Smith v. Middle States Utilities Co. of Delaware

• Decision Date: 28 September 1937
• Docket Number: 43479.
• Citation: 275 N.W. 158,224 Iowa 151
• Parties: SMITH et al. v. MIDDLE STATES UTILITIES CO. OF DELAWARE.
• Court: Iowa Supreme Court

275 N.W. 158

224 Iowa 151

SMITH et al. v. MIDDLE STATES UTILITIES CO. OF DELAWARE.

No. 43479.

Supreme Court of Iowa.

September 28, 1937

Appeal from District Court, Clarke County; Homer A. Fuller, Judge.

Action at law for damages growing out of alleged fraudulent representations, and also on the ground of a contract to repurchase the stock sold by defendant to plaintiffs. The opinion states the facts. From a verdict and judgment in favor of the plaintiffs, the defendant appeals.

Reversed and remanded.

Hughes, O'Brien & Hughes, of Des Moines, for appellant.

O. M Slaymaker, R. E. Killar, and D. D. Slaymaker, all of Osceola for appellees.

DONEGAN, Justice.

From April 26, 1928, to January 20, 1929, the plaintiffs in this action, on four different occasions, purchased preferred and common shares of stock of the defendant corporation. Such purchases were made on April 26, May 6, and July 17, 1928, and on January 20, 1929, and aggregated 41 shares of preferred and 8 shares of common stock of the defendant corporation, for which the plaintiffs paid approximately $4,000.

On January 22, 1935, plaintiffs commenced three separate actions against the defendant. The first of these actions involved 21 shares of preferred and 5 shares of common stock purchased on May 6, 1928; the second action was in two counts, and involved the 10 shares of preferred stock and 2 shares of common stock purchased on July 17, 1928, and the 2 shares of preferred stock purchased on January 20, 1929. The third action involved the 8 shares of preferred and one share of common stock purchased on April 26, 1928. Aside from the allegations as to the different dates and number of shares purchased thereon, and the amounts for which judgments were asked, the petitions in all of these actions were the same. When reached for trial in the district court the three cases were consolidated and tried as one action, and the pleadings involved in the first case, cause No. 9136 in the district court, were considered as applicable to the other two cases.

The petitions filed by plaintiffs alleged: " That to induce plaintiffs to purchase said stock, defendant, through its said agents, representatives, employees, and servants, W. J. Brownell and W. E. Hahn, orally stated to plaintiffs that said defendant was a good, well managed company. That said defendant was solvent and had assets largely in excess of its liabilities. That said defendant could and would buy back the stock at any time for par, less two per cent, plus earned interest. That the properties of defendant were free and clear of mortgage and other debt. That said stock was a first lien on all of the property of the defendant. That the telephone plants were all owned by the Middle States Utilities Company of Delaware. That said defendant had assets so that it could and would guarantee principal and interest. That said stocks were as good as government bonds, that all well-to-do people had it, and said stock was accepted by courts as investments for trust funds."

Said petition further alleged that plaintiffs relied upon each and all of said statements, and, on account thereof, bought and paid for the stock and, except for such statements, would not have bought same; that said statements were untrue, so known to defendant when made, or, if not known to be untrue, were made as a fact; that, had said statements been true, the stock purchased would have been worth the price paid therefor, but, because such statements were not true, the stock purchased was of little or no value; that, because of defendant's wrongful acts, plaintiffs have suffered damages in the aggregate sum of $4,000; that plaintiffs did not learn of the falsity of said statements until within the last four years, and were not negligent in not learning of them sooner. Plaintiffs asked judgment against defendant for a total of $4,000, with interest from the respective dates of purchase. In its answers, filed April 29, 1935, the defendant denied generally all the allegations of the petitions; denied that plaintiffs had been damaged by any act of the defendant in any amount; and stated that, if the plaintiffs had any cause of action on account of the things stated in their petitions, the same was barred by the statute of limitations, more than five years having elapsed between the time of the alleged fraud and the bringing of the action.

So far as we can gather from the record, the trial of the case began some time on the 16th day of October, 1935. The record indicates that the defendant filed an amendment to its answer on October 16, and that the plaintiffs filed an amendment to their petition on October 17. As statements in the amendment to the answer seem to be in response to statements in the amendment to the petition, we shall refer to them in that order. The amendment to the petition alleged that about June 1, 1931, the plaintiffs requested the defendant verbally to repurchase the said stock and at that time tendered said stock to defendant, that defendant at said time and ever since has refused to buy back said stock, and that plaintiffs still desire defendant to repurchase same, and tender the same to the defendant. The prayer was for the same relief prayed for in the petition. In its amendment to its answer the defendant states that the petition shows on its face that it is a law action; that any cause of action accrued more than five years prior to the bringing of this suit; and that no facts have been alleged taking the case out of the statute of limitations. Defendant denies that plaintiffs at any time requested defendant to repurchase the stock, or that they tendered the stock to defendant prior to the bringing of this suit, and alleges that the bringing of this suit was an election on the part of plaintiffs to retain the stock and sue for damages. Defendant denies that there was a contract to repurchase said stock, and denies that plaintiff at any time tendered the stock for repurchase to the defendant, or had any right to do so.

On October 17, 1935, plaintiffs filed a reply to defendant's answer in which they denied all the allegations contained therein which are inconsistent with plaintiffs' petitions, and allege that plaintiffs did not discover the fraud that was perpetrated on them until about July 1, 1931, and that they were not careless or negligent in not sooner discovering same. The prayer of the reply is for the same relief prayed for in the petitions.

The cause was tried and submitted to a jury, which returned a verdict in favor of the plaintiffs for $4,875.01. Motion for new trial and exceptions to instructions filed by the defendant were overruled, and judgment entered upon the verdict. From this judgment and all adverse rulings, the defendant appealed.

Before proceeding to the alleged errors relied on for reversal, we direct our attention briefly to appellees' contention that none of these alleged errors should be considered by us, because of the failure of the appellant to comply with the rules of this court, especially rule 30. The rules of this court were not adopted for the purpose of creating a trap for the unwary nor for the purpose of disposing of appeals on refined technicalities instead of on their merits. The purpose of these rules is to facilitate the work of the court, as well as to aid attorneys in presenting issues to this court in a clear and concise manner. Many changes have been made in rule 30 since it was originally adopted. None of these changes has been made for the purpose of adding difficulties to the presentation of appeals in this court, but all of them represent an effort on the part of the court to cause attorneys to make a reasonable effort to present the matters which they desire to have corrected in such a manner that this court can readily determine what particular judgment or order or ruling of the lower court, or part thereof, is claimed to be erroneous, where it will be found in the record, and why it is claimed to be erroneous. The directions and forms set out in the rule were not intended as a model which must be strictly copied, but merely as suggestions to be followed substantially as aids to bringing about the purpose of the rule. Where there has been a good-faith attempt to comply with this rule, and the court can readily determine therefrom the particular judgment or order or ruling of the lower court of which complaint is made, where it will be found in the record, and why it is claimed to be erroneous, this court will not refuse to consider an allegation of error upon which an appellant relies for a reversal simply because it does not show a technical compliance in every particular with the provisions of the rule. A substantial compliance, which fulfills the purposes of the rule, is all that is necessary.

I.

Appellant's first alleged error relied upon for reversal is the refusal of the court to direct a verdict in its favor on the ground that it is more probable that plaintiffs' loss and damage were due to the general depression than to the alleged fraud of the defendant. The trial court submitted the case to the jury on two separate causes of action: Damages resulting to plaintiffs from the alleged false representations made by defendant which induced the plaintiffs to purchase the stock and a contract to repurchase the stock. The error here under consideration has to do with the claim for damages for the alleged fraud and false representations which induced the plaintiffs to purchase the stock. As to this cause of action the court instructed the jury that, if they found for the plaintiffs, " then the amount of damages, if any, that you should allow will be such sum as you find to be the difference between the actual value of the stock purchased on the dates purchased,...