Prewett v. Trimble

• Decision Date: 24 October 1891
• Citation: 17 S.W. 356,92 Ky. 176
• Parties: Prewett v. Trimble.
• Court: Kentucky Court of Appeals

17 S.W. 356

92 Ky. 176

Prewett v. Trimble.

Court of Appeals of Kentucky.

October 24, 1891

Appeal from circuit court, Montgomery county.

"To be officially reported."

Action by John T. Prewett, trustee, etc., against James G. Trimble for rescission of a contract for the purchase of bankstock. Judgment for defendant. Plaintiff appeals. Reversed.

Lewis J.

January 19, 1888, appellee, then president of the Exchange Bank of Kentucky at Mt. Sterling, sold and transferred to appellant 20 shares of stock in that bank at the price of $120 per share, and 21 shares in the Mt. Sterling National Bank at $120 per share for 20 shares, and $118 for the remaining one payment for which was then made partly in notes assigned to and received by appellee at their face value, and partly in money. May 14, 1888, appellant brought this action for rescission of the contract and restoration of the notes, or if collected, payment of amount thereof, and the money received by appellee, and interest on the whole; it being alleged and not denied that a tender and offer to retransfer the stock and demand of repayment of the purchase price had been made by appellant and refused by appellee. It appears that December 31, 1887, a statement of resources and liabilities of the Exchange Bank of Kentucky, signed by the cashier, was published in newspapers of Mt. Sterling, and by printed cards, which were generally distributed; there being at foot of the statement an announcement that the bank had declared its usual semi-annual 4 per cent. dividend. There was printed on the same card a statement, signed by the president and directors, in which the cashier's statement was referred to as evidence of the prosperous condition and increasing business of the bank. According to that statement the resources of the bank, having a capital of $100,000, amounted to $329,380.42, of which $245,790 were loans and discounts and $13,338.68 overdrafts, while the undivided profits were $15,851.41. But no mention was made of any insolvent debts being part of the aggregate of either loans or overdrafts. In respect to the statement it is alleged and appears that of the total amount of loans and discounts more than $30,000 consisted of stale and worthless demands, and of overdrafts at least $7,000 were likewise worthless, the drawers being insolvent; and that, after charging off such worthless demands, there would be left in the bank no undivided profits at all. It is further alleged and proved that the books of the bank showed at date of the statement about $7,600 more due to depositors, and, consequently, that much more liabilities than disclosed by it.

The evidence places beyond question that when the statement was published and circulated the real value of stock in the Exchange Bank of Kentucky, calculated and determined by the actual condition of its resources and liabilities, was not over $70 per share. It is also satisfactorily shown that when he made the purchase appellant did not know, nor have any other means of knowing, the true condition of that bank's affairs than such information as was afforded by the cashier's statement, and that given directly to him by appellee, and that he believed and acted on that information. There is discrepancy in the testimony of the parties as to what occurred between them when...