Younger v. Hoge

• Decision Date: 01 April 1908
• Docket Number: No. 13,102.,13,102.
• Citation: Younger v. Hoge, 211 Mo. 444, 111 S.W. 20 (Mo. 1908)
• Parties: YOUNGER v. HOGE et al.
• Court: Missouri Supreme Court

111 S.W. 20

211 Mo. 444

YOUNGER v. HOGE et al.

No. 13,102.

Supreme Court of Missouri. Division No. 1.

April 1, 1908.

Rehearing Denied April 13, 1908.

1. CONTRACTS—RESCISSION—GROUNDS—MISREPRESENTATIONS.

A breach of a promise by one party to a contract for exchange of property, that the other party should have a certain position at a stated salary, was not ground for rescission of the contract.

2. FRAUD—FALSE REPRESENTATIONS.

A promise, though made without intention to fulfill it, is not a misrepresentation of an existing fact.

3. CONTRACTS—FRAUD—EVIDENCE.

In an action to rescind a contract for the exchange of property on the ground of fraud, held, that the evidence of fraud was overcome by a preponderance of the evidence to the contrary.

4. SAME—FALSE REPRESENTATIONS—RELIANCE ON.

False representations, to justify the cancellation of a contract, must have been relied on by the party complaining, and where he testifies that he did not rely on the statements, and that he made an independent investigation, he is not entitled to relief.

5. CANCELLATION OF INSTRUMENTS—SALE AND CONVEYANCE OF LAND—BONA FIDE PURCHASER —EVIDENCE—RELATIONSHIP OF PARTIES.

In an action by a grantor to cancel a sale of land and recover the property, as against a purchaser from his immediate vendee, the mere fact that the subsequent grantee was a brother-in-law of plaintiff's grantee was not evidence of fraud in the conveyance to him.

Appeal from St. Louis Circuit Court; Warwick Hough, Judge.

Action by F. O. Younger against Barak L. Hoge and others. From a judgment for plaintiff, defendant A. R. Morgan appeals. Reversed.

Rassieur, Schnurmacher & Rassieur, for appellant. Frank Y. Gladney and F. O. Poston, for respondent.

VALLIANT, P. J.

This is a suit in equity, in which the plaintiff seeks to annul a transaction in which he conveyed to defendant Heard a 200-acre farm in Illinois, and to require the defendant Morgan, to whom Heard afterwards conveyed it, to reconvey it to the plaintiff. The petition charges that the defendants Kester and Heard made certain false representations to him, by which he was deceived and thereby induced to make the deed conveying the land to Heard, and that defendant Morgan took the deed from Heard with knowledge of the fraud and to aid the fraudulent scheme. The transaction consisted in the conveying of the land to Heard for the consideration of stock in a manufacturing corporation in St. Louis. Defendants Kester, Heard, and Hoge were, at the time of this transaction, the chief stockholders in the corporation. They were directors and active participants in its business. Defendant Morgan held five shares of the stock, and about a month after the transaction in question was made secretary. The false representations alleged in the petition to have been made by Kester and Heard were that the capital stock of the corporation, $150,000, was all subscribed, and $83,-000 fully paid; that, of the $83,000, $57,-000 was paid in cash, and $26,000 in property at a just and reasonable valuation; that the corporation was in a prosperous condition earning sufficient to pay all expenses and a large dividend on its total capital, and in addition to the representations it was promised the plaintiff that, if he would make the trade, they would have him elected secretary and treasurer of the corporation at a salary of $100 a month, whereas, the petition averred, there was only $4,100.12 of the capital stock paid in cash and the remaining $145,899.88 was paid in property at a fabulous valuation. The petition alleges that Morgan was not an innocent purchaser, but that he had conspired with his codefendants to defraud the plaintiff out of his farm. Defendants Kester, Hoge, and Morgan filed an answer to the petition, which was a general denial and a plea that plaintiff did not rely on any representations made by them or Heard, but that he investigated the subject for himself and acted on his own judgment. They denied that Heard had ever made any such representations, and averred that, if he did, he was not authorized by them to do so. Morgan especially denied that he had engaged in any collusion or conspiracy with his codefendants to defraud the plaintiff, and averred that he was an innocent purchaser of the property for value. There was no service of the summons on Heard and no appearance for him. The suit was, as to him, dismissed.

At the trial the testimony in behalf of the plaintiff in reference to the alleged misrepresentations was chiefly that of the plaintiff himself, and was to the following effect: Plaintiff is a merchant living in Murphysboro, Ill. The corporation in question was a concern engaged in the manufacture of a breakfast food called "Cris-Po." Plaintiff's attention was first attracted to this matter by an advertisement in a St. Louis newspaper. It led to a correspondence by mail and then to the plaintiff's coming to St. Louis and meeting defendants Kester and Hoge at the mills of the corporation. They went over the mills together. In the course of their conversation at that time, Kester and Hoge said to plaintiff that they were very anxious to get an active business man to be secretary and treasurer of the concern; that they were more anxious to get a good man for that place than they were to sell the stock; that the man who then had the position, Heard, was sick and out of the city, but, while they were talking, Heard came in and was introduced to plaintiff, and said he had unexpectedly returned. After talking the matter over at the mills, no result was reached. They parted with an agreement to meet at a certain hotel that evening for further conference. At the meeting in the evening, only Kester and Heard met the plaintiff, and they had further discussion. Plaintiff made a proposition in writing, which was not accepted, and plaintiff returned to his home in Illinois. That proposition contained the condition that plaintiff was to be secretary and treasurer of the company, but Kester and Heard said they could not promise that without consulting Mr. Hoge, and for that reason refused to accept it. "Q. You went home with the understanding that they would not promise you the position of secretary and treasurer without seeing Hoge? A. Yes, sir; in the meantime I think I telephoned Hoge to find out whether he was willing to make me secretary and treasurer, and over the `phone he gave his assent that he was." That was some time in October, 1903. After returning home, plaintiff obtained through a friend in St. Louis a report from the Dunn Commercial Agency of the condition of the corporation, and on the strength of that report he had a deed to the farm made out and signed and acknowledged by himself and wife and came with it to St. Louis. The substance of the Dunn report was the authorized capital stock was $150,000, of which the amount paid in cash was $57,000, and paid otherwise $26,645.36; that the machinery and plant were worth $64,248.11, stock on hand, raw and finished, $6,441.30, bills receivable of the value of $6,653.55, cash on hand and in bank $6,312.39, total liabilities $900, assets over liabilities $82,745.36. Refer to St. Louis Union Trust Company and Live Stock Remedy Company. That report was dated February 20, 1903, and there was evidence tending to show that it was made on information given the Dunn Company by the corporation bookkeeper by direction of the president. On arriving in St. Louis and going to the factory, plaintiff learned that there had been a fire the day before. Therefore it was mutually agreed that nothing could be done in furtherance of their trade until the fire loss and insurance could be adjusted. In fact Heard had telegraphed plaintiff not to come because the fire had occurred, but plaintiff had left home before the telegram was delivered. Plaintiff then returned home. After some days Heard went to the plaintiff's home to renew negotiations, and told him that the insurance had been adjusted, and the business had been resumed practically as it had before been. But plaintiff testified that he was not satisfied to take Heard's word for it, but communicated by telephone with Mr. Zeche, a friend of plaintiff's in St. Louis, and requested him to go to the factory and make an examination and report, which he did, and on the strength of the report he offered Mr. Heard the farm for $20,000 worth of stock, provided they would make him secretary and treasurer at a salary of $100 a month. Plaintiff had had some intimation that Hoge had some claim on Heard's stock. Therefore he telephoned Hoge about it, and Hoge replied that the claim had been settled, and that Heard's stock was clear. Thereupon Heard agreed to give plaintiff $20,000 in stock for the farm and to use his efforts to make plaintiff secretary and treasurer at $100 a month. November 13, 1903, plaintiff made the deed conveying the farm to Heard and received $20,000 in stock, of which $12,000 was Heard's stock, and $8,000 belonged to Kester; but it turned out that Heard and Kester did not own the majority of the stock, and they could not elect the plaintiff to the position he desired without the sanction of Hoge, and Hoge refused. This was on November 16th, three days after the deed had been delivered. Hoge's reason for refusing was, as plaintiff testified, that it was the understanding that part of his stock was to be given for the farm, and he was to have an interest in the trade. Then there was some unpleasant discussion between Kester, Heard, and Hoge ("fuming and fussing" to quote plaintiff's words), in the course of which it was suggested that Kester should give Hoge $1,000, or that some property was to be transferred to him, and Hoge said to plaintiff that they were drawing up a paper for him (plaintiff) to sign agreeing that he would not try to recover the farm, and, if he would sign it, they would make him secretary and treasurer. Just what the terms of this proposed paper were does not appear, but, to quote ...