Reed v. Holloway

• Decision Date: 30 March 1910
• Citation: 127 S.W. 1189
• Parties: REED v. HOLLOWAY.
• Court: Texas Court of Appeals

127 S.W. 1189

REED v. HOLLOWAY.

Court of Civil Appeals of Texas.

March 30, 1910.

Rehearing Denied May 11, 1910.

Appeal from District Court, Burnet County; Clarence Martin, Judge.

Action by M. H. Reed against F. H. Holloway. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Dayton Moses and Geo. E. Shelley, for appellant.

JENKINS, J.

This suit was brought by appellant to recover a balance of $553, together with interest and attorney's fees, alleged to be due on a note for $1,553, executed by appellee, Holloway, in favor of appellant, Reed. Appellee admitted the execution of the note, and alleged that the same was executed in part payment for 100 shares of stock in the Reed-Grant Company, an incorporated mercantile concern, doing business at Llano, Tex., for which said shares the appellee agreed to pay the appellant the sum of $11,500, and did pay him at the time of said purchase the sum of $9,947, and executed the note herein sued on for the balance, $1,553, and that appellee had subsequently paid on said note the sum of $1,000. Appellee alleges that he was induced to purchase said stock and to agree to pay said price for the same upon the false and fraudulent representations of appellant as to the value of said stock, said false representations consisting, among other things, that there had been paid into said corporation $20,000 in cash, and that it had made profits amounting to $3,000, which had been left in the business; that said representations were false and fraudulent, etc., with proper allegations to the same being relied upon, etc. Appellant in a supplemental petition denied the allegations of fraud, and alleged that appellee did not in fact pay appellant $9,947 for said shares of stock, but that he deeded appellant a certain tract of land and paid $2,000 in cash, and executed his note for $1,553 as the full consideration for said shares of stock; that appellee falsely and fraudulently represented said land to be worth $10 per acre (883 acres), when in truth said land was only worth the sum of $4,500, and the total consideration paid by appellee, to wit, the aggregate value of said land, cash, and note was only $8,050. Appellant further alleged that possession of said stock of goods was delivered to appellee, and that six months thereafter he paid $1,000 on said note, by reason of which he is estopped to allege fraud in said sale. The case was tried by the court without a jury. The court found that the appellant made fraudulent representations as to the value of the stock of goods owned by the Reed-Grant Company, and that appellee was entitled to recover of appellant the difference between $11,500, the contract price for the stock in said Reed-Grant corporation, and $9,003.31, the value of said stock as found by the court, less the note sued on.

It appears from appellee's answer that he paid $1,000 on said note six months after the execution of the same, and appellant demurred to said answer on the ground that said payment showed a ratification of said transaction, and annulled his plea of fraud herein. The court overruled this exception, and appellant assigns error on this ruling of the court. While we would not reverse this case on this assignment of error, it occurs to us that appellee ought to be more specific in assigning a reason for not discovering for so great a length of time the fraud which he says was practiced upon him, as he had charge of the stock of goods from the date of the purchase to the time of the payment of said $1,000, six months later. "If the defrauded party acquires knowledge of the fraud while the contract remains executory, and thereafter does any act in performance or affirmance of the contract, he thereby condones the fraud, and waives his right of action." 20 Cyc. 92, and authorities there cited, including Barber v. Morgan, 76 S. W. 321.

In his second assignment of error the appellant complains of the action of the court in not sustaining his exception to appellee's answer, in that it does not allege that the stock purchased by him was not worth $115 per share, the contract price. We think this sufficiently appears from appellee's answer. He alleges that the stock was sold to him on a basis of $23,000 assets, which would be its value at $115 per share, and further alleges that said assets were not worth more than $18,000, which, if true, would make the value of said shares only $90 each.

The court sustained appellee's exception to appellant's allegation that appellee did not pay $9,947 in cash for said stock, but in payment thereof deeded appellant a tract of land worth only $4,500, and paid only $2,000 cash, and that the entire consideration paid by appellee, including the $1,553 note sued on, was only $8,050. We hold that the court erred in sustaining said exception. If it be conceded that Reed made fraudulent representations as to the value of the stock of goods owned by the Reed-Grant Company, and that Holloway made no fraudulent representations as to the value or quality of the land given by him in part payment for the stock in said company, still he is entitled to recover on account of said fraud only the damages that he has suffered; and, if it be true that the transaction was, as alleged by appellant, not a purchase of the land at an agreed price, but an exchange of the stock for the land and $3,553, cash $2,000, and a note for $1,553, as appellee did not tender back the goods and is not seeking to recover back the land, he is entitled to a credit on what the goods were actually worth only the value of what he actually paid.

Appellant's fourth, fifth, sixth, eighteenth, and twentieth assignments of error were based on the findings of the court as to the facts. As this case is to be reversed on other assignments of error, it is not necessary for us to pass upon these assignments. Appellant has abandoned his seventh, tenth, eleventh, fifteenth, sixteenth, seventeenth, and nineteenth...