Plate v. Detroit Fid. & Sur. Co.

• Decision Date: 31 December 1924
• Docket Number: No. 91.,91.
• Citation: 201 N.W. 457,229 Mich. 482
• Parties: PLATE v. DETROIT FIDELITY & SURETY CO.
• Court: Michigan Supreme Court

229 Mich. 482

201 N.W. 457

PLATE

v.DETROIT FIDELITY & SURETY CO.

No. 91.

Supreme Court of Michigan.

Dec. 31, 1924.

Appeal from Circuit Court, Lenawee County, in Chancery; Ernest P. La Joie, Judge.

Action by Carrie E. Plate against the Detroit Fidelity & Surety Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Argued before CLARK, C. J., and McDONALD, SHARPE, STEERE, FELLOWS, and WIEST, JJ. Sheridan F. Master, of Detroit, for appellant.

Baldwin & Alexander, of Adrian, for appellee.

WIEST, J.

This is a bill to require defendant to surrender for cancellation plaintiff's subscription for 50 shares of its capital stock, return $1,250 paid thereon, and two notes, each for $1,875.

Defendant employed Walter W. Tait to sell its capital stock, and Mr. Tait employed B. C. Scott to solicit subscriptions. Mr. Scott visited plaintiff and represented to her that the company was making profits to the extent it had paid as high as 40 per cent. in dividends per year upon its common stock, and that dividends of from 5 to 6 per cent. would be paid each quarter of a year, and, if she would purchase common stock at $100 per share and pay one-quarter down the dividends would pay the rest in from three to four years and take care of her notes for the other three-quarters. Believing this she subscribed for 50 shares, paid $1,250, and gave two notes, each for $1,875.

Learning the representations were false, she filed this bill, after making efforts to obtain relief without suit. Defendant admits the employment of Mr. Tait, but denies any authority on the part of Mr. Scott to represent it, except to give receipt in its name for moneys paid on subscriptions; acknowledges receipt of the money paid, and the receipt and acceptance of the subscription contract, including the two notes; sets up laches and acts constituting estoppel; avers payment of a commission of $875 on the subscription to Mr. Tait; and insists plaintiff is without remedy.

There is a rule of common honesty which should run with the dealings of men, and this requires that the truth be told, and when this is not done, and one person is led to lose and another to profit by false representations inducing contract relations, and the fruit of the iniquity comes to headquarters, the court of equity is little apt to pay attention to mere intermediaries between the person wronged and the one who has profited thereby, and insists on keeping the gain.

Of course, we recognize the difference between claimed relation of past facts and mere prophecy of what is to come. Whether necessary or not under the authorities, we strip this case to the bone, and plant decision upon the bald statement made by Mr. Scott, that the company had paid as high as 40 per cent. dividends per year upon its common stock. This representation was false. Defendant company is a reorganization of an old company with another name, and, at the time of the representation made by Scott, had not been operating long enough to pay a dividend. Such a statement about dividends paid would be quite likely to induce a purchase of stock, and we are satisfied it was a moving cause in obtaining plaintiff's subscription, money, and notes.

We recognize no point where the fraud in so obtaining plaintiff's money and notes left the transaction and let the avails come clean into defendant's hands. We do not say defendant knew anything about the fraud committed by Mr. Scott, for we entertain the opinion it was not aware thereof at the time Mr. Scott's gleanings were turned in, but it was advised...