California Credit & Collection Corp. v. Randall

THE COURT.

The plaintiff brought this action to recover on a promissory note, payable six months after date, given by the defendant to the Virden Packing Company, a corporation, and by that company assigned, after maturity, to the plaintiff for collection. The defendant entered into an agreement with the packing company to purchase ten shares of its capital stock at $100 a share, the par value thereof. He paid $250 on the purchase price and gave the note in suit for the remainder thereof. The agreement contained the following provisions: “It is expressly agreed that no stock is to be issued until the amount of this subscription and note or notes given therefor are paid in full in cash. . . . The subscription contract . . . contains the entire contract between the subscriber and the company and no agent or representative of the company, or any other person, has any power to change or alter the terms of this subscription. . . . Verbal or other agreements between .agents and applicants contrary to the terms of this contract are not authorized and will not be recognized by the company.” The answer sets up as an affirmative defense that the de

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fendant was induced to enter into the contract and to give the note by false representations made by the company’s selling agent, E. J. Warner. The only alleged misrepresentation which is material to the questions raised by appellant is “that said stock . . . was then paying . . . twelve per cent dividends.” The court found in accordance with the allegations of the affirmative defense and entered judgment in favor of defendant for the cancellation of the agreement and the promissory note and for costs of suit. The plaintiff has appealed from the judgment.

The ten shares of stock were never delivered to defendant and he did not pay any part of the note or receive any dividend upon his stock. The parties stipulated at the trial that, without the defendant’s knowledge or consent, the company credited upon the note the amount of a dividend declared by it, the amount of such dividend not being stated in the stipulation. Relative to the alleged representations of the selling agent, the defendant testified as follows: “Q. How did you come to subscribe for that stock? A. On account of the representations they made regarding the value of it and what it paid. Q. Well, what did Mr. Warner state to you about this stock before you subscribed for it? A. Oh, I met him I guess, several times, and he spoke about the investment and said it was paying 12 per cent. I guess I saw him two or three times before I took the stock. Q. He told you the stock was then paying 12 per cent dividend? A. That it had. . . . Q. Did he say anything about what it was paying then? A. As I understood him, he said it was paying then 12 per cent. . . . Q. Did you have any knowledge of stocks? A. I did not. Q. Or of the Virden Packing Company, a corporation ? A. No. Q. Or what they owned? A. No. Q. Or anything about the formation of the company? A. Only what they told me. Q. Did you have any information of any kind as to the value of this stock? ... A. No, I did not. Q. Did you have any knowledge of any facts relating to the resources of the Virden Packing Company, except what you got from Mr. Warner? A. That is all I knew. ... I didn’t know any such company existed. . . . Q. Mr. Randall, did you believe the statements that Mr. Warner made to you about this matter? A. I did. . . . Q. Did you rely on them. A. He was introduced to me by a friend of mine, and I depended on