California Credit & Collection Co. v. Carpenter

The plaintiff brought this action to recover on three different promissory notes, executed and delivered by defendant to the Virden Packing Company, a corporation. Each of the notes is dated July 17, 1919, and each is for the sum of $250, with interest after maturity at the rate of six per cent per annum. The notes represented the remainder of the total purchase price of ten shares of stock of the Virden Packing Company subscribed for by defendant after the payment thereon by the latter of the sum of $250 in cash, and were made payable, respectively, four, eight and twelve months after date. The complaint is in three separate counts and therein the notes are separately declared upon in the order of the seniority of their maturity. It is alleged that the notes were, prior to the commencement of this action, duly assigned to the plaintiff, and that it “is now the owner and holder thereof.”

The answer, admitting the execution and delivery of the notes as alleged in the complaint, charges that they were made and delivered by defendant and that he was induced to make and deliver them to plaintiff’s assignor by and upon certain false and fraudulent representations by the latter. The special defense set up in each of the three several counts of the complaint is, mutatis mutandis, identical,

“Executive Offices—Capital National Bank Building “Virden Packing Company “(and Union Stock Yards)

“Chas. E. Virden, President.

“J. H. Glide, Vice President C. M. Hartley, Treasurer “F. F. Atkinson, Secretary. Peter B. Newman,

“Ass’t. Treasurer.

“Capital Stock $5,000,000.00

“Sacramento, Cal., May 3, 1919.

“Mr. G. A. Carpenter,

“Box 741 Colusa, Cal.

“My dear Sir:—

“I would like very much to meet you personally and tell you what the plans of the Virden Packing Company are, what it hopes to do for the livestock men of the West, and how it came into being; but I find it impossible to talk personally to all the cattle, sheep, and hog men of California, and so must write to you instead.

“After a three years’ thorough investigation of the livestock and packing situation in the Western States, I came to the conclusion that the most vital need of California’s agricultural industries at the present time is a Union Stock Yards, open to all, and large enough to handle the livestock of California and adjacent states, and Packing Plants capable of handling the raw products of these states.

“A Union Stock Yards means the establishment of a market for livestock near the point of production, not thousands of miles away. A Union Stock Yards open to all buyers and sellers alike,-where lean as well as fat marketable stock may be consigned and find a ready purchaser, where prices will be established, and where the stock man will receive fair prices for his products, the same as prevail ; at Chicago, Kansas City, Omaha, and Portland.

“As it is now, a large percentage of the livestock raised in the Western States is shipped to eastern markets, where higher prices prevail at all times, owing to an open market existing at those points. Thus the livestock men of the West are handicapped by having to ship large quantities of their livestock East in order to obtain satisfactory prices.

The freight charge per carload of livestock to Chicago is $285. Then it costs the consumer of packing houses in California $2.50 per 100 pounds to have delivered to him these products made from western livestock.

“Naturally the first question to arise, when the establishment of the Union Stock Yards and Packing House Plant was contemplated, was the one of location. My associates and I investigated this question thoroughly, for we realized its vital importance. We found that San Francisco is the financial center of the State, Oakland and Stockton the manufacturing centers, Fresno the center of the raisin industry, and Sacramento the agricultural center. San Francisco and Oakland, largely dependent upon the agricultural district of the Sacramento and San Joaquin valleys, and no doubt interested in the growth of these districts.

“Our investigations showed that Sacramento is at the present time the home of the Swanson Packing Company, the Charles F. Silva Company, and many smaller meat concerns, which together with the Virden Packing Company and other packing concerns that will be attracted to Sacramento, creates an immediate demand for a Union Stock Yards at this central point.

“Undisputable facts showed that Sacramento is the natural transportation and packing center of the vast agricultural area. By reason of her trunk lines of railroads, coming direct from the stock producing districts of the Western States, and her deep sea connections by way of the Sacramento River, Sacramento is capable of handling the vast volume of business which will result from making this the livestock center of the West.

“Will you not agree with me that it is time that, not only the livestock grower of the Pacific Coast, but the consumer of packing house products as well, awaken to the necessity of having at home an institution thoroughly prepared to handle the entire output from all over our own territory, instead of paying the heavy freight toll, which has been and is being paid today ?

“If a Union Stock Yards is not a necessity to the grower of livestock, permit me to ask you why every state in the Union, where livestock is raised, has for many years past maintained its central markets or Union Stock Yards?

“Although the Virden Packing Company and Union Stock Yards is an absolutely independent institution, it extends an invitation to all growers of livestock, meat packers, and consumers of the Western States to cooperate with us for the good of all concerned.

“Sacramento is going to have located within its boundaries a well equipped and up-to-date Packing Plant and Union Stock Yards. My associates and I ask you for your support and cooperation.

“I thank you for the time consumed in the reading of this letter, setting forth the plans of what I consider the most important California institution, indispensable if the livestock industry of the West is to keep pace with other agricultural developments.

“Yours very truly,

“Chas. E. Virden,

“President.”

An amendment to the answer, filed by leave of the court, alleged that, prior to the commencement of this action, defendant tendered and offered to restore to the packing company all the right, title, and interest to and in the stock agreed to be purchased by him and for the balance of the purchase price of which he made and delivered the notes in suit. Defendant did not ask for affirmative relief.

The action was tried by the court, sitting without a jury. Findings as to the charge of fraud as set forth in the answer and that defendant was induced by such fraud or false representations to subscribe for the stock of the packing company and to execute the notes in suit as alleged in defendant’s said pleading were made by the court. The court also found that the fact of the fraudulent representations by which defendant was induced to subscribe for the stock and execute the notes in suit was known to plaintiff at the time it took over after their maturity the notes declared upon; that defendant, prior to the commencement of this action, in the year 1920, tendered and offered to the packing company said stock, so agreed to be purchased, and all the right, title, and interest therein and right thereto; that defendant, ever since making such tender and offer, has been ready and willing to “surrender up and cancel all his right, title, and interest in and to said stock, and did, with his answer herein,” make such tender and offer; that the packing company then and

The plaintiff appeals from the judgment and submits to us two propositions upon which it principally relies for a reversal. The first is that the statements or representations, as shown by the answer, the findings and the evidence, by which the defendant was induced to subscribe for the stock of the packing company and to execute and deliver to the latter the notes in suit, amounted to no more than a mere

The defendant testified that he was, at the time he subscribed for the stock and made and delivered the notes in suit, and had been a long time prior thereto, engaged in the business of raising and selling sheep and cattle in Lassen ' County, in the northern part of the state of California and north of the city of Sacramento; that an agent of the packing company called on him at his place of residence and orally made substantially the same representations to him as are contained in the letter above reproduced herein with regard to the purpose of the company to establish a packing plant and stockyards in the city of Sacramento; that, in fact, said agent represented to him that the packing company intended to locate its plant and stockyards in Sacramento ; that he emphasized the fact, as did the letter referred to, that it would in a financial way prove advantageous and profitable to him (defendant) and other stockraisers in the northern part of the state to establish a packing plant and stockyards at Sacramento; that he, in effect, said to said agent that he realized that if, as he (the agent) and the letter stated, a packing establishment and stockyards were located at Sacramento, “there would be a special advantage to me from a hauling standpoint and general marketing conditions; the nearer our market would be to our place of produce, the less the shrinkage in getting our stock to market, and better marketing advantages.” Defendant testified that, upon the representations by the agent and those contained in the letter above quoted herein, he subscribed for ten shares of the stock of the packing company at the rate of $100 per share; that he paid $250 cash down and for the balance or as evidence of the balance he owed on the purchase price, he gave to the packing company the promissory notes described in the complaint. Defendant further

The testimony of defendant, of which the foregoing statement embraces a fair resume, was not disputed by plaintiff, nor was there any attempt to contradict it. The letter from

In Russ L. & M. Co. v. Muscupiabe L. & W. Co., 120 Cal. 521 [ 65 Am. St. Rep. 186 , 52 Pac. 995 ], it appears that the defendant, an irrigation company, represented to plaintiff that it had the ability to furnish the plaintiff with sufficient water to satisfy its needs for the purposes of irrigation, and that upon such representations the defendant obtained certain promissory notes from plaintiff as evidence of the latter’s agreement to pay the amounts represented by the notes for the water so to be furnished; that said defendant was later shown to be wholly unable to furnish the quantity of water which it had represented to plaintiff that it was able to furnish, and that the representation was false and so known to be by defendant when made. It was there contended that “the representations were respecting future acts only,” and that such representations “do not, in contemplation of law, amount to a fraud,” and could be neither false nor true when made. To which proposition the supreme court replied: “But counsel in this contention confuse and fail to distinguish between ‘promises’ and representations.’ A mere promise to perform an act in the future is not, in a legal sense, a representation, nor does a failure to perform such promise convert it into a false representation; but if the promise is accompanied with statements of existing facts which show the ability of the promisor to perform his promise, and without which the promise would not be accepted or acted upon, such statements are denominated representations, and if falsely made are grounds of avoiding the contract, though the thing promised to be done lies wholly in the future.” (See, also, California Credit & Collection Corp. v. Goodin, supra.)

In this case the plaintiff’s assignor not only pointed out to the defendant what would obviously be true to wit, the beneficial result to him as a raiser of livestock for the market of the establishment of a packing plant and stockyards in

[5] The second proposition urged by plaintiff for a reversal, as indicated above, is that, in order to prevail in this action, it was essential that defendant should plead and prove that he suffered substantial or some actual damage from the fraudulent representation whereby, it is alleged, plaintiff’s assignor induced defendant to execute and deliver to it (the packing company) the notes in suit. The precise question thus submitted is considered and determined against the position of plaintiff here in the opinion of this court in California Credit & Collection Corp. v. Goodin, supra, and the cases therein cited. Nothing further of special force can here be added to what is said in the opinion in that case upon the proposition.

Plummer, J., and Finch, P. J., concurred.

A petition by appellant to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on May 3, 1926.