Rosenberger v. H. E. Wilcox Motor Co.

• Decision Date: 30 April 1920
• Docket Number: No. 21796.,21796.
• Citation: 145 Minn. 408,177 N.W. 625
• Parties: ROSENBERGER v. H. E. WILCOX MOTOR CO.
• Court: Minnesota Supreme Court

145 Minn. 408

177 N.W. 625

ROSENBERGER

v.H. E. WILCOX MOTOR CO.

No. 21796.

Supreme Court of Minnesota.

April 30, 1920.

Appeal from District Court, Hennepin County; John H. Steele, Judge.

Action by Ernst Rosenberger against the H. E. Wilcox Motor Company. Judgment for defendant, and plaintiff appeals. Reversed.

Syllabus by the Court

Where stock in a corporation is sold on the strength of a representation of facts which show it to be worth par, an admission that by reason of certain conditions its value was at that time only forty cents on the dollar, is not a mere expression of opinion, but an admission of a fact.

Statements made by the president of a corporation at the office of the corporation, while he is in charge of the business of the corporation and in the course of negotiations within the scope of the general authority of the president, may be shown as admissions against the corporation.

An agent of a corporation, if acting within the scope of his authority, may make an admission in behalf of the corporation as to a past transaction.

Statements of value made to the assessor may be received in evidence as admissions. Kerr, Fowler, Schmitt & Furber and Cray & Eaton, all of Minneapolis, for appellant.

A. M. Higgins, of Minneapolis, for respondent.

HALLAM, J.

For some years prior to December 12, 1913, the H. E. Wilcox Motor Car Company had been engaged in the business of manufacturing and selling motor trucks. On the above date, the business was reorganized under the name of the defendant company. Defendant took over the business of the former company, and issued its stock to the stockholders of the former company in exchange for their holdings. Some of the preferred stock of defendant was put on the market for sale. O. M. Hatcher was a stock salesman employed by the defendant. He was furnished with a financial statement bearing date December 12, 1913, purporting to be a true and correct statement of the financial condition of defendant. In June, 1914, Hatcher approached plaintiff for the purpose of selling him stock, exhibited this statement, told plaintiff it was true, called his attention to the different items, told him that, according to the statement, there was dollar for dollar value, that the corporation was then making money, that profits of more than $50,000 had been made, that this would make the preferred stock worth par and would put a value on the common stock. The financial statement did show assets sufficient to make the preferred stock worth par and showed large current profits. Plaintiff testified that he purchased preferred stock in defendant company in reliance on such representation, and that the representations were not true. The court found for defendant. Plaintiff appeals.

[1] 1. The point mainly urged on this appeal is the refusal of the court to receive evidence that in 1916, some two years after these representations were made, H. E. Wilcox, then president of defendant company, made certain admissions as to the value of the stock at the time plaintiff made his purchase. Wilcox had been president of the old corporation. When the new corporation was formed he became a large stockholder and a director. For a time he was vice president and a salesman on the road, but he became its president in July, 1915. As such he attended to the usual duties of a president of such a corporation, kept posted as to the property of the corporation and its business and its assets and liabilities. In July, 1916, plaintiff retained an attorney, Benjamin Taylor. The offered proof was, that Taylor called on Wilcox at the office of defendant, explained the nature of his claim, and demanded a return of the notes and money plaintiff had given for his stock, that Wilcox refused, that Wilcox then stated that, before he took charge of the affairs of the company, it was maintaining a number of branches which showed a loss, that he insisted that these be closed and that some other matters be charged off to make the books show the true condition of the company, that he said he thought it would be a mistake for any stockholder to commence any proceedings against the company as it would result in the loss of the entire investment, and said, that at the time plaintiff purchased his stock it was worth forty cents on the dollar, but that he thought it would eventually be all right if plaintiff did not make the company trouble.

We think the rejection of the testimony was error. The testimony was material. It tended to prove that the value of the stock was less than it had been represented. It was more than a mere expression of opinion as to value. It was an admission of a fact.

[2] 2. The question whether the statement of the president could be proven against the company resolves itself into simply a question of agency. The mere fact that Wilcox was president was not enough to make...