Moore v. Beakley

FLY, C. J. Plaintiffs in error sued defendant in error to recover damages in the sum of $1,300, alleging that plaintiffs and defendant had exchanged certain parcels of land, and plaintiff’s land being more valuable than that of defendant he gave promissory notes and 13 bonds, the face value of which was $1,300, but which were alleged to be of no value; that they were purported to be first mortgage bonds of the Texas Baptist University and secured by a lien on its property. Fraud was alleged upon the part of defendant as follows: “That at the time the contract was made for the exchange of said properties, and at the time the deeds were executed in pursuance thereto, and at the time the said bonds were delivered to plaintiff, the defendant and his duly authorized agent represented to plaintiff that the same were first mortgage bonds of the Texas Baptist University; that is said bonds were secured by a first lien upon the property of said university, that said bonds were the only debts owing by said university and its property was worth the sum of one hundred and fifty thousand dollars ($150,000). “That the representations made as aforesaid were believed by plaintiffs to be true when made and they were ignorant of their falsity, and they acted upon said representations and received said bonds at their par value, believing them to be a first lien upon the property of said university, and that the property of said university given as security for the payment of said bonds was amply sufficient in value to secure their payment. That the representations so made by defendant and his .agent to plaintiffs were made for the purpose of inducing plaintiff to act thereon, and plaintiffs would not have acted thereon but for said representations. “That said representations made as aforesaid were wholly false in this: That at the time of the issuance of the bonds by the Texas Baptist University, of which the said 13 bonds above described form a part, and at the time of the execution of the mortgage or deed of trust given by said university to secure the same, and at the time of the sale of the 13 bonds to plaintiffs, the property of said University was then incumbered by prior vendor’s liens executed by the Texas Baptist University for eighteen thousand dollars ($18,000) and interest, held by B. W. Sears, and eleven thousand eight hundred and twenty-four dollars and eighty-three cents ($11,-824.83) held by O. O. Huffines et al., retained in a deed executed by the Patton Seminary & Conservatory of Music to the Texas Baptist University dated on the 9th day of March, 1905, and another deed executed by J. G. Etheridge to the Texas Baptist University on the 4th day of April, 1905. And the value of all of the property of said university then less than the said bonded debt. “That the said prior liens as aforesaid were, at the time of the sale of the bonds by defendant to plaintiffs, greatly in excess of the value of the property belonging to said university, whereby the said bonds were then and are now worthless, and that these plaintiffs failed to discover the existence of said prior liens or that said representations so made were false, until on or about the 2d day of August, 1911.” The court after hearing the evidence instructed a verdict for defendant. The evidence shows that B. H. Howard was the agent of plaintiffs to sell or exchange certain real estate owned by them, and in the prosecution of his agency he succeeded in obtaining from defendant an agreement to make a certain exchange, whereby he was to receive properties known as numbers 713 and 717 in the city of, San Antonio, on the west side of Howard street, between Park avenue and Evergreen street, of the estimated value of $10,000, and was to give therefor $1,700 in cash, to convey to plaintiffs two certain lots of the estimated value of $2,000, to deliver to plaintiffs 13 bonds issued by the Texas Baptist University of Dallas, Tex., and to execute to plaintiffs 5 vendor’s lien notes in the sum of $1,000 each. Plaintiffs were to pay a certain indebtedness on the two lots of $1,500. The trade was consummated as indicated, the necessary deeds and notes were executed, and the 13 bonds delivered to plaintiffs. It was recited in the bonds that they belonged to a series of similar bonds numbered from 100 to 400, inclusive, amounting in the aggregate to $40,000, secured by a mortgage or deed of trust on all the property, real and personal, owned by the Texas Baptist University, and on each of the bonds was the following indorsement: “The Texas Baptist University First Mortgage Bond,” with dates, etc. The trade was closed on September 19, 1910, and appellants did not discover the bonds until June, 1911. There was a superior lien to that evidenced by the mortgage to secure the bonds made to secure the sum of $18,000, and there were other liens paramount to the lien for the bonds. The property was sold to pay those claims and nothing remained. The bonds at the time of the trial were worthless, but what their value was in September, when they were delivered to plaintiffs, is not shown by the evidence. The first interest due on the bonds after appellants obtained them was paid to them. No conversation took place between plaintiffs and defendant preliminary to the trade. The only statement made by defendant as to the bonds was to B. H. Howard, and as written by the latter and given plaintiffs was: “Bonds — 7 years to run, issued to Texas Baptist Institute at Dallas for improvements $40,-000, which is all that is owed, and the property is worth $150,000, as stated by the Surety & [382] Trust Company of Dallas — 6%, payable semiannually.” Defendant told R. H. Howard and he told Moore when he gave him the statement that he could take 30 days and investigate as to the truth of it. Moore made no investigation but stated that he was satisfied if the Baptist Church backed the bonds, and on their face they showed they were first mortgage bonds, and he made no investigation. There were no representations made when the contract was signed, when the deeds were executed, or when the bonds were delivered, as is alleged in the petition. There is no evidence tending to show that the bonds were not worth $1,300 when they were delivered to plaintiffs. It was months after the bonds had been delivered to plaintiffs that the property of the Texas Baptist University was placed in the hands of a receiver. [1,2] The testimony showed that it was agreed between the parties when the exchange was made that the bonds were worth $1,300, and plaintiffs insist that ‘‘if the parties agreed upon the value at the time the conveyances were made, this may be deemed its true value,” as was held in the case of White v. Street, 07 Tex. 177, 2 S. W. 529. That is the only proof as to the value of the bonds at time of trade that was made, and ■upon that proof, if proof it be, plaintiffs failed to show that they sustained any damages whatever. The only evidence as to the value of the bonds was the value months after the exchange, and that could not be used as a measure of damages. The bonds were not worthless when the exchange was made because afterwards they produced interest which was collected by plaintiffs. In the absence of any evidence to the contrary it must be presumed that the parties put the true value on the property that they exchanged. [3, 4] Stripped of all technicalities, the true measure of damages in this case would be the difference in the estimated market value of the bonds, based on the representations of defendant, and the true market value at the time the bonds were delivered to plaintiffs. Under that common sense measure the proof fails to disclose any way to calculate the damages. The same result is reached if we apply the rule, invoked by plaintiffs, laid down in George v. Hesse, 100 Tex. 44, 93 S. W. 107, 8 L. R. A. (N. S.) 804, 123 Am. St. Rep. 772, 15 Ann. Oas. 456, which, in cases of exchange of property, states the measure of damages to be “the difference between the value of that which he has parted with, and the value of that which he has received under the agreement.” The value of nothing exchanged in this transaction is questioned, except the value of the bonds; therefore nothing need bo taken into consideration, except the represented value and the actual value of the bonds at the time the exchange was executed. No value was shown by plaintiffs at that time, and the agreed value must be taken as the true value, and consequently there was no basis for the suit. [5] If there was no misrepresentation as to the value of the bonds at the time or before the exchange was consummated, there could be no basis for nominal damages, because there was no invasion or violation of any legal right of plaintiffs, and this suit was not necessary for the vindication of a right nor to redress a wrong deserving compensation. In the testimony there is no basis for damages, substantial or nominal, and the court could not do otherwise than instruct a verdict for defendant. It would not matter that the bonds were not secured by a first mortgage, nor that the property of the Texas Baptist University was not worth $150,000, nor that it owed more than $40,000, if the bonds were worth $1,300 when the exchange took place, no case was made out. At that time the university may have been perfectly solvent. A day may change the condition of a man or corporation from one of solvency to one of insolvency. This is well known to every one acquainted with the moving pictures of modern business life. [6] The evidence of W. O. Moore, complained of in the fifth assignment of error, in view of the facts, is utterly immaterial, and the assignment is overruled. The same cau be said of the second and third assignments of error. The evidence of Moore tended to show that he relied on the fact that the bonds were issued by a Baptist institution, and that the bonds purported to be secured by a first mortgage. The judgment is affirmed. Footnotes [1] (g^pffor other oases see same topic and KEY-NUMBER in ail Key-Numbered Digests and Indexes