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Given v. Powell

145 A.D. 559 Court Second Department, Decision date 1911-06-09 English

Judges Jenks, P. J., Hjrsohberg, Burr, Woodward and Rich,JJ., concurred.

Contents

Majority

p. 559
James B. Given, Respondent, v. Llewelyn L. Powell, Appellant.
Second Department,
June 9, 1911.

Headnote

Eraud — misrepresentation on sale of stock — evidence—sources of information — good faith.
In an action to recover damages from á promoter for fraud and misrepresentation in connection with the sale of corporate stock it is reversible ' error to exclude evidence offered by the defendant to show the sources of his information. The defendant is entitled to show the sources of his • information, that he was justified in relying on it and that he made the statements in good faith.
Appeal by the defendant, Llewelyn L. Powell, from a judgment of the Municipal Court of the city of New York, borough of Brooklyn, in favor of the plaintiff, rendered on the llth day of February, 1911.
George R. Cooper and Arthur B. La. Far, for the appellant.
Leon M. Woodworth and Lester 8. Abberley, for the respondent.

Defendant appeals from a judgment in an action for damages for fraud and deceit in connection with the sale of stock, of the Rubber Company of America. He was a promoter, and engaged in the sale of stock of said company.

There was a sharp conflict of evidence as to the character of the representations made. At the close of plaintiff’s case there was no direct evidence that, even if defendant made the

p. 560
representations testified to by plaintiff as to the amount of capital stock which had been sold for cash, the price paid therefor, as to the existence of large orders for goods manufactured by said company, and other similar matters, they were known to him to be false. It might possibly be, however, that there .was then enough to go to the jury upon the theory that defendant made statements recklessly, not knowing whether they were false or true and not caring what the effect might be, and paying no heed to the injuries which might result therefrom. (Kountze v. Kennedy, 147 N. Y. 124 .)

Defendant, however,- was clearly entitled to show the sources of his information, and that he was justified in relying upon it, and made the statements in good faith. When defendant was upon the stand, he was asked whence he obtained the information in connection with which he made the statements to plaintiff, and this was excluded. This was error. (Duryea v. Zimmerman, 121 App. Div. 560 .)

The correctness of many other rulings in the course of the trial has been challenged. As the foregoing is fatal we need not consider any others.

The judgment of the Municipal Court must be reversed and a new trial ordered, costs to abide the event. ‘

Jenks, P. J., Hjrsohberg, Burr, Woodward and Rich,JJ., concurred.

Judgment of the Municipal Court reversed and new trial ordered, costs to abide the event.

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