Bank of Woodland v. Hiatt

Sharpstein, J.: The appellant purchased of one Strong one thousand shares of mining stock, and gave him therefor his (appellant’s) non-negotiable note for eight hundred dollars, payable twelve months after date. It was transferred to the respondent, who brought an action and recovered upon it. This appeal is from the judgment. The defense to the action was that the stock was not, at the time of appellant’s said purchase, or when this action was commenced, of any value, and that ap[236]pellant was induced to purchase it by the false and fraudulent representations of Strong. The value of the stock depended entirely upon the condition and character of a certain mine known as the “ Excelsior Mine,” and the Court found that Strong, for the purpose of inducing appellant to purchase said stock, represented to him, among other things, “ that no work was required to be done on said mine, except to put in blasts and blow the ore out and have it milled, which was untrue; and further represented that there was then, on the dump of said mine, ore of the value of ten thousand dollars, and that one Jones and another had taken ore from said mine to the value of six thousand dollars; which latter two representations were also untrue, and the defendant, by reasonable diligence and inquiry, might have known them to be untrue; and, while the said Strong knew them to be untrue, he did not intend at the time to cheat, wrong, or defraud the defendant, because he, at the same time, believed said mine to be rich, and said stock to be fully worth the price paid therefor.”

The Court also found that “the defendant believed that the Excelsior Mine was of immense value, and bought said stock as a speculation, partly upon the representations made by Strong and partly upon information obtained from others.

“At the time of said transaction, and for some, months thereafter, the said Excelsior stock was selling in this vicinity for from seventy-five cents to one dollar per share, and was of that value for the purposes of sale; but the said stock is now of no value whatever, and the said Excelsior Mine is of no value.

“The defendant, on or about the 10th day of December, 1877, discovered that said mining stock was worthless, and that the representations upon which he had relied were untrue; and within a reasonable time thereafter, to wit, on December 20th, 1877, tendered the said stock to said Strong, as averred in his answer, and said Strong refused to receive the same, and has ever since refused so to do. The defendant is now ready and willing to surrender said stock, and has tendered and left the same with the clerk of said Court.”