Wilson v. Meyer

The defendant’s motion for judgment on the pleadings was denied. The complaint is that on March 15, 1910, the plaintiff purchased 10 shares of the stock of a corporation of which defendant was a majority stockholder, president, and treasurer, and an executive officer, under a prospectus or statement issued by defendant and made a part of the complaint.- The complaint then charges that prior to September 23, 1910, the defendant made and caused to be made to plaintiff and other stockholders of the corporation many flattering statements concerning (1) the preliminary organization of the corporation; (2) the extent of the advertising of its business and the fruits thereof; (3) the practical demonstration of the use of its product, and the great demand there was and would be for it, and the marketable value thereof; (4) the extent of the unfilled orders therefor on hand; (5) the desirability for additional money in the treasury for properly carrying on its business. Thus far the complaint does not state a fact upon the falsity of which this action to rescind the contract for fraud can rest. Then follow allegations of representation by defendant concerning his desire, in promotion of the business of the corporation, to raise additional capital therefor, and his intention for that end to make available certain shares of the capital stock then owned by him, on the condition that the stockholders “were or would become mutually interested with the defendant in his said purpose of raising additional capital for the corporation, by purchasing the said shares of stock,” and that the proposed transfer of stock by defendant and payment therefor by the plaintiff and other stockholders “was to be upon the distinct understanding, and agreement that the stock to be so transferred was to be treasury stock and the moneys to be paid therefor were to become an asset of the corporation, to be used” by it in the development and furtherance of its business, and that defendant truthfully represented to plaintiff, to induce him to purchase shares owned by defendant and to become treasury stock, that some other stockholders had taken shares on the conditions named and others had agreed to do so. Then the allegation is that, relying upon such statements and representations, the plaintiff paid defendant at various times, beginning September 23, 1910, sums of money for which plaintiff received another 10 shares of stock. Thus far not an issuable fact alleged to be untrue existed before or at the time of the purchase, for every statement was of intention or of a future act to be done by defendant. Then follow usual allegations of falsity of defendant’s statements to his knowledge.

I do not find anything beyond promises, and upon promises an action for fraud cannot be based. Ranney v. People, 22 N. Y. 413 ; People v. Blanchard, 90 N. Y. 314 ; Lexow v. Julian, 21 Hun, 577 ; Gallager v. Brunel, 6 Cow. 346 . The plaintiff’s attorney, in summary of the elements of the alleged fraud, states that defendant misrepresented the value of the stock; but where or how he does not point

The order should be reversed, with $10 costs and disbursements, and the motion for judgment on the pleadings be granted, with costs, with leave to the plaintiff to serve an amended complaint within 20 days upon payment of aforesaid costs. All concur.