Rohrbacher v. Kleebauer

HAYNES, C. This action is prosecuted to recover from the defendant five thousand five hundred dollars and interest, upon a promissory note made by defendant to plaintiff on December 27, 1890, due six months after date.

The answer contains several defenses, alleging separately that there was no consideration for the note, that the consideration had wholly failed, and also alleged that said note was given for the purchase price of two thousand shares of the stock of the River, Harbor, and Canal Dredging and Land Company, a corporation organized under the laws of the state of Colorado, of which the plaintiff was president and managing agent, and that he was induced to purchase said stock by and through the fraudulent misrepresentations of the plaintiff upon which he relied; the particulars of which need not be stated, as no question is made upon its sufficiency. It is sufficient to say that the alleged false representations were as to the value of a large tract of salt marsh land owned by the corporation, its sound financial condition, and the value of its stock.

These issues were tried before a jury. The plaintiff put in evidence said note and rested; and at the conclusion of defend-i ant’s evidence, upon request of plaintiff, the court instructed the [262]jury to return a verdict for the plaintiff for the amount of the note and interest, as prayed for, and defendant excepted. This appeal is from the judgment entered thereon and from an order denying a new trial. Whether the court erred in so instructing the jury is the only question noticed in the briefs.

Much of the defendant’s evidence related to the indebtedness of the corporation and the value of its land. That evidence need not be repeated, however, as we shall assume, for the purposes of this opinion, that the allegations of the answer in that respect are true. Nor need we consider whether defendant relied, or was entitled to rely, upon plaintiff’s representations as to the value of the stock, or the financial condition of the River, Harbor, and Canal Dredging and Land Company, nor how far those statements were of material facts or the mere expression of opinion, since the defense is based upon an alleged rescission of the contract of purchase, the right to rescind resting upon the alleged fraudulent misrepresentations. ,

It is alleged in the answer that the Dumbarton Land and Improvement Company was incorporated December 22, 1891, and that the assets of the Colorado corporation were transferred to it, and that it assumed the liabilities of the prior corporation, and that defendant- was induced to surrender the stock he purchased from the plaintiff in December, 1890, and accept therefor two thousand shares in the new corporation. But the evidence discloses that the Colorado corporation, in addition to the land mentioned, also owned certain Boschke patents for dredgers; that at the same time that the Dumbarton Land and Improvement Company was formed another corporation known as the Western Dredging Company was also formed, to which said •Boschke patents were transferred by the Colorado corporation, and when defendant surrendered his stock in the Colorado corporation he received not only the same number of shares in the Dumbarton Land and Improvement Company, but also two thousand shares in the dredging company; and the Colorado 'corporation was thereupon disincorporated. These shares in the new corporations were delivered to defendant -January 19, 1892, and at that date defendant paid on account of interest on his note three hundred and thirty dollars. About six months after the new stock was delivered an assessment was levied by the