led his mind to this ultimate conclusion. They are too numerous and complicated for repetition here. A few of the most salient of them were these:

Carson was, and had been for some time, the manager of the Kansas City Company under a contract with it for a term of years. His office was at Kansas City, in the state of Missouri, and he had no knowledge of the actual financial condition of the Moline, Milburn & Stoddard Company, the principal office of which was at Omaha, in the state...