Gleason v. McPherson

SHAW, J.

The plaintiffs appeal from a judgment in favor of the defendants rendered upon the granting of the defendants’ motion for nonsuit.

The action was to recover damages alleged to have been caused by false representations made by the defendants to the plaintiffs.

The complaint alleges, in substance, that the plaintiffs bought of one C. J. Proud and the defendant, H. A. Land

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wehr, certain bonds of the Bisbee Light & Power Company, of the par value of thirty thousand dollars, and paid for the same by conveying to said Proud a certain lot in Los Angeles and to Landwehr certain other property, all of the value of twenty-five thousand dollars; that to induce plaintiffs to make said exchange the defendants represented to plaintiffs that the bonds were ‘ * gilt-edge securities, ’ ’ that the net income of the Power Company was more than double the amount of the bond interest, that the bonds were guaranteed by Deane & Company, of Grand Rapids, Michigan, that said guarantors were a large concern owning and operating plants all over the country, and their securities “gilt edge,” that there were only two hundred and ten thousand dollars of the bonds outstanding, and that the bonds were secured by a first mortgage on the property; that each and every of said representations were false and were known by the defendants to be false at the time they were made; that the defendants made said representations in order to induce plaintiffs to exchange their property for said bonds; that plaintiffs at the time did not know that the representations were false but believed them to be true, and that, relying thereon, they made the exchange aforesaid; that the said bonds in fact are worthless. The prayer is for twenty-five thousand dollars as damages for the deceit. The allegations concerning the alleged false representations are denied by the answers of the respective defendants.

The bonds once belonged to the defendants McPherson and Nordholt, who sold and transferred them to Proud in August, 1908, a few weeks prior to the transfer to the plaintiffs. Landwehr had acted as agent for McPherson and Nordholt in their deal with Proud and in making that deal had obtained two letters, one from McPherson and one from H. J. Englebrecht, cashier of the Bank of Santa Monica, to himself, containing statements regarding the bonds. Landwehr acted as agent for Proud in the transaction with Gleason. The plaintiffs are husband and wife. The husband conducted all the negotiations. They sued Proud for a rescission of the contract and failed to recover. (See