Snowden v. Taggart

Decision Date14 November 1932
Docket Number12801.
Citation17 P.2d 305,91 Colo. 525
PartiesSNOWDEN v. TAGGART.
CourtColorado Supreme Court

Rehearing Denied Dec. 29, 1932.

In Department.

Error to District Court, City and County of Denver; E. V. Holland Judge.

Action by E. P. Snowden against R. W. Taggart. The action was dismissed, and plaintiff brings error.

Reversed and remanded.

John M Keating, Glen L. Daly, and John W. Shireman, all of Denver for plaintiff in error.

Frank D. Taggart, of Denver, for defendant in error on rehearing.

ADAMS, C.J.

The parties are aligned in this court as at the trial; plaintiff in error will be referred to as plaintiff and defendant in error as defendant. Plaintiff seeks to recover damages in an action in tort against defendant for fraudulent misrepresentations. The trial court sustained a motion for nonsuit and dismissed the action. Plaintiff brings the cause to this court for review on writ of error.

The substance of the complaint, in so far as it affects the above-named parties, is that the Gove County Telephone Company was a public utility corporation, organized under the laws of the state of Kansas, doing business in said state that defendant was the president of the company; that, while so acting, he issued and placed in circulation certain bonds purporting to be first mortgage twenty-year 6 per cent. gold bonds of the company and signed by him as president of the company; that plaintiff exchanged property of the value of $13,000 for such bonds of the par value in the same amount; that he afterwards discovered that the bonds were not a lien on the properties of the company, but on the contrary were void under the laws of the state of Kansas, particularly because the company or defendant did not comply with the statutes of that state relating to public utilities. Plaintiff further alleged that defendant induced the trustee under the bond issue to make an indorsement on the bonds that they were secured by first mortgage or deed of trust, but in fact none was executed; that defendant made the representations with knowledge of their falsity, with intent to deceive, and for the purpose of inducing plaintiff and the public at large to act thereon; that plaintiff was ignorant of the falsity of the representations, and, on the contrary, he believed them to be true and acted thereon to his injury. Another defendant, H. Morton, secretary of the telephone company, was named in the complaint, but was not located or served, and the case went to trial against Taggart alone.

A demurrer to the complaint was overruled. Defendant answered, and admitted the execution of the bonds in question, admitted the existence of the Kansas statute, but denied that the bonds were void thereunder, and alleged that the bonds when executed (our italics) were valid obligations of the corporation, secured by a first mortgage or deed of trust, duly made, executed, and delivered to the trustee named therein. In general, plaintiff's other allegations were denied; the answer also contained special defenses not germane to this opinion.

On cross-examination under the statute (section 6570, C. L. 1921), defendant reiterated the assertions and admissions contained in his answer. He admitted that the Public Utilities Act of the state of Kansas was not complied with while he was president of the telephone company, although there was some discussion about it. It further appears from defendant's testimony that he entered into negotiations with former owners of the capital stock of the telephone company to acquire its control. It is not clear how far the negotiations progressed, or whether defendant performed his part of the agreement. As stated by the trial court: 'Something took place, not disclosed by the evidence, between defendant and a former president of the company.' This apparently refers to a Mr. Ahn, to whom defendant delivered the bonds, together with a mortgage or deed of trust, in Denver, Colo., according to defendant's testimony. The mortgage or deed of trust was not recorded; defendant says that he delivered the bonds to Ahn to do with them as he saw fit. Defendant further testified that he demanded the return of the bonds, but that Ahn refused. The record fails to show why defendant demanded them back, what, if anything, he offered for them, whether he was entitled to their return, or why Ahn declined. Defendant also testified that he afterwards 'resigned from the Gove County Telephone Company,' and 'I wasn't entitled to them (the bonds) after my resignation, in any event.' Defendant admits that the bonds are now worthless, but declared, 'I made it a point to tell everybody, whenever I got the chance, that they were without any value.' Plaintiff, however, discovered the facts too late; he acquired the bonds, or some of them, at a cost of $13,000 in property, in the course of a business transaction in Colorado with one Sampson, not a party to the suit. Plaintiff's testimony is to the effect that he purchased the bonds in reliance upon the representations contained therein, without notice or knowledge that they were false, and in the belief that they were true. It was also shown that defendant obtained the indorsement of the trustee on the bonds that they were secured. Other essential allegations of the complaint were either admitted by defendant or fully proven by plaintiff.

1. In the face of defendant's admissions that the bonds are invalid and unsecured, no proof of the fact is required. He relies, however, upon his unsupported testimony that the bonds were valid when issued, but offers no further explanation, and his reasons are inscrutable, either to lawyer or layman. His statement represents only his own conclusions. It is not as if the issue had been bona fide originally, but had subsequently depreciated in value, or become worthless for some unforeseen reason; the bonds and mortgage or deed of trust, if there was one, never attached to the corpus of the telephone company. We are not so credulous as to suppose that the paper was good in the first place, but lost its virtue in the mere process of negotiation or when defendant parted with it. His flimsy pretext lacks technique; it is too fantastic to imagine that, if there ever was a valid lien, it vanished into the air, and disappeared no one knows where, when put to the test. It is self-evident that defendant's testimony is contrary to reason; but, even if this were not so, the fact that plaintiff made a prima facie case causes us to say that the nonsuit was improperly granted.

2. We must conclude that the bonds are void and were void ab initio; further, that they are not and never were secured by a lien on the property of the telephone company or at all. One reason for this determination is that the bonds were uttered in defiance of, or in total disregard of, the Public Utilities Act of the state of Kansas. Sections 25 and 26, chapter 238, Kansas Session Laws of 1911--sections 66-125 and 66-126, Revised Statutes of Kansas, 1923. Its requirements are more than formal. Section 66-125 calls for an application and certain statements to be made to the Public Utilities Commission of that state, as a condition precedent to the issuance of bonds of this nature and paper of other specified character by a common carrier or public utility. The act also requires a certificate to be obtained from the commission that the statements in the application have been...

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15 cases
  • Wallop Canyon Ranch, LLC v. Goodwyn
    • United States
    • Wyoming Supreme Court
    • June 9, 2015
    ...her individual acts of negligence even though committed on behalf of the corporation, which is also held liable. Snowden v. Taggart, 91 Colo. 525, 531, 17 P.2d 305, 307 (1932) (“To permit an agent of a corporation, in carrying on its business, to inflict wrong and injuries upon others, and ......
  • W. Acceptance, LLC v. Gen. Agric.
    • United States
    • U.S. District Court — District of Colorado
    • July 8, 2021
    ... ... Colo. 2018) ... (quoting Hoang v. Arbess , 80 P.3d 863, 867 ... (Colo.App. 2003)); see Snowden v. Taggart , 17 P.2d ... 305, 307 (Colo. 1932) (“To permit an agent of a ... corporation, in carrying on its business, to inflict wrong ... ...
  • In re Tinkler
    • United States
    • U.S. Bankruptcy Court — District of Colorado
    • June 2, 2004
    ...acts of negligence even though committed on behalf of the corporation, which is also held liable.") (citing Snowden v. Taggart, 91 Colo. 525, 17 P.2d 305, 307 (1932)). The Court must, therefore, determine if Grand Lake has committed a state law tort. Wachovia Bank and Trust Co. v. Banister ......
  • Armed Forces Ins. Exchange v. Harrison
    • United States
    • Utah Supreme Court
    • April 25, 2003
    ...encourage the perpetration of flagrant and wanton injuries by agents of insolvent and irresponsible corporations." Snowden v. Taggart, 91 Colo. 525, 17 P.2d 305, 307 (1932) (citation omitted). In Mecham v. Benson, 590 P.2d 304, 308 (Utah 1979), this court noted that a defendant, by attempti......
  • Request a trial to view additional results
2 books & journal articles
  • Construction Law
    • United States
    • Colorado Bar Association Colorado Lawyer No. 50-8, September 2021
    • Invalid date
    ...to the litigation or unless such director or officer committed a criminal offense in connection with such situation.); Snowden v. Taggart, 17 P.2d 305, 307 (Colo. 1932) ("To permit an agent of a corporation, in carrying on its business, to inflict wrong and injuries upon others, and then sh......
  • Continuing Liability for Unpaid Corporate Debts After a Corporation Ceases Business
    • United States
    • Colorado Bar Association Colorado Lawyer No. 14-1, January 1985
    • Invalid date
    ...NOTES _____________________ Footnotes: 1. CRS § 7-8-101 et seq. 2. CRS §§ 4-6-101 et seq.; 7-5-112; 7-5-114. 3. Snowden v. Taggert, 91 Colo. 525, 17 P.2d 305 (1932). 4. 654 P.2d 324 (Colo.App. 1982). 5. Id. at 326. 6. See, id.; Ruiz v. Excellor Corp., 653 P.2d 415 (Colo.App. 1982); Colorado......

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