Texas Indus. Trust, Inc. v. Lusk

• Decision Date: 12 March 1958
• Docket Number: No. 13280,13280
• Citation: 312 S.W.2d 324
• Parties: Blue Sky L. Rep. P 70,376 TEXAS INDUSTRIAL TRUST, Inc., Appellant, v. Myrtle M. LUSK, Appellee.
• Court: Texas Court of Appeals

Page 324

312 S.W.2d 324

Blue Sky L. Rep. P 70,376

TEXAS INDUSTRIAL TRUST, Inc., Appellant, v. Myrtle M. LUSK, Appellee.

No. 13280.

Court of Civil Appeals of Texas, San Antonio.

March. 12, 1958.

Wm. Andress, Jr., Dallas, for appellant.

Johnson, Hester & Jenkins, Harlingen, for appellee.

POPE, Justice.

Plaintiff, Myrtle M. Lusk, an aged widow, sued to rescind two deeds to property, which she gave Texas Industrial Trust, Inc., in exchange for what proved to be worthless corporate stock. She tendered back all the stock. A jury found that defendant, acting through its president, on August 18, 1954, fraudulently represented to plaintiff she could get $1 per share for her stock after January 1, 1955; that defendant corporation would pay dividends after January 1, 1955, and that plaintiff, after January 1, 1955, could secure money on her stock when she needed it. The court gave judgment for the plaintiff rescinding her two deeds. The court also gave plaintiff judgment in the sum of $3,845 as rentals collected by defendant corporation on the property. Defendant appeals.

Defendant corporation urges: (1) That there are no pleadings and evidence to support findings of fraudulent statements about the payment of future dividends on the stock; (2) that there were no findings of a present false intent concerning payment of future dividends, future value, and future ability to convert the stock into cash if needed; (3) that plaintiff failed to prove the element of pecuniary damages; (4) that there is no evidence to support the finding and judgment that defendant corporation received $3,845 as rentals from the property plaintiff conveyed to defendant in exchange for the stock, and (5) that certain evidence was improperty admitted.

The pleadings amply alleged fraudulent statements concerning the payment of future dividends. Plaintiff alleged that she conferred with the president of defendant corporation on August 18, 1954, at which time he presented that the dividends from the stock would yield plaintiff substantial returns, and that if she would hold the stock until January 1, 1955, she could sell her stock and always get money on it, and that she could get at least $1 per share for all or any part of the stock she bought. There were no exceptions to the pleadings, and we consider the pleadings adequate notice of this complaint by plaintiff. Plaintiff supported these pleadings by her own testimony that the corporation's president told her, 'if I invested in it I could always get good returns on my money and it wouldn't be long before it would double its value. * * * He said it would double in value and we would be getting, he thought, would be paying the dividends by the first of the year, that was his intention to pay some of the dividends by the first of the year. * * * That was their plan to pay some dividends the first of the year and he said if I could hold my stock until the first of the year, for six months, then I could draw on some of them, that I could get money any time I needed it.' In answer to the direct question whether she would have bought the stock if the president had not represented that she would receive dividends after January 1, 1955, she replied, 'No, I certainly wouldn't, because I didn't have very much means and that all the means I had.' Plaintiff, herself, therefore, testified directly to the point, and we cannot say that there is no evidence in support of the finding. Defendant's prospectus and advertising material greatly exaggerated the financial status of the company.

Defendant corporation next complains that the trial court failed to submit an issue which inquired if the fraudulent intent on the part of the corporation existed at the time the representations were made. The point, as we understand it, recognizes that fraud may arise with reference to representations about the future value and dividends on corporate stock if the representations were known to be false and were made to deceive the plaintiff. Russell v. Industrial Transp. Co., 113 Tex. 441, 241 S.W. 1034, 258 S.W. 462, 51 A.L.R. 1; Cherry v. First Texas Chemical Mfg. Co., 103 Tex. 82, 123 S.W. 689; Riedel v. C. R. Miller Mfg. Co., Tex.Civ.App., 18 S.W.2d 264; Texas Co-op. Inv. Co. v. Clark, Tex.Civ.App., 216 S.W. 220; 10B Tex.Jur., Corporations, Secs. 135, 183; accord, Peerless Fire Ins. Co. v. Reveire, Tex.Civ.App., 188 S.W. 254; 20A Tex.Jur., Fraud and Deceit, Sec. 47. The point is that the jury found that there were three different representations of future situations which were false, but that the court failed, over objection of defendant corporation, to submit an issue whether there was a present intent by defendant not to perform with respect to each of the representations.

The court submitted groups of issues for each of the three claimed false representations. It submitted issues inquiring if on August 18 1954, (1) defendant made the representation, (2) if the representation was false, (3) if it was made with knowledge that it was false, (4) if plaintiff relied upon the representation, (5) if defendant made the representation with intent to induce plaintiff to invest in the stock, and (6) if the representation did induce plaintiff to invest in the stock. All those questions were answered in the affidavit on each of the three separate groups of issues. The first, third, and fifth of those issues, blended together, mean that on August 18, 1954, defendant made a representation concerning a future fact, which he then, on August 18th, knew was false, and that he made it to induce plaintiff to buy the stock. The utterance of a known false statement, made with...