California Credit & Collection Corp. v. Ricca

NOURSE, J.

Plaintiff sued as assignee for collection upon a promissory note for $3,750 executed and delivered by defendant to the Virden Packing Company on October 15, 1921, in renewal off a former note in the same amount given as part payment of the purchase price of forty shares of the capital stock of the packing company. The defendant answered admitting the execution of the note and setting up the special defense of fraud in the original transaction. The cause was tried before the court, sitting without a jury, and resulted in a judgment for the plaintiff as prayed.

The facts pleaded in the answer upon which the defendant based his claim of fraud were that the agent of the Virden Packing Company represented to him that the company was doing a large and profitable business and that the actual value and the market value of its capital stock was $100 per share and that it would soon thereafter be worth $125 per share. It was then alleged that these representations were false, and were known to be false by the agent, that they were made with the intent to deceive the defendant, and that he -had no knowledge of the actual or the prospective value of the stock, but relied entirely upon the agent’s representations.

The trial court found that the representations as alleged were made for the purpose of inducing the defendant to purchase the stock, but not with the intent of cheating or defrauding him, and that none of the representations was false..

On this appeal the only point calling for consideration is the sufficiency of the evidence to support the finding that the representations were not false. In this connection we must bear in mind that the issue of fraud having been raised by the appellant in defense to the note, the

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burden of proof was on him. The only evidence tending to prove the falsity of any of the representations pleaded was that on October 15, 1921, the stock was quoted in a San Francisco newspaper under the head of “unlisted securities” as $25 “bid” per share and that on December 15, 1923', and December 17, 1923, it was similarly quoted at $29 “asked” per share. No evidence of any character was offered to prove either the actual or the market value of the stock at the time the representations were made—• July, 1920—and no attempt was made to show the amount of business carried on by the company at that time.