Voorhees v. Cragan

Decision Date10 May 1916
Docket NumberNo. 8977.,8977.
Citation61 Ind.App. 690,112 N.E. 826
PartiesVOORHEES v. CRAGAN.
CourtIndiana Appellate Court

OPINION TEXT STARTS HERE

Appeal from Circuit Court, White County; James P. Wason, Judge.

Action by Strange N. Cragan against Richard D. Voorhees. From a judgment for plaintiff, defendant appeals. Judgment affirmed.C. Robert Pollard, of Delphi, and Addison K. Sills and Addison K. Sills, Jr., both of Monticello, for appellant. E. B. Sellers, of Monticello, and Samuel R. Artman, of Indianapolis, for appellee.

HOTTEL, J.

For convenience and brevity appellee and appellant will be referred to herein as “A.” and “B.,” respectively. This is an appeal from a judgment in A.'s favor for $2,477.20 and interest from September 22, 1913, in a suit brought by him against B. to recover damages alleged to have resulted from the fraud of B. in connection with a sale made by him to A. of 80 shares of stock in the “Dairy Cream Separator Company.” The complaint is in one paragraph and the averments thereof, necessary to an intelligent disposition of the questions presented by the appeal, are substantially as follows:

On July 18, 1907, the “Dairy Queen Manufacturing Company,” a corporation, was engaged in the manufacture and sale of cream separators at the town of Flora, Ind. On said day a new corporation, designated “the Dairy Cream Separator Company,” was organized with a capital stock of $65,000, divided into 650 shares of $100 each. This latter corporation was organized for the purpose of taking over the former and enlarging it and relocating it at Lebanon, Ind. B. and one Edward F. Hedderich, hereinafter referred to as “H,” were stockholders in the former company, resided in said town of Flora and took stock in the new company; B. taking 122 shares, and H. 81 shares. A. took 75 shares in the new corporation, and A. and B. were each elected directors thereof. A. was chosen president and B. vice president, and continued to hold such offices for more than three years. H. was selected as superintendent of the factory of the new corporation. About the time of the organization of the new corporation B. learned that H.'s 81 shares of stock could be purchased for $6,000, and he thereupon conceived the intention of cheating and defrauding A., and to such end approached and represented to A. that the business of the new company would not, and could not, succeed with H. as superintendent of the factory; that he (B.) personally knew H. and knew him to be visionary and impracticable; that his holding the position of superintendent was a menace to the success of the business of the corporation; that such representations were made by B. for the purpose of arousing the interest of A. and with the intent of putting him in a frame of mind to purchase additional stock in such corporation; that B. cautioned A. to treat said information as confidential and not to disclose it to the other directors of such corporation; that B. further represented to A. that in order to get shut of H. and prevent him from becoming superintendent of their factory it was advisable to purchase his stock, and then well knowing that he could purchase such stock for $6,000, falsely and fraudulently represented to A. that it could be purchased at par, viz., $8,100, and no less, and that he alone could purchase it for such sum, and proposed to A. that he (A.) authorize him (B.) to purchase such stock at and for such price; that relying on B.'s representations as true A. promised to take such matter under consideration and advisement; that soon thereafter B., still intending to cheat and swindle A., further represented to him that he had a conference with H. and had arranged to purchase his 81 shares of stock at $100 a share, and again represented to A. that it was highly important to purchase such stock and eliminate H. as a stockholder, and as said superintendent; that it was impossible for such corporation to succeed with H. as superintendent because of his impracticable and visionary character; that at the time of making these latter representations B. had then arranged with H. to purchase his said stock for $6,000, and with the intent to wrong and defraud A. concealed such fact from him and falsely represented that he had arranged to purchase such stock at and for $100 per share and no less; that he alone could purchase the stock at that price; that H. did not know that he (B.) was acting in behalf of any one else in making such purchase, but believed that he was purchasing such stock for himself, personally, and that he (B.) did not want H. to know that the purchase of such stock was for any one else; that if B. became aware that A. was trying to purchase such stock for some one else the purchase could not be effected; that he (B.) could not make such purchase unless he (A.) would purchase 81 shares of stock from him (B.), and that if A. would purchase his stock he would sell it to him at the same price he was buying it from H., viz., $100 a share; that A. greatly desired the success of such new corporation and did not know that any of said representations made by B. were false, but believed all of said representations, both as to the necessity for eliminating H. as a stockholder of such new corporation and as the superintendent of its factory in order to make the business of such corporation a success, and said representations as to B.'s arrangement for the purchase of the stock of H. and the arrangement as to the price to be paid therefor, and believed that all of such representations were made by B. with a good intent and an honest purpose and with a view to the success of such new corporation; that so relying on such representation and on account of his reliance thereon A. on October 18, 1907, in good faith, by a written contract executed by himself and B., purchased of B. 80 shares of B.'s stock at and for the price of $8,000; that if he (A.) had known that B. had arranged to purchase from H. his 81 shares at $6,000, he would not have purchasedB.'s stock at $100 a share; that each and all of the representations made by B. were false and were known by him to be false when made, and were made for the purpose of defrauding A. out of the sum of $2,000 and for no other purpose, etc.

The errors assigned and relied on for reversal are: (1) The overruling of appellant's motion for a new trial; (2) the overruling of his motion that the submission of the cause be set aside and that he be granted leave to file a demurrer to the complaint as amended. The motion for new trial contains numerous grounds, many of which are waived and will not be considered; there being no reference to them in B.'s brief. B. first insists that the representations on which A. relies as furnishing the basis for his recovery, as disclosed by the complaint and the evidence, relate to the price which B. was to pay for H.'s stock and not representations of any material existing fact or facts, and hence that such representations, though false, are not actionable.

[1] The sufficiency of the complaint was not challenged below, and hence our consideration of the questions suggested must be from the standpoint of the evidence. However, there was evidence supporting or tending to support each of the essential averments of the complaint above indicated, and hence such averments, for the purpose of the question suggested, may be treated as statements of the facts disclosed by the evidence. It should be stated, however, in this connection that B. insists that the evidence shows without contradiction that H. was theoretical and unpractical, and that B.'s representations in this respect were true. Assuming that this is correct, it is not of controlling influence. The complaint proceeds on the theory that the representations in such respect were made for the purpose only of getting A. in a frame of mind to consider the purchase of H.'s stock; and, this being true, B.'s desires and purposes in the matter of the real fraud intended to be perpetrated, viz., the sale to A. of H.'s stock, would have been rendered easier of accomplishment if in fact A. knew and recognized the truth of B.'s said representations as to H. The falsity of such representations therefore, though alleged in the complaint, was not essential to A.'s cause of action, and hence proof thereof was not necessary.

[2] Going back to the question or legal proposition, above indicated as the one for which B. contends, it may be conceded that, generally speaking, representations in order to furnish the basis of an action for fraud on account thereof must relate to a material existing fact, and that mere opinions as to value or representations or promises as to what one can or will do in the future will not furnish the basis for such an action. Culley v. Jones, 164 Ind. 168, 171-174, 73 N. E. 94, and cases cited; Smith v. Parker, 148 Ind. 127, 133, 45 N. E. 770;Judy v. Jester, 53 Ind. App. 74, 86, 100 N. E. 15;Merchants' Nat. Bank v. Nees, 110 N. E. 73, 77;Neidefer v. Chastain, 71 Ind. 363, 36 Am. Rep. 198;Cooper v. Schlesinger, 111 U. S. 148, 153, 4 Sup. Ct. 360, 28 L. Ed. 382, 384. B. makes his mistake in assuming that A.'s right to recover under the issues and the evidence is based on the misrepresentation of what he (B.) could purchase H.'s stock for. It seems clear to us that the averments of the complaint indicated, supra, show an entirely different theory, viz., that the action is founded on the false representations made by B. in the purchase of such stock, as to the actual existing agreement and understanding he (B.) had with H. as to the price which he was to pay for such stock.

[3] In support of such averments and theory there was evidence tending to show that B., after convincing A. that the success of their new corporation depended on getting rid of H. as superintendent, then suggested that this could be done by purchasing H.'s stock, and in response to the suggestion of A. that the purchase be taken up with the board of directors...

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