Chisholm v. Eisenhuth

Laughlin, J.: This suit is in equity to cancel a contract for the purchase of 700 shares of the capital stock of the Eisenhuth Horseless Vehicle Company and to recover the moneys paid on account of such purchase. The purchase was consummated on the 17tli day of November, 1899, and the stock was delivered to plaintiff, who, by check, paid $10,000 down and agreed to pay $20,000, that being the balance of the purchase price, within six months. The plaintiff alleged that he was induced to make the contract by false and fraudulent representations to the effect that the automobiles which said company was incorporated to manufacture, under the protection of patents owned by it, had passed the experimental stage, had been tried, tested, and were an assured success; so much so that the company had contracts for the manufacture and sale of automobiles upon which its profits would amount to over $1,000,000, and that it had one order alone from a prominent New York ice company for 1,000 auto trucks, which would yield a profit of $500,000. These allegations were sustained by the evidence introduced upon the trial. Not only did the company not have these or any other contracts, but it was still experimenting with a motor which,had stood a shop test and was attempting to improve upon and perfect it. The evidence fairly justified the finding that the representations [136] were fraudulently made for the purpose of inducing the plaintiff to-purchase the stock, and that he relied thereon in so doing. These false representations were made, not by the defendant, but by her husband, and it is contended that they were not authorized by her. There was evidence of an express admission on her part that her husband was authorized to sell her stock, and ■ that he managed all of the sales of her stock. She did' not directly participate in the negotiations for the sale of the stock, but permitted the same to be conducted by her husband, and she executed the contract thus induced and accepted the fruits of his services. For the-purpose of the relief sought in this action, his fraud was her fraud. Evidence that similar representations were made by the husband at or about the same time to two other parties, who also through him purchased other shares of the capital stock of this corporation owned by her, offered by plaintiff, was received under defendant’s-objection that it was incompetent, and a motion to strike it out was-denied. Her counsel excepted to each of these rulings, and he relies on Hubbell v. Alden (4 Lans. 214, 225) to sustain his contention that-.the evidence was incompetent. That was also an action to rescind a. contract for the purchase of stocks on the ground of fraud and to recover the amount paid. The court recognized - the existence of the rule permitting evidence of similar contemporaneous frauds, but-did not deem the other fraudulent representations proved sufficiently contemporaneous to justify the reception of the evidence. The Court of Appeals, however, reversed the General Term and sustained the recovery as to a party against whom this evidence was received and, without discussing the competency of the testimony, cited this evidence in the opinion as tending to establish the fraud, (Hubbell v. Meigs, 50 N. Y. 480, 491.) The evidence of the false representations made to the plaintiff was ample to establish the fraud and sustain the judgment without the testimony relating to similar contemporaneous representations'; but we consider that evidence competent as tending to establish the'fraudulent intent. (Cary v. Hotailing, 1 Hill, 311; Amsden v. Manchester, 40 Barb. 158; Naugatuck Cutlery Co. v. Babcock, 22 Hun, 481; Miller v. Barber, 66 N. Y. 558, 568; Baldwin v. Short, 125 id. 553, 559; Boyd v. Boyd, 164 id. 234.) The false representations were made on a prior sale of similar [137] stock to plaintiff some months before and were not expressly reiterated on the sale of the stock in question. We think the court was warranted in finding that they were calculated and intended to induce the last purchase and that plaintiff was justified in relying thereon. The point is also made that the action cannot be maintained because plaintiff did not tender a return of the stock before bringing the action. The plaintiff brought this action within a month after discovering the fraud, and in the meantime he did nothing in affirmance of the contract or that could in any manner mislead or prejudice the defendant. In his complaint he offers to return the stock, and he produced it upon the trial and tendered a surrender thereof, which was refused. The decree requires it to be deposited with the clerk of the court for the benefit of the defendant. The suit being in equity, this is all that is required. (Delano v. Rice, 23 App. Div. 327, 331; Littlejohn v. Leffingwell, 47 id. 377, 379; Vail v. Reynolds, 118 N. Y. 297, 302; Berry v. A. C. Ins. Co., 132 id. 49, 55.) Part of the consideration paid by plaintiff having been invested in real estate, the title to which was in defendant, the court properly decreed that plaintiff was entitled to a lien thereon to the extent of his money invested therein and interest. No other question requires discussion. The judgment should be affirmed, with costs. Van Brunt, P. J., Patterson, Ingraham and Hatch, JJ., concurred. Judgment affirmed, with costs.