Russell v. Industrial Transp. Co.

• Decision Date: 30 May 1923
• Docket Number: (No. 428-3795.)
• Citation: 251 S.W. 1034
• Parties: RUSSELL v. INDUSTRIAL TRANSP. CO.
• Court: Texas Supreme Court

251 S.W. 1034

RUSSELL v. INDUSTRIAL TRANSP. CO.

(No. 428-3795.)

Commission of Appeals of Texas, Section A.

May 30, 1923.

Error to Court of Civil Appeals of Sixth Supreme Judicial District.

Action by T. J. Russell against the Industrial Transportation Company. Judgment for plaintiff was reversed by the Court of Civil Appeals (238 S. W. 1030), and plaintiff brings error. Judgment of Court of Civil Appeals affirmed and cause remanded for new trial.

Connor & Ramey, of Sulphur Springs, and Clark & Sweeton, of Greenville, for plaintiff in error.

W. M. Pierson, of Dallas, for defendant in error.

RANDOLPH, J.

This suit was brought by T. J. Russell, hereinafter called plaintiff, against Industrial Transportation Company, hereinafter called defendant, in the district court of Hopkins county. From a judgment in favor of plaintiff in the trial court, the defendant appealed to the Court of Civil Appeals. On hearing by that court, the judgment of the trial court was reversed and remanded to the trial court.

The suit was for the cancellation of a contract for the purchase of stock in the defendant company, executed by the plaintiff, and also to cancel a note for $1,000 given to defendant by plaintiff, and to recover $1,000 paid to defendant by plaintiff.

As his basis for suit, the plaintiff in his petition alleged the following as his grounds for the cancellation of such contract and note:

"For cause of action, plaintiff alleges that heretofore, to wit, on or about the 15th day of July, A. D. 1920, the defendant, acting by and through its duly authorized agents, who were acting within the scope of their employment, whose names are to plaintiff unknown, but who are well known to the defendant, sold to plaintiff, at his residence in Hopkins county, 200 shares of its stock at $10 per share, aggregating the sum of $2,000; that plaintiff paid to said agents of the defendant therefor the sum of $1,000 cash, and executed his note for $1,000 payable to himself and indorsed by him, due November 15, 1920, and delivered the same to defendant's said agents, which note defendant now owns and is demanding payment of same of plaintiff; that plaintiff executed a contract for the purchase of said stock at said time and was induced to so execute said contract for the purchase of said stock; and to, in fact, purchase the same from the defendant, by and through certain material misrepresentations which defendant's said agents fraudulently made to him at the time the contract of purchase was entered into; that said material misrepresentations were as follows, to wit:

"(a) Said agents represented that they were familiar with the value of defendant's stock, knew defendant's business and its avenues and opportunities for making money, and, by reason of their intimate close connection with the defendant, they knew what its said stock was worth on the market and that at the time plaintiff was induced to execute said contract of purchase, they represented to the plaintiff that defendant's said stock was worth on the market more than its par value and that on and after August 1, 1920 — about 15 days from the date plaintiff was induced to execute said contract of purchase — said stock would be worth on the market 25 per cent. more than the amount plaintiff would have to pay for same, to wit, its par value, and that if plaintiff purchased the stock at the price at which they were offering it to him, to wit, its par value, he would be buying it for less than its then market value, and on and after August 1, 1920, he would be able to sell it on the market for 25 per cent. more than he would have to pay for it; that said agents further represented to plaintiff at said time that their statements with reference to the market value of said stock at that time and what its market value would be on and after August 1, 1920, were based upon their intimate knowledge of said stock's value and of the defendant's business and its ability to make money, and that they guaranteed and warranted to the plaintiff that said stock would be worth on the market on and after August 1, 1920, 25 per cent. more than he would have to pay for it at that time;

"(b) Said agents further represented to the plaintiff at said time that the defendant was doing a large volume of business and was making large sums of money for its stockholders, and that said agents were in position to know, because of their intimate knowledge of defendant's business, that said stock would pay to plaintiff large dividends on his investment, and that they guaranteed to plaintiff that said stock would pay him at least an 8 per cent. dividend annually from the earnings of the defendant's business; and

"(c) Said agents further represented to the plaintiff at said time that the defendant intended, within a reasonable time, to establish a large business in the city of Winnsboro, Wood county, Tex., and expected to put into said business about 75 per cent. of the money raised by the defendant in the community surrounding the city of Winnsboro from the sale of its stock; that by reason of the large business it expected to conduct in said city of Winnsboro, it intended to sell its goods, wares, and merchandise for less money than the merchants engaged in a similar business at said point could sell like merchandise, and this because of the large volume of business it would do, and the entire trading community, as well as the stockholders of said company, would derive the benefits therefrom."

The answer to this petition included the following: A general demurrer, special exceptions raising objections to the petition that the alleged agents who were claimed to have represented defendant in the transaction were not named; that the alleged false representations were simply promises to do something in the future, and were matters of opinion only, and, further, answers to the merit.

The case was submitted to the jury upon special issues, in part as follows:

(1) Did Johns and Londergon, alleged representatives of defendant, represent to plaintiff that they had intimate knowledge of the value of the stock in controversy and the defendant's business? To which the jury answered, "Yes."

(2) Did the said Johns and Londergon represent to plaintiff that the existing condition of the business at that time was such that they could and did guarantee that said stock would be worth on the market after August 1, 1920, 25 per cent. more than he was paying for same? To which the jury answered, "Yes."

(3) Were such representations in reference to the condition of business true? To which the jury answered, "No."

(4) Did said agents know that such statements were not true? To which the jury answered, "They did."

(5) The jury found that the plaintiff relied upon said representations and was induced thereby to purchase the stock.

(6) The jury also found that said representations were made for the purpose of inducing plaintiff to purchase the stock.

(7) The jury found that said agents represented to plaintiff that the existing condition of the business at that time was such that they could and did guarantee that he would receive annual dividends of at least 8 per cent. on the amount invested by him in said stock.

(8) That said representations with reference to the condition of the business were not true, and that said agents knew that they were not true at the time they made the same.

(9) That plaintiff relied on said representations and was induced thereby to purchase said stock.

(10) That said representations were made for the purpose of inducing plaintiff to purchase said stock.

(11) That said agents represented to plaintiff at the time he purchased the same that said stock was then worth more than he was paying for it.

(12) That plaintiff relied on these representations.

(13) That said agents represented to plaintiff that in the event he should become dissatisfied with such stock, that said defendant company would refund to him the sum paid on such stock and cancel and return the note and contract.

(14) That plaintiff relied on said representations and was induced thereby to purchase said stock.

(15) That the reasonable market value of the stock in question on the 1st day of August, 1920, was unknown.

(16) That the reasonable cash value of the stock at the time plaintiff purchased same was unknown.

(17) That the reasonable cash market...