William L. Scoville v. James W. Brock
| Decision Date | 09 October 1908 |
| Citation | 70 A. 1014,81 Vt. 405 |
| Parties | WILLIAM L. SCOVILLE v. JAMES W. BROCK |
| Court | Vermont Supreme Court |
May Term, 1908.
APPEAL IN CHANCERY. Heard on the pleadings, master's report and exceptions thereto at the March Term, 1906, Washington County, Rowell, Chancellor. Decree, strictly pro forma overruling the orator's exceptions, sustaining the defendant's exceptions and dismissing the bill with costs. The orator appealed. This case has been in the Supreme Court three times before. See 75 Vt. 243; 76 Vt. 385; and 79 Vt. 449.
Decree affirmed and cause remanded.
Elbridge R. Anderson, Edward H. Deavitt, and Harry C Shurtleff for the orator.
Hunton & Stickney for the defendant.
Present ROWELL, C. J., TYLER, MUNSON, and WATSON, JJ.
When this case was last before us, (79 Vt. 449, 65 A. 577, 118 Am. St. Rep. 975) it was remanded that the report might be recommitted for the master to find "whether the defendant, in continuing to hold the securities, acted with fidelity, and with that measure of case and diligence that a prudent man would have exercised in the same circumstances." The finding is for the defendant; but the orator contests its validity on several grounds.
It is said that the mandate contemplated a further finding on the case as then made up, and that the taking of additional testimony was not authorized. The order of recommittal is not before us, but presumably it followed the mandate, and the terms of the mandate did not preclude an exercise of the master's discretion regarding the hearing. See Richardson v. Wright, 58 Vt. 367, 5 A. 287. It is said, however, in view of the circumstances and ground of the recommittal, that the mandate cannot be allowed the construction adopted by the master without doing the orator an injustice, and that the construction is therefore one that the Court cannot have intended. But the first reception of evidence at the rehearing was on the orator's offer, and no objection was made to the taking of further testimony, nor was the report excepted to because based on the testimony so taken.
It is said that when the allegations of the bill were examined on demurrer, (76 Vt. 385, 57 A. 967) they were held sufficient to show that the securities the defendant received were not proper investments, and that it was his duty to sell them if a sale was feasible; that the only question before the master on recommittal, if the mandate be given a construction consistent with that decision, was whether the defendant had any excuse for not selling; and that inasmuch as the master has found that certain of the securities could have been sold above par without incurring personal liability, and had evidence before him from which he ought to have made the same finding regarding them all, his ultimate finding in exoneration of the defendant is beyond his authority. It is said further, that, since the allegations then passed upon are now admitted by the answer, the record is the same on the merits as on the demurrer, and requires the same decision. These claims are not justified by the scope of the former adjudication. The point of that decision was that the defendant could not be excused from the exercise of ordinary care in disposing of securities which had a marketable value but were in fact worthless, on the ground that if he had ascertained the facts he could not have effected a sale without committing a fraud. It was not necessary to determine just what knowledge was chargeable to the defendant on the pleadings, nor whether that knowledge was such as charged him with the duty of selling.
It is urged that the conclusion of the master is inconsistent with a conclusive admission contained in the answer. This claim is based on a consideration of the admission in connection with certain reported facts. It was alleged, in substance, in the first paragraph of the first amended bill, that the securities were in fact worthless, that it was widely believed at the places where the companies were located that they were fraudulently organized and conducted, and that if the defendant had gone to these places and made an investigation he would have been satisfied, as a man of ordinary prudence, that the investments were unsafe. The defendant, in his amended answer, admitted in general terms the allegations of this paragraph. It now appears that the defendant visited Sioux City while he was holding the securities, and went to the office of the Loan and Trust Company, and inquired how the company was getting along. The master reports that in reaching his conclusion he treated the admission as conclusive of the facts alleged, but not as conclusive of the ultimate fact to be determined.
The orator's argument is this: The defendant admits that if he had gone to Sioux City and inquired as to the standing of the Loan and Trust Company he would have ascertained its condition. The master finds that he did go to Sioux City and make the inquiry. So he must either have ascertained the facts, or been negligent in his investigation. Upon this reasoning, the fact that the defendant visited Sioux City gives to the admission an effect at variance with the master's conclusion. The question is whether the orator is entitled to have the admission given a conclusive effect as regards the ultimate fact.
We think the orator's argument is without substantial basis. The allegation of what the defendant would have discovered is not the allegation of a matter of fact, but of a matter of opinion or speculation. It cannot be said that the existence to a considerable extent in the community generally of the unfavorable belief was something which one making a diligent inquiry on the ground must necessarily have discovered. The admission of an allegation of this nature cannot convert the matter alleged into a positive and conclusive fact. Moreover, the matter alleged, if it be treated as a fact, is but one of several elements to be considered in determining the question submitted. The defendant might have learned of the unfavorable views entertained by a portion of the community, and still have become satisfied on reasonable grounds that the company was solvent and well managed. The final allegation, as to how the ascertainable information would have affected the defendant as a prudent man, is but the raising of one speculation on another. The allegation involves, not only what the defendant would have learned, but the effect that the things learned, when considered in connection with other information, would have had upon his judgment as a prudent man. Furthermore, it must be kept in mind that these matters are made dependent upon an event that is not alleged to have occurred, and are admitted as alleged. Now an admission will not be conclusive unless complete in itself or made complete by a necessary inference from some other averment. See Schwarz v. Sears, Walk. Ch. 19. This completeness cannot be predicated of an admission which depends for its force on the finding of a further fact from the evidence. It should also be noticed that if the claim now made by the orator is sustained the defendant will be made liable on a different ground from that set up in the bill; for the bill assumes that the defendant did not visit Sioux City to make inquiry, and charges him with negligence in that respect. These considerations all point to the inconclusiveness of the admission regarded as a pleading, and if not conclusive under the rules of pleading it has no conclusive effect. A party is not bound by a casual admission of what prudence would have required of him. Stowe v. Bishop, 58 Vt. 498, 3 A. 494, 56 Am. Rep. 557. It was for the master to say, from all the facts the defendant ascertained and all he ought to have ascertained, whether he exercised the care and diligence of a prudent man in retaining the securities. He could treat the defendant's admission as conclusive proof of the existence of the belief stated, and that and the fact of his visit as conclusive proof that he learned of the belief, and yet not accept the admission as conclusive upon the ultimate fact submitted for his determination.
The orator insists that the result must be the same if the admission is rejected. It is argued that the presumption of negligence applies to every act and default of the defendant in relation to the investments, and that the finding as to the particular act or default cannot be for the defendant without evidence rebutting the presumption, and that unless the defendant can be justified as to each particular of his conduct the conclusion of the master cannot be sustained. We shall examine the orator's objections upon this ground without inquiring as to its correctness.
It is said that there was no testimony tending to show that the defendant could not have learned the facts while at Sioux City, and that in the absence of such evidence it is to be presumed that he could have learned them, and that his failure to learn them charges him with negligence. It does not appear when the defendant's visit to Sioux City was made, and we treat the case as though it occurred shortly before the failure. The report shows that when the defendant went to the office of the Loan and Trust Company and inquired how they were getting along, he was given a sworn statement of the company which showed it to be in a safe and prosperous condition, and that he received no other information, and learned nothing that caused him to suspect that the affairs of the company were not as shown by the statement. It is intimated that the defendant should have sought an interview with the officials of the company in their private room, and made his inquiries there. But the fact that the financial statements issued by the company were false is enough to support a...
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