JACKSON
J.
This is
a suit to recover damages for breach of warranty and for
fraudulent misrepresentations by defendant in the sale to
plaintiff of 768 coupons of the first mortgage bonds of the
Covington Street-Railway Company, and of certain judgments
against said company. The intervention of a jury having been
waived, the cause was tried by the court under a stipulation
of parties, made part of the record, which requires the court
to make a special finding of the facts, on which its judgment
shall be rendered. In conformity with that requirement, the
court, after a careful examination of the evidence, finds the
material and relevant facts to be as follows, viz.:
First.
After negotiations commenced in the summer of 1881, and
continued through the fall of that year, a certain contract
was completed and executed between the parties therein named
as follows:
'This
agreement, made and entered into this 17th day of February
1882, by and between Erasmus Gest, party of the first part,
Anthony D. Bullocn, E. F. Abbott, John A. Williamson, and
John G. Isham, of the second part, and William A. Goodman,
of the third part: Witnesseth, that the party of the first
part hereby sells and agrees to deliver, as hereinafter
specified, to the party of the second part, the following
securities: (1) 1,677 shares (which said Gest guaranties is
the majority) of the capital stock of the Covington
Street-Railway Company, each of the par value of one
hundred dollars. (2) 768 past due and unpaid coupons cut
from the first mortgage bonds of said company, each for
thirty-five dollars. Some of these coupons, having been
mislaid, are to be delivered with the others as soon as
found, and the said Gest agrees to make a thorough search
for them at once. In case of the failure to find them, he
assigns his right to collect them, and guaranties that such
right is perfect, and agrees to indemnify the party of the
second part against any liability to their production and
claims of ownership by others, and to furnish them
sufficient evidence of his ownership of the same, by his
own oath or otherwise, at any time upon demand. The amount
of such mislaid coupons does not exceed $3,500, exclusive
of interest. The total amount of accrued interest on the
768 coupons is computed approximately at about $8,159 on
the 1st of October, 1881. (3) Decree against Malcolm
McDowell and others, for purchase money of stable lot, and
for sale thereof, which said Gest now holds against the
company, amounting in all to $2,551.05, upon which interest
to the 1st of October, 1881, to-wit, $1,652.35, being
added, makes the amount of the decree on that date
$4,203.40. (4) Lot on Pike street, near Lewisburgh,
purchased at the cost of five hundred dollars from one
Perkins. (5) 78 mules and horses now in use upon the
Covington Street-Railway, or in the stables of said
company; original cost being $10,212. (6) Judgment in favor
of Amos Shinkle, trustee, against said company, on the past
due coupons, case No. 1,397 Kenton chancery court, for
$1,282.12, which has been paid by said Gest, and which he
now holds against the company,
which, with interest to October 1, 1881, amounts on that
day to $1,302.95. (7) Judgment in favor of the city of
Covington against said company for $1,029.53, with interest
from June 25, 1881, which has been paid by said Gest, and
is now held by him against said company. (8) Judgment in
favor of Amos Shinkle, trustee, with interest from November
18, 1881, $4,703.35, against said company, which has been
paid by said Gest, and is now held by him against said
company. (9) Claim of E. Gest against the Covington
Street-Railway Company for that part of moneys advanced by
said Gest in behalf of the company, and paid in settlement
of license claim with the city solicitor, Clement Bates,
which was fairly chargeable to the Covington Street-Railway
Company, estimated approximately at the sum of $1,200. (10)
Bonds of the Covington Street-Railway Company, secured by
mortgage to A. S. Winslow, trustee; principal $40,000, with
all interest thereon, none having been paid. These bonds
are transferred without recourse upon Erasmus Gest. (11)
Cash due Erasmus Gest on current account January 1, 1882,
$1,922.48. The foregoing property is to be transferred and
delivered to William A. Goodman on the 1st day of March,
1882, or on the first day thereafter that said Gest's
counsel, George Hoadly, may be in the city of Cincinnati,
able to attend to business, if said Gest, on account of the
absence of said counsel on said 1st day of March, shall
desire to postpone said delivery until the return of said
counsel.
'In
consideration of the premises, said parties of the second
part agree to pay to said Gest in money on March 10, 1882,
the sum of thirty-five thousand dollars, less whatever
part, if any, of the said sum of $1,922.48 said Covington
Street-Railway Company may have repaid to said Gest in the
course of its current transactions with him before or on
March 1, 1882. In further consideration of the premises,
said parties of the second part agree that immediately
after the adjournment of the present session of the
Kentucky legislature they will cause all the property, real
and personal, wheresoever situated, and of whatsoever
composed, of the Newport Street-Railway Company to be
conveyed to the South Covington & Cincinnati Street-Railway
Company, free from all debts and incumbrances, and by a
perfect title, except to the extent of fifty thousand
dollars bonded debt outstanding against the same, and that,
at the time of such sale and conveyance, the South
Covington & Cincinnati Street-Railway Company shall execute
and deliver to William A. Goodman, as trustee, its deed of
mortgage, properly executed and recorded, conveying by a
perfect title, except as aforesaid, all its property, real
and personal, wheresoever situated, and of whatsoever
composed, including such property so acquired from said
Newport Street-Railway Company, in trust to secure the
punctual payment of the principal and interest of its two
hundred and fifty bonds, for the principal sum of one
thousand dollars each, dated March, A.D. nineteen hundred
and twelve, (1912;) said bond and mortgage to be in a form
satisfactory to the counsel of said Gest. Of these bonds,
fifty, with the coupons thereon, shall be retained by said
Goodman, trustee, to be exchanged from time to time, and so
as to bring about the extinguishment and cancellation of
the present mortgage debt of the Newport Street-Railway
Company, which said parties of the second part agree to
procure to be done as soon as practicable. Twenty-five of
said bonds, with coupons thereon, are to be delivered to
said Erasmus Gest, and the remaining one hundred and
seventy-five of said bonds, together with all the
securities transferred by said Erasmus Gest, are to be held
by said William A. Goodman, trustee, in escrow, upon the
following terms and conditions, viz.: The whole of said
bonds, except as hereinafter stated, and of said
securities, are to be held by said Goodman-- (1) As
security for the payment to said Erasmus Gest of the sum of
thirty-five thousand dollars, with interest from the 1st
day of March, 1882, within six months from the day of the
adjournment of the Kentucky legislature; but
the said Goodman may permit said horses and mules to be used
by said purchasers, they exercising ordinary diligence in the
care thereof. (2) Upon the completion of such payment to said
Gest of said sum of thirty-five thousand dollars and
interest, the residue of said bonds, except as hereinafter
stated, and all of said securities so transferred by said
Gest, are to be transferred by said Goodman to the South
Covington & Cincinnati Street-Railway Company as its absolute
property. (3) The parties of the second part having given,
contemporaneously with the execution of this paper, to the
said Gest, an option for the exchange of other coupons not
held by him, secured by the first mortgage of the Covington
and Cincinnati Street-Railway Company, as in said agreement
of provisions aforesaid for the security of said Gest, said
Goodman may deliver out of said one hundred and seventy-five
bonds any which may be required by the terms of said option,
in case the same shall be exercised in whole or in part.'
'In
consideration of the premises said Gest agrees and undertakes
that the property of the Covington Street-Railway Company, so
far as he knows or believes, is free from indebtedness
except that transferred by him by the terms of this contract,
and as follows: (1)First mortgage for the principal sum of
$100,000; also coupons, including those due January 1, 1882,
and including interest to that date on the past due coupons
to the approximate amount, believed by him to be correct, of
thirty-five thousand five hundred and ninety-eight dollars
($35,598.) (2) A disputed claim pending in the court of
appeals, on behalf of the city of Covington for about six
hundred dollars, against which said parties of the second
part are to protect the surety for said company. (3) A claim
pending on appeal in the court of appeals, for a
trustee's fee,--about one hundred dollars,-- against
which said parties of the second part are to protect the
surety of said company. (4) Part of the first item above--
$35,598-- is embraced in a suit recently brought by Charles
W. West, in the circuit court in Kenton county, which is not
additional to the said first item. (5) Whatever court costs
may be due upon the lawsuits pending or determined in Ohio
and Kentucky in...
