Redding v. Godwin

• Citation: 44 Minn. 355,46 N.W. 563
• Parties: REDDING v GODWIN ET AL.
• Decision Date: 06 October 1890
• Court: Minnesota Supreme Court

44 Minn. 355

46 N.W. 563

REDDINGvGODWIN ET AL.

Supreme Court of Minnesota.

Oct. 6, 1890.

(Syllabus by the Court.)

1. Resolutions adopted or declarations made at a corporate meeting are not evidence of the truth of matters recited or declared as against persons not members of the corporation.

2. The insolvency of a corporation at a particular time is not shown by proof that several weeks after that time it made a general assignment for the benefit of creditors.

3. The price for which an assignee in insolvent proceedings sold the property of the assignor is not conclusive proof of the real value of the property in an action not connected with the insolvency proceedings.

4. In an action to recover damages for deceit as to the condition of a private corporation, by means of which the plaintiff was induced to purchase stock of the corporation, the measure of damages is the difference between the value of the stock and the price paid for it. While the market value is ordinarily to be taken as the value for the assessment of damages, yet, if it be shown that the corporation was insolvent, it is not to be presumed that the stock had a market value different from its intrinsic worth, and the latter may be shown as a basis for the assessment of damages.

5. Proof of admissions made either by a party to the action or else by a stranger is not admissible.

6. In an action charging a conspiracy between the defendants to defraud the plaintiff, evidence is admissible on the part of one of the defendants that he never had any conversation with the other upon the subject of the alleged conspiracy.

7. An established patronage or custom in the sale of goods (milk) may be of substantial value.

8. The question being whether the general business of a corporation was prosperous it is not error to exclude an offer to prove that a profit was derived from a certain part (only) of its business.

9. It appearing from the testimony of a disinterested witness that the defendants made to the plaintiff (deceased since the commencement of the action) the fraudulent representations for which a recovery is sought the defendants are not permitted (under the statute) to testify that, in the conversation with the deceased, referred to by such witness, they made no such representations.

10. The admissions of the defendants that on June 18th and August 2d the corporation of which they were members was insolvent is prima facie evidence against them that it continued to be so until the 11th day of August following.

Appeal from district court, Hennepin county; HOOKER, Judge.

Gilger & Harrison, for appellant William A. Godwin.

Weed Munro, for appellant Charles A. Wright.

Benton & Roberts, for respondent.

DICKINSON, J.

This action, commenced by Frank P. Redding, who died prior to the trial, is for the recovery of damages for alleged fraudulent representations of the defendants concerning a corporation known as the “Minneapolis Milk Association,” by means of which representations, as it is claimed, Redding had been induced to purchase from the defendant Godwin 30 shares of the capital stock of the corporation for the agreed price of $3,000. It is alleged that the two defendants entered into a conspiracy to induce Redding, by means of false representations, to make the purchase. It is also alleged that both the defendants falsely and fraudulently represented to Redding (1) that the corporation was owing no debts; (2) that its business was in a prosperous condition; and (3) that it was earning $18 a day in excess of expenses. We do not particularly refer to some other allegations which were not supported by the evidence. There was evidence that both defendants made the representations above indicated, and that such representations were false. The jury returned a verdict for $1,900 against both defendants.

The sale by Godwin to Redding was completed on the 11th day of August. The records of the corporation, under date of September 18th of the same year, were received as evidence on the part of the plaintiff, setting forth a resolution adopted at a meeting of the directors and stockholders, wherein it was recited that property of the corporation had been levied upon under attachment and garnishee proceedings issued out of the municipal court of the city of Minneapolis; that the corporation was unable to carry on its business; that a general assignment for the benefit of creditors, under the insolvent law of 1881, was necessary; and resolving that such an assignment be made. The records of the district court were also introduced embracing such an assignment made on the 20th of September, a verified inventory of the liabilities and assets of the corporation, the assignee's final account, showing, among other things, the amount realized by him from a sale of the property of the corporation, and an order approving the assignee's account. At a subsequent stage of the trial the defendants offered to show that the property was worth more than four times as much as it was sold for by the assignee; but this evidence was excluded.

The record of the corporation was not competent evidence, as against these defendants, neither of whom were then members of the corporation, of the matters there recited; that is, that the corporate property had been attached, that it could not continue its business, and that insolvency proceedings were necessary. Nor was the resolution to make an assignment, nor the assignment itself, nor the record of the assignment proceedings in the district court proof, as against these defendants, of the insolvency of the corporation at the time of the alleged false representations, and of the purchase of the stock. The mere fact that the corporation made an...