Reardon v. Dickinson

• Decision Date: 05 May 1924
• Docket Number: 26277
• Citation: 100 So. 715,156 La. 556
• Court: Louisiana Supreme Court
• Parties: REARDON et al. v. DICKINSON et al

100 So. 715

156 La. 556

REARDON et al. v. DICKINSON et al

No. 26277

Supreme Court of Louisiana

May 5, 1924

Rehearing Denied by the Whole Court June 20, 1924

Appeal from First Judicial District Court, Parish of Caddo; J. H Stephens, Judge.

Suit by R. M. Reardon and others against W. L. Dickinson and others. Judgment for plaintiffs, and certain defendants appeal, and file plea of prescription.

Affirmed.

Thigpen Herold, Lee & Cousin, of Shreveport, for appellants.

Wise, Randolph, Rendall & Freyer, of Shreveport, for appellees.

OPINION

THOMPSON, J.

The 20 plaintiffs instituted this suit against the 4 defendants, praying for judgment in solido for $ 35,000 apportioned to the plaintiffs as set out in the petition, this being the amount paid by the plaintiffs for 35,000 shares of the capital stock of the North Louisiana Drilling Company at the par value of $ 1 per share.

The liability of the defendants is predicated upon the fact that the plaintiffs were induced to subscribe for the said stock by the false and fraudulent representations of one J. E. P. Miller, the duly authorized agent of the defendants, who were the promoters and organizers of the said corporation, and which stock, as shown by subsequent events, was utterly worthless.

An exception of misjoinder of parties plaintiff was filed by all of the defendants except Wakefield.

The exception having been overruled, two of the defendants, Jake Metzler and Arthur T. Kahn, answered. Metzler denied having had any connection with the promotion or organization of the corporation, and denied that he was a subscriber to the charter, or that he owned any stock in said corporation.

Kahn denied that he was a subscriber to any stock, but admitted that 300 shares had been issued to and accepted by him in payment of $ 300 which he had loaned to the company. He alleged that his name had been signed to the charter without his authorization, and that he was not responsible for any of the acts or representations of the agent or of the promoters and organizers of said corporation.

After trial on the merits judgment was rendered in favor of the several plaintiffs for the amount sued for against Dickinson, Metzler, and Kahn. The two last named have appealed, and in this court have filed a plea of prescription of one year under article 3536 of the Civil Code in bar of plaintiff's action.

Misjoinder.

The exception of misjoinder is founded on the hypothesis that there exists no mutuality or privity of interest between the several plaintiffs with respect to the relief demanded by them individually. In other words, it is argued that each of the plaintiffs entered into a separate contract by which he became a subscriber and purchaser of a certain number of shares of stock, and that no one subscriber has any interest in the shares acquired by other subscribers. This is unquestionably true, but because of such want of interest and such diverse ownership it does not follow that the plaintiffs cannot all legally join in one suit. The test to be applied in considering a plea of misjoinder is whether the parties, plaintiffs or defendants, have a common interest in the subject-matter of the suit.

The exception of misjoinder is dilatory in character and must necessarily be determined on the face of the petition. It appears from the allegations that the defendants agreed that they would organize a corporation with an authorized capital stock of $ 300,000; that they would sell $ 200,000, and for their services in promoting, organizing, and financing the said corporation they would receive and divide among themselves the other $ 100,000 of the capital stock. A charter was prepared and was signed by Dickinson, Wakefield, and Kahn, the lastnamed subscriber being represented by Dickinson as agent. Each incorporator subscribed for $ 100,000.

The charter was filed with the Secretary of State and was duly published. An agent was employed and sent forth to solicit subscriptions. He visited the cities of Dallas and St. Louis with letters of introduction, and immediately got in touch with certain friends and business acquaintances of his principals. Among them were the plaintiffs named in the petition. The said agent in person and through others represented to the several plaintiffs that $ 100,000 in cash had already been paid into said company and was in the treasury; that many reputable and prominent citizens of Shreveport had invested their money in said company, and were stockholders; that a trusted employe of long service with the Standard Oil Company was the manager and in charge of the operations; that E. K. Smith, president of the Commercial National Bank of Shreveport, had invested money in said corporation; and that others who were oil producers and contractors of Tulsa, Okl., were owners of stock in said company. Acting upon these representations, and knowing the people referred to in a business way, the plaintiffs subscribed and paid for the amount of stock as set forth in the petition.

It is charged that all of the representations made by the said agent of defendants were misleading and were false in every particular. Not one penny had been paid into said corporation, and none of the stock had been subscribed to except by the three incorporators, who never intended to pay for the same. None of the persons who were represented as owning stock in said company had any interest therein. The plaintiffs paid in the sum of $ 42,500, which represented practically all of the capital stock issued or paid for.

From the foregoing recited facts it is apparent that all of the plaintiffs were moved and induced to subscribe for the stock of the corporation on the false and misleading representations of the common agent of the promoters and organizers of the corporation, and it follows as a corollary that all of them have an interest in common with each other to recover the amounts which each of them paid out on such fraudulent representations. It can make no difference whether the representations were made to the plaintiffs individually or collectively, at one time and place or at different times and places. It suffices for the purposes of this case that the representations were the same to each of the plaintiffs, and that each acted on such representations. The cause of action of each of the plaintiffs, therefore, has the same origin and arises from the same common source. The evidence necessary to sustain the demand of one will be required for all the others. If one of the plaintiffs is entitled to recover, then all of them are. The plaintiffs must all succeed or all fail. There is no controversy as to the amount due each plaintiff. There is no antagonism between the plaintiffs. The certificates of stock are annexed to the petition and speak for themselves. The defendants cannot question the legality of the stock purchased by the plaintiffs, nor can the corporation do so.

The only issue presented, therefore, between the plaintiffs and the defendants, is the alleged artifice and fraud practiced on the plaintiffs by the agent of the defendants. There has been no sufficient reason suggested, and none can be suggested, why there should be as many separate trials of that single issue as there are plaintiffs in this suit. In Gill v. City of Lake Charles, 119 La. 17, 43 So. 897, Mr. Justice Provosty commented on the fact that the Code of Practice makes no provision for determining when parties may or may not be joined either as plaintiffs or defendants; and after a review of many authorities he said:

"We have to be guided in that regard by the well-settled rules of pleading as found in the books of common law, according to which a large discretion is left to the court; the aim being to avoid a multiplicity of suits, while not permitting parties to be joined who have not a common interest. * * *"

And this appears to be the rule followed in all of the cases we have been able to find. Where there is a common interest in the subject-matter of the suit, and where the cause of action arises from the same common source, joinder will be permitted; otherwise it will not. Holzab v. R. Co., 38 La.Ann. 185, 58 Am. Rep. 177; Cane v. Sewall, 34 La.Ann. 1096; Conery v. Coons, 33 La.Ann. 372; Riggs & Bro. v. Bell, 39 La.Ann. 1030, 3 So. 183.

After all, the matter was within the sound discretion of the trial judge, and we are unable to say that he has abused that discretion. There is no pretense that the defendants have suffered any injury by the ruling complained of.

Prescription.

The plea of prescription is manifestly untenable under the facts of this case. The petition alleges and the evidence establishes that the plaintiffs did not discover that a fraud had been practiced on them until May, 1920, and the suit was filed in less than a year thereafter. As a matter of fact, while the false representations were made and the stock was issued to the plaintiffs more than a year before the suit was filed, the actual loss and damage only occurred within the year preceding the filing of the suit.

In Mestier v. New Orleans O. & G. W. R. Co., 16 La.Ann. 354, the court said:

"It seems to the court to be quite clear that the article 3502 [now 3537] C. C., should be construed (in such cases) as it reads, and the prescription should be held to commence running from the time the damage was sustained."

The foregoing ruling was made after mentioning the following example:

"My neighbor willfully undermines the party wall between us without my knowledge, and a year afterwards it falls. Shall he escape by proving that he did the act which occasioned the damage more than a year previously?"

The answer given by the court to...