Rehearing
Denied June 24, 1914
Appeal
from City Court of Montgomery; Gaston Gunter, Judge.
Action
by the Smith Sons Lumber Company, a corporation, against
Richard Tillis. Judgment for plaintiff, and defendant
appeals. Affirmed.
The
following are the counts referred to:
(5) "Plaintiff claims of defendant the sum of $100,000
as damages, for that, to wit, on the 29th day of July, 1908
one W.T. McGowin, one E.L. McGowin, and I.E. Boyette had been
negotiating with plaintiff for the purchase of certain of its
assets consisting of a large amount of real and personal
property at and for the sum of $200,000; that pending said
negotiation it became necessary for the vendees to procure
some one to finance the deal for them, and on, to wit, the
last day aforesaid, the vendees offered to purchase the said
assets at and for the sum of $141,000, and also for certain
bonds of the Norfolk & Southern Railway Company, called
Norfolk & Southern Railway Company, first, and refunding 5
per cent. sinking fund gold bond of the face value of
$44,000, and also for 150 shares of what was called preferred
stock of said railroad company of the par or face value of
$15,000, and also for 250 shares of what was called the
common stock of said railroad company, a portion of which
said $141,000 and all of which said bonds and stock the
defendant had agreed to furnish at the face value of said
lands and preferred stock as a loan to the vendee, knowing
the aforesaid purchase for which they were to be used, and to
take as security therefor from them a first mortgage on the
chief assets so to be sold by plaintiff to vendee, and
plaintiff avers that it knew nothing as to the value of said
bonds and stock, and, before accepting said offer, its
representative on its behalf informed defendant in substance
that it knew nothing of the value of said stocks and bonds
and inquired of defendant as to the true value thereof; that
said defendant then and there stated to the representative of
plaintiff in substance that said bonds and said preferred
stock were as good as gold, and worth dollar for dollar, and
that said bonds were secured by a first mortgage on the
property of said railroad company; that said common stock was
of practically no value; that shortly thereafter plaintiff
agreed to and did accept the said offer of said vendee
relying upon the representation of defendant as aforesaid
and conveyed to the said vendees the assets purposed to be
purchased by them as aforesaid, and said stocks and bonds
were thereupon delivered by defendant to plaintiff as in part
payment of said consideration. Plaintiff avers that said
bonds and stock at the time of said transaction were not
good, and not worth dollar for dollar, but on the contrary
were of little or no value, that said bonds were not secured
by first mortgage, and that the said railroad company was
then in the hands of a receiver. And plaintiff avers that
said representation of defendant as to the value of said
bonds and preferred stock, and as to the security for said
bond, were falsely and fraudulently made by defendant for the
purpose and with the intent to deceive and mislead plaintiff
which representations did in fact deceive and mislead
plaintiff, to his damage as aforesaid."
(7) Same as 5 as to the transaction, except that it is
alleged, in addition to the above consideration, that
"the vendees named were to execute two promissory notes,
one for $16,000, payable one year after date, and one for
$25,000, payable two years after date, which latter sums were
to be secured by mortgages on all or substantially all of the
assets purchased, said mortgage to be subject to a first
mortgage given to Tillis; that the proposition was made upon
the condition that Tillis would furnish the stocks and bonds
and a part of the cash; and that said Tillis did agree to
furnish said stocks and bonds at the face or par value
thereof and a part of the said cash sum, provided the vendees
would execute him a first mortgage on all of the real and
personal property which they proposed to purchase from
plaintiff, the mortgage to be in the sum of $150,000, which
included the face or par value of said bonds and preferred
stock, and provided, further, that plaintiff would pay Tillis
the earned or accumulated interest, amounting to $550. The
negotiations were being conducted and carried on in the state
of Alabama, and the said Norfolk & Southern Railway was a
corporation operating a railroad in the state of Virginia,
with its principal place of business in the city of Norfolk,
and plaintiff was ignorant of the real and true value of said
stocks and bonds, and before accepting the proposition, its
representative informed the said Tillis that it was ignorant
of the value of said stocks and bonds, and inquired of him as
to the real value thereof, and that said defendant Tillis
represented and stated to the representative of plaintiff in
substance that said bonds and preferred stock were as good as
gold, and were worth dollar for dollar; that said bonds were
secured by a first mortgage on all of the property of said
railroad company, but that the common stock was of no value.
Plaintiff avers that, relying upon said representation, it
thereupon accepted the said proposition of the vendees, and
received from said Tillis the stocks and bonds, and paid him
the earned or accumulated interest of $550, and conveyed to
the said vendees, its sawmill plant and other real and
personal property as aforesaid; that the said vendees
thereupon executed to the said Tillis a first mortgage on
said property for the sum of $150,000, which included the
face or
par value of said bonds and preferred stock, and a second
mortgage to plaintiff as agreed. And plaintiff avers that the
representations of said Tillis as to the value of said bonds
and said preferred stock were untrue, and were known by him
to be untrue, and that the railroad company was then in the
hands of a receiver in a proceeding wherein the mortgage
given to secure the said bonds was sought to be foreclosed,
which fact was then known to defendant; that the said
preferred stock was practically worthless; that said bonds
had no market value, and were worth in truth and in fact only
about 50 cents on the dollar; that the said mortgage was not
a first mortgage on the property of said railroad company as
represented by the said Tillis as aforesaid; and that the
said representations of said Tillis were falsely and
fraudulently made for the purpose of deceiving plaintiff and
inducing it to accept said stocks and bonds as a part of the
purchase price as aforesaid, and which did deceive plaintiff
and induce the acceptance of said stocks and bonds, and the
sale and conveyance by it of the property aforesaid."
The
allegation of deceit is the same in the eighth as in the
seventh count. The ninth is the same as the seventh and
eighth, with the same allegation as in the seventh count as
to the deceit.
Defendant
moved to strike from the fifth count the following:
"That said bonds and said preferred stock were as good
as gold, and worth dollar for dollar"--and also:
"The value of said bonds and said preferred stock."
Also
moved to strike from the sixth count the following:
"And plaintiff avers that the representation of the said
Tillis as to the value of the said bonds and the said
preferred stock were untrue, and known by him to be
untrue."
Also
moved to strike from the seventh count the following:
"That the said bonds and preferred stock were as good as
gold, and worth dollar for dollar."
The
same motion was made as to the eighth and ninth counts.
The
pleas were as follows:
(4) The alleged false represention of this defendant was as
to a fact not peculiarly within the knowledge of this
defendant, but was one as to which plaintiff had equal and
available means and opportunity for information as this
defendant had.
(5) That the alleged false representation of this defendant
[same as 4 down to and including the last word therein]; and
defendant further avers that plaintiff failed to exercise
reasonable care and prudence to ascertain the alleged falsity
of said representation; and defendant further avers that
plaintiff negligently and carelessly failed to make use of
its said means and knowledge, and, if it had done so, it
would have discovered and found out the true and real value
of said bonds and stock in said complaint mentioned.
Plea 3
substantially appears from the opinion.
The
following charges were refused to defendant:
(9) If any individual juror, after a fair consideration of
all the evidence, is reasonably satisfied by any material
part of the evidence that defendant did not state to the
witness Kayser, at the office of Hill, Hill & Whiting, that
the bonds and preferred stock were as good as gold, and worth
dollar for dollar, and in substance that the mortgage
securing the bonds was a first mortgage on the property, you
cannot find for plaintiff for any damages as the result of
any fraud or deceit or misrepresentation on the part of
defendant.
(12) Plaintiff cannot recover in this case, unless the jury
is reasonably satisfied from the evidence that defendant, in
the office of Hill, Hill & Whiting, falsely represented to
the witness Kayser the value of the bonds and preferred
stock, and that the bonds were secured by a first mortgage
and that this false representation induced plaintiff to part
with its property.
(10) If you should find from the evidence in this case that
plaintiff, through its agent or agents, made an independent
investigation as to the value of bonds and stocks and the
condition of the property of the Norfolk & Southern Railway
Company as to liens, and acted on such
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