United States National Bank v. Stiller

[444]

FRICKE, J.,

pro tem.

Plaintiff brought action for fraud and deceit, alleging that defendant with intent to deceive made certain representations to the plaintiff which induced the latter to loan to Pacific Cotton and Finance Corporation the sum of $15,000 on its promissory note. The representations were that defendant was the owner of a one-third interest in the Pacific Cotton and Finance Corporation, that said corporation had a surplus of assets over liabilities in the sum of $7,118.28 and that the corporation had a paid-in capital stock of $60,300. These representations were made to the plaintiff through the medium of a balance sheet of the assets and liabilities of the corporation, signed by defendant as its president and a personal financial statement of the defendant, both of which were delivered to the plaintiff bank by defendant. Defendant’s answer does not deny the allegations in the complaint that defendant was not the owner of one-third of the capital stock of the corporation and that the corporation did not have $60,300 paid in on capital stock. The falsity of the latter representations, as well as the falsity of the representation as to surplus, is supported by evidence more than sufficient to support the findings. It appears that in fact the capital stock paid in amounted to only $40,000; that instead of a surplus there was a deficit of $4,018.84, and that defendant had only 100 shares, to wit: $1,000 of the capital stock. Appellant seeks to argue that the representations were really not false because the corporation was later permitted to increase its capital stock to $60,300 and because he had loaned the corporation $15,000 which he considered as giving him a one-third interest in the corporation. However, the truth or falsity of the representations must and can only be determined as of the time when they were relied and acted upon by the respondent bank, and a misrepresentation of fact cannot be justified by an alleged belief wholly unwarranted by the facts.

Appellant contends that the court erred in overruling his objection to the introduction of any evidence on the ground that- the complaint was insufficient. No authorities are cited nor is the assignment sustained by argument. We find no substantial defect in the complaint.

[445]