Drake v. Grant — 22 N.Y. St. Rep. 502

Majority

p. 502

Simeon J. Drake, Resp’t, v. B. Suydam Grant et al., Ex’rs, etc., App’lts.

(Supreme Court, General Term, First Department,

Filed March 29, 1889.)

Headnote

1. Ebaud—Action, fob—When bbpbesentations actionable.

Where representations as to the" pecuniary value of the bonds of a corporation are made to a purchaser as an inducement to purchase, by a person who asserts himself to be, and actually is, in a position to know the-financial condition of the corporation whose bonds are the subject of negotiation and sale, it cannot be said that they are mere expressions of opinion, and that the purchaser must inquire for himself and act upon his own judgment; he has a right to rely upon the assertions, and relying thereon, if he is injured, he may have recourse to an action for fraud and "deceit, if the representations were untrue.

2. Same—Intent—Question, fob the jury.

The question whether or not the representations are made knowingly with intent to deceive, is one, under all the circumstances, within the province of the jury.

Appeal from a judgment in favor of the plaintiff for $13,181.99 entered upon the verdict of a jury, and from an order denying the defendant’s motion for a new trial.

Albert A. Abbott, for app’lts; John R. Dos Passos, for resp’t.

—The action was originally begun against one Washington Lee to charge him in damages for fraud and deceit by which the plaintiff was induced to purchase of him ten bonds of one thousand dollars each of the Long Beach Improvement Company. When this cause was before this court upon an appeal by the plaintiff from a judgment entered upon the verdict of a jury ( 36 Hun, 464 ) the •court held that the representations which were shown to have been made by Mr. Lee, were sufficient to be submitted to the jury, and directed a new trial, mainly upon the ground of error of the trial judge in charging the jury that ■a representation that these bonds were as good as government bonds, though false, was not actionable.

The court there said: “This direction withdrew what was relied upon as a material misrepresentation, made by the testator to the plaintiff in the course of their negotiations. It was not, as the court assumed to be, a mere opinion expressed by the testator, but it was a fact asserted by him that the bonds which were offered to the plaintiff were as good as government bonds. The intention was to impress the plaintiff with the conviction that they would safely be made the subject of investment on his part, and that the testator knew that to be their character.”

Under that decision, it was incumbent upon the trial court to submit the evidence, which consists mainly of that of the wife of the plaintiff, to the jury.

She says: Mr. Lee remarked “ it’s (Long Beach) a delightful place, and you no doubt want to come here every sum ■ mer with your family, and you ought to have some of these bonds”—the first mortgage Long Beach Improvement Company’s bonds. Mr. Drake replied he did not know anything about the bonds, about the investment. Col. Lee said, “you can rely upon me; I am a director and know all about it,” or in other words that he had the inside track, that was the expression he used. He also said “they are just as good as government bonds,” some interest had already accrued upon them He also said the company was in good financial condition. “I will let you have ten bonds for $9,000. My husband replied that he had some money he could invest, and that if he would assure him the bonds were all right and the company in good condition, he would take them.”

It further appeared from this lady’s testimony that Mr. Drake told Mr. Lee that he (Drake) knew nothing of the condition of the company, and that Mr. Lee replied, “you can rely upon my statements, I know all about it.” The testimony of the plaintiff’s „wife is not disputed by other witnesses.

This evidence showed, first, that Col. Lee, who is admit

p. 504

ted to have been an active director of the corporation, assumed to know exactly the financial condition of his-company; that he had had opportunities to observe in the past its transactions, and he knew whereof he spoke. When he used the expression that the bonds were as good as government bonds, it was manifest that he did not mean to be understood, and was not, in fact, understood as asserting that they were worth as much money as a like number in the same account of the government bonds of the United States. Nobody would so understand an assertion of that kind, but it was a strong way of asserting: positively that the company was in a good financial condition and that the bonds for that reason were a - safe investment.

The plaintiff was not in a position to know the condition of the company and’ did not know of its condition, except as it had been disclosed to him by Mr. Lee. This fact was well known to Mr. Lee. That the plaintiff purchased these bonds, relying upon these representations, is not-seriously disputed in the case. When representations of this character are made by a person who asserts himself to-be, and actually is, in a position to know the financial condition of a corporation whose bonds are the subject of negotiation and sale, it cannot be said that they are mere expressions of opinion, and that the purchaser must inquire for himself and act upon his own judgment. He has a right to rely upon assertions of this description, and relying thereon, if he is injured, he may have recourse in this form of action if the representations were untrue.

That these representations were false is also shown by the evidence. The collapse of the company followed soon upon the sale of these bonds. The evidence of the bookkeeper is quite conclusive that the company was wholly insolvent at the time of this sale of the bonds, and is corroborated by various exhibits in the case. The question whether or not Mr. Lee made the representations thus knowingly with intent to deceive the plaintiff, is one, under all the circumstances, peculiarly within the province of a jury. Their conclusion, as is usual in this class of cases upon this branch of the case, is to be derived from a consideration of the whole case, and drawn mainly as an inference from the well established and undisputed evidence. We are unable to say that the inference of an intent to deceive was unjustly drawn by the jury.

It follows that the judgment entered upon the verdict should be affirmed, with costs.

Van Brunt, Oh. J., and Brady, J., concur.