Redding v. Wright

• Citation: 49 Minn. 322,51 N.W. 1056
• Parties: REDDING v WRIGHT ET AL.
• Decision Date: 18 April 1892
• Court: Supreme Court of Minnesota (US)

49 Minn. 322

51 N.W. 1056

REDDINGvWRIGHT ET AL.

Supreme Court of Minnesota.

April 18, 1892.

(Syllabus by the Court.)

1. In an action for deceit in the sale of stock in a corporation, matters of account in the books of the corporation, relating to transactions subsequent to the sale, held not material, the controversy being as to the financial condition of the corporation at the time of the sale.

2. The rule that the declarations of a person do not bind another, there being no relation of privity, and no conspiracy between them, applied.

3. The competency of a witness to express an opinion as to the value of an established business considered.

4. If a member of a corporation, offering his stock for sale, falsely and fraudulently represents that the corporation is not in debt, and is making profits of a specified amount, and thereby induces one to purchase his stock, he is responsible for the fraud, even though the purchaser might have discovered it by investigation into the affairs of the corporation.

5. A conspiracy to defraud may be inferred from the circumstances under which the parties are found to have acted, without direct evidence of conspiracy.

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

Action by Marguerite B. Redding, as administratrix, against Charles A. Wright and others, for deceit in the sale of certain stock. From a judgment for plaintiff, defendants appeal. Reversed.

Weed Munro and Gilger & Harrison, for appellants.

Benton, Roberts & Brown, for respondent.

DICKINSON, J.

This is a second appeal in this action. The decision on the former appeal (44 Minn. 355,46 N. W. Rep. 565) embraces a sufficient statement of the nature of the action. At the second trial the plaintiff had a verdict against both defendants, and they appealed from an order refusing a new trial. The decision of this court is asked upon 85 assignments of error, many of which do not deserve serious consideration. But there are some assignments which are directed to substantial errors, and, while it may be that some of these did not really prejudice the case of the defendants, we are unable to say that they may not have had some influence in the minds of the jury, and, upon a consideration of the whole case, we have reluctantly concluded that the defendants are entitled to a retrial. We shall refer specially to a few matters which we think render a new trial necessary.

The account-books of the corporation were received in evidence covering a period of some weeks subsequent to the sale by Godwin of his stock. It was objected that the transactions subsequent to that time were immaterial. The objection seems to have been well founded. We are unable to say with confidence that such evidence could not have confused or misled the jury. The same may be said of so much of Schedule D as related to the condition of the corporation subsequent to the sale. The declarations of Wright to creditors, as to the embarrassed condition of the corporation, and as to the correctness of schedules showing its condition, were not admissible as proof against Godwin, the latter not being present. Even if there was a conspiracy to defraud the plaintiff, such declarations were not made in furtherance of it. The court was hardly justified in ruling that the witness Ide, who showed familiarity with such matters, could not, by an examination of two hours, have acquired sufficient knowledge of the property and business to enable him to express an opinion as to its value. The weight to be given to such an opinion was rather for the jury than the court to determine. The refusal to comply with the defendants' ...