Snider v. McAtee

• Decision Date: 07 May 1912
• Citation: 147 S.W. 136
• Parties: SNIDER v. McATEE.
• Court: Missouri Court of Appeals

147 S.W. 136

SNIDER v. McATEE.

St. Louis Court of Appeals. Missouri.

May 7, 1912.

1. WITNESSES (§ 138)—COMPETENCY—CONTRACT WITH DECEDENT.

Under Rev. St. 1909, § 6354, providing that, where one party to a contract in issue is dead, the other party may not testify in his own favor, or in favor of any other party to the action, claiming under him, where three persons purchased stock from a decedent, and it appears that, although they were together at the time of the purchase, the decedent dealt with each one individually, and that each acted and contracted for himself, in a proceeding by one of the purchasers against the executor of the decedent for false representations, the other purchasers are competent witnesses.

2. EXECUTORS AND ADMINISTRATORS (§ 256) —DISPUTED CLAIMS—TRIAL—PLEADINGS.

Although a demand, filed in the probate court against the estate of a decedent, should be sufficiently definite to inform the adverse party what he must defend against, where a statement is defective, and an issue has been contested and tried, without objection, as if it were made by the pleadings, and the evidence pertaining thereto was received without objection, the issue will be treated on appeal as within the pleadings.

3. FRAUD (§ 13)—FALSE REPRESENTATIONS— KNOWLEDGE OF FALSITY—RECKLESS STATEMENTS.

Where the cashier of a bank in selling stock represented that the bank had sufficient surplus and undivided profits to make the stock worth $150 a share, when, in fact, it was worth only $100 a share, he is liable for the false representations, whether he knew they were false or not, since, where a person making false representations as of his own knowledge, and asserting them to be true, has no knowledge whatever on the subject, the law implies scienter, especially where he has peculiar means of knowledge.

4. FRAUD (§ 23)—RELIANCE ON FALSE REPRESENTATIONS —DUTY TO INVESTIGATE.

Where a director and vice president of a bank, having no actual knowledge of a shortage in its accounts and no means of ascertaining it without an extended examination of the books, purchased stock from the cashier, who had complete charge of its deposits, books, and accounts, in reliance on his false representations as to the condition of the bank, he was not estopped from recovery for the false representations, on the ground that he was negligent in not knowing the true condition of the bank's affairs, since, although he could not, in reliance on such representations, neglect means of information within easy reach, he was not bound to exercise extraordinary diligence.

Reynolds, P. J., dissenting.

Appeal from Circuit Court, Cape Girardeau County; Henry C. Riley, Judge.

Proceeding on a claim filed in the probate court by John A. Snider against S. M. McAtee, executor of Hugh R. Quinn, deceased. From a judgment for plaintiff, defendant appeals. Affirmed, and certified to the Supreme Court.

A. M. Spradling and T. D. Hines, of Jackson, for appellant. Oliver & Oliver, of Cape Girardeau, and Jno. A. Snider, of Jackson, for respondent.

NORTONI, J.

This proceeding originated in the probate court, and involves the allowance of demand against the estate of Hugh R. Quinn, deceased, arising out of the sale of 22 shares of bank stock by Quinn to plaintiff. The finding and judgment were for plaintiff in both the probate and circuit courts, to which the case was taken on appeal, and from the judgment of the latter court defendant appeals here.

It appears that Hugh R. Quinn, in his lifetime, owned considerable stock in the Exchange Bank of Jackson, Mo., and was its cashier. About 16 months before plaintiff purchased the 22 shares of stock from Quinn, he was elected a director of the bank, and was vice president thereof on the date of the purchase. Quinn, desiring to sell 65 shares of the stock owned by him, submitted a proposition to plaintiff, B. B. Schwab, and Blucher Sperling to that effect. After considering the matter, plaintiff purchased 22 shares of the stock at $150 a share. Mr. Sperling purchased 23 of the shares, and Mr. Schwab the remainder, all at the same price. Mr. Quinn having subsequently died, plaintiff filed the demand involved here for $1,100, or $50 per share, against his estate, by which he seeks to recover this amount and interest thereon, on the theory that, through misrepresentation, Quinn induced him to pay $50 per share more than the stock was worth at the time of purchase. When the contract of purchase was entered into, plaintiff, Sperling, and Schwab were present, and negotiated with defendant concerning the sale of stock to each. Sperling was introduced as a witness for plaintiff, and gave testimony tending to support his claim. Indeed, Sperling is the only witness who testified in the cause; and his evidence stands uncontroverted in the record.

The first point urged for a reversal of the judgment goes to the effect that, in view of the subsequent death of Quinn, Sperling was an incompetent witness; for, it is said, there was but one contract made between Quinn, Sperling, and Schwab for the sale of the stock, and that they subsequently divided it. The record by no means justifies this conclusion. Indeed, the evidence is plain and positive to the contrary. Sperling testifies that all three of the parties purchased the stock at the same time from Mr. Quinn on September 4th; and that each purchaser paid $150 per share for the stock so purchased. It is true that all the parties were together at the time and negotiated the contract of purchase with Quinn; but it appears, beyond question, that each acted for himself. While Mr. Quinn sold the 65 shares of stock at the same time to the three purchasers mentioned, he dealt with each individually in so doing; for it conclusively appears that each party purchased directly from him on his own individual account and paid the purchase price. In other words, plaintiff and Schwab and Sperling did not jointly purchase the stock from Quinn and afterwards divide it among themselves; but each then and there purchased for himself. The statute (section 6354, R. S. 1909) provides that in actions where one of the original parties to the contract or cause of action in issue and on trial is dead, or is shown to the court to be insane, the other party to such contract or cause of action shall not be admitted to testify either in his own favor, or of any other party to the action, claiming under him. The inhibition, above quoted, is without influence here; for the witness Sperling is in no sense a party to plaintiff's cause of action, or to the contract by which plaintiff acquired title to the 22 shares of stock which he purchased. Plaintiff did not acquire title through Sperling, or through any contract by which they jointly purchased the stock; for each party individually purchased from Quinn and paid for a certain number of shares of stock. Neither is plaintiff's right derived in any sense through Sperling, the witness; but, on the contrary, it arises from his individual contract of purchase, entered into with Quinn in the presence of Sperling and Schwab. Obviously the witness Sperling was competent to speak of the contract made in his presence by plaintiff and Quinn. See Thompson v. Brown, 121 Mo. App. 524, 97 S. W. 242.

The issue tried in the circuit court, and on which plaintiff recovered, pertained to a misrepresentation on the part of Quinn touching the value of the bank stock; and it is argued here the judgment should be reversed for the reason the pleading is insufficient on that score. It is true plaintiff's demand, filed in the probate court, is defective in the respect mentioned; but it seems that no question was made touching the matter at the trial. The statute (section 206, R. S. 1909) provides that the probate court shall hear and determine all demands filed against an estate in a summary way, without the form of pleading. But it is said such demands shall be sufficiently definite to inform the adverse party of what he must defend against. Watkins v. Donnelly, 88 Mo. 322. However, when it appears the parties have contested and tried out the issue as though it were made by the pleadings, and this, too, without any objection whatever, the appellate court should treat with and dispose of the case on the same theory as that voluntarily adopted at the trial. All of the evidence pertaining to the misrepresentations about the value of the stock and the condition of the bank was received without objection; and, furthermore, much of this defendant elicited by his own examination. Such was the issue clearly made and tried by the parties on the informal statement of demand originally filed in the probate court; and it is obvious that both came prepared to meet the particular issue on which the recovery was had. In such circumstances, it would be highly unjust for the appellate court to reverse the judgment and remand the cause for amendment, to the end that the identical issue tried once without objection should be tried a second time. Instead of so doing, the rule of decision is the court will, in the interests of justice, treat the matter as within the pleadings. Litton v. C., B. & Q. R. Co., 111 Mo. App. 140, 85 S. W. 978; Mellor v. Mo. Pac. R. Co., 105 Mo. 455, 16 S. W. 849, 10 L. R. A. 36. See, also, Deschner v. St. Louis & M. R. Co., 200 Mo. 310, 98 S. W. 737.

The evidence tends to prove that defendant's testator, Quinn, organized the Exchange Bank of Jackson in 1894, and, besides being the cashier, was the controlling spirit therein. Plaintiff, a lawyer by profession, purchased some of the stock and became a director in the bank about 16 months before the purchase of the 22 shares of stock from Quinn, out of which the present controversy arises. A couple of months before purchasing the 22 shares of stock, which was on the 4th day of September, plaintiff was elected vice president of the bank; but his relationship therewith was more nominal than real. At that time, he was not...