American National Bank v. Hammond

Mr. Justice Gabbert delivered the opinion of the court. Of the numerous errors assigned by appellant, it is only necessary to pass upon those included in the following propositions, suggested by its counsel : First. That it was no part of the business of the bank to make representations regarding the financial condition of the Crowls, or the value of the mining stock, and, therefore, it is not liable for the statements of its officers in this respect; that the evidence does not establish the allegations of the complaint ; that appellee was not justified in relying upon the statements of the bank officials respecting the Crowls and their mining stock; and that the statements attributed to these officials were but mere expressions of opinion or belief, and, therefore, not actionable. Second. That the court erred in its instructions regarding the measure of damages, and in refusing to permit appellant to introduce evidence touching the value of the stock of merchandise. 1. A corporation must act through its agents, who can only — 371 — bind it within the scope of the powers for which it was .created : Cooley on Torts (2d ed.), 136; Weckler v. Bank, 42 Md. 581; but where, through its agents, assuming to act in its behalf, it reaps and retains the fruits of an unauthorized transaction, this doctrine is no longer applicable; for it cannot interpose the defense of ultra vires and- still retain the benefits thus acquired. American National Bank v. National Wall Paper Co., 77 Fed. Rep. 85; Thompson on Corporations, §§ 6015, 6016. It was no part of the business of appellant to make representations or statements regarding the financial responsibility of the Crowls, or the value of the mining stock, and for such representations alone it could not be held liable; but coupled with the agreement said to have existed between it and the Crowls, and the alleged object of the bank in aiding them to secure the property of appellee, in connection with its acts in subsequently acquiring this property for its own benefit, it cannot escape liability upon the ground that the transaction was not within the scope of its cojqwrate powers ; and if the facts upon which appellee relies were established, he was clearly entitled to recover the damages sustained by reason of the acts of appellant. Belative to the proposition, that the evidence does not establish the facts upon which appellee relies for a recovery, it is not necessary to notice the testimony, except in so far as its sufficiency or materiality bears upon the issues. If sufficient in this respect, it was the province of the jury to determine the facts, and if the testimony supports the issues tendered by the complaint, the verdict and judgment cannot be disturbed upon this ground, so that a disposition of this question depends upon the views expressed on the remaining ones, included in the first proposition advanced by counsel for appellant. It appears that the representations attributed to the bank officials related to matters regarding which, from the nature of the previous transactions between the Crowls and the bank, they would be presumed to have knowledge. There was nothing in the transaction, nor does appellee appear to have — 372 — possessed any information, which would have aroused his suspicions, or cast doubt upon the truth of the statements claimed to have been made by the bank officers, and he was, therefore, justified in relying upon them, in so far as the law recognizes them of that character that their falsity may be actionable. 2 Pomeroy’s Equity (2d ed.), §§ 891, 892. The general rule is, that a representation cannot form the basis of an action for falsity unless it relates to a matter of' fact, as distinguished from opinion. The difficulty arises in making the distinction. The true rule appears to be, that a. fraudulent misrepresentation cannot itself be the mere expression of an opinion entertained by the party making it, but where such party makes a statement which might otherwise be only an opinion, and does not state it as the mere expression of his opinion, but affirms it as a fact, material to the transaction to which it relates, so that the person to whom it is addressed may reasonably treat it as a fact, and rely and act upon it accordingly, then such statement becomes an affirmation of a fact, within the meaning of the general rule, and may be a fraudulent misrepresentation. 2 Pomeroy’s Equity (2d ed.), § 878. If the representations are of such character that they will bear either the construction that they were expressions of opinion, or statements of fact, the question, which they were, must be decided by the jury. 3 Sutherland on Damages (2d ed.), § 1167; Teague v. Irwin, 127 Mass. 217 ; Sterne v. Shaw, 124 Mass. 59. But in order to justify a finding that they were representations of fact, they must be statements susceptible of knowledge as distinguished from opinion. 3 Sutherland, supra; Sterne v. Shaw, supra; Nounnan v. Sutter Land Co., 81 Cal. 1; Williams v. McFadden, 23 Fla. 147; Parker v. Moulton, 114 Mass. 99. Precisely what conversation occurred between the bank officials and appellee regarding the Crowls, as detailed by appellee himself, is not altogether clear. He says when he-went to the bank that he wanted to know if the Crowls were-reliable men, i. e., trustworthy. It nowhere appears that he-asked any questions of these officers regarding the solvency — 373 — or responsibility of these parties, viz: their ability to pay debts, or means of paying obligations they might incur. He also states that he told one of these officers that he came to inquire about the value of the mining stock, and the response, so far as it related to the Crowls, was to the effect that they were all right in a business way, and that their transactions with the bank were satisfactory; that to the other official his inquiries, in substance, were that he had been referred by the Crowls to the bank for information as to their financial standing and the value of the stock, to which the reply with reference to the Crowls was, that they were all right, or that he would find them all right; and that the bank’s business dealings with them had been satisfactory. From his own statements it is apparent that the information he sought related to the mining stock particularly, for he says after this last conversation he thanked the party with whom it was had, for the information received, and stated to him, with reference to the mining stock, that it was information he could rely upon, knowing the bank held some of the same security; and later, in his testimony, stated that he did not deem it necessary to make any inquiry of the Crowls about what property they owned, because he thought the mining stock was sufficient after the information regarding it was obtained from the bank. According to the testimony of appellee, it is evident that no statements regarding the solvency of the Crowls were made to him by the bank officers; his inquiries on this subject were so vague and indefinite that it is impossible to ascertain what information he was seeking in this respect; and it was, therefore, error to submit this question to the jury, for they may have been led thereby to believe there was testimony tending to prove the contention of appellee, that he had been falsely informed by the bank officers regarding the solvency of the Crowls. Burlington & C. R. R. Co. v. Liehe, 17 Colo. 280; Burlock v. Cross, 16 Colo. 162. Further, if he did not rely upon any information received from the bank officers regarding the solvency of the Crowls, he cannot make their representations in this respect the — 374 — basis of an action for damages, even though such statements may not have been true. 2 Pomeroy’s Equity (2d ed.), § 890. With reference to what was said by appellee and the bank officials, with whom he talked regarding the mining stock, the testimony is conflicting, but taking the version of appellee, it was to the effect that he told this officer that he came there to make inquiries about this stock and the company; that he knew the bank held some of the same security, and that he wanted information that he could rely upon; that the Orowls were strangers to him, and that he did not propose to let his store go unless satisfied regarding the security; that he was told by this officer that it would be all right, and that the number of shares he proposed to take ought to be ample security for the amount which it was intended to secure; that he then thanked him for the information, and said that he could and would rely upon it. The value of the mining stock was a subject upon which an opinion could be expressed, or a statement made as a matter of fact. In the light of all the circumstances surrounding the transaction, it cannot be said, as a matter of law, that the statements of the bank officer regarding the stock, as detailed by appellee, were mere expressions of opinion or belief, and not statements of fact, or vice versa, and this question should have been submitted to the jury, under appropriate instructions, to determine which they were, from all the evidence in the case. 2. Damages are limited to the natural and proximate consequences of the acts complained of, 2 Greenleaf, § 256, and those results are proximate which the party charged with such acts must have contemplated as the probable consequences arising therefrom. Crater v. Binninger, 33 N. J. L. 513. If the facts are established which render the appellant liable, it can only be called upon to respond in such sum as equals the damages which appellee has sustained resulting from the acts charged. By the acts of its officers, if established, as contended by appellee, appellant has obtained his property, the natural and proximate results which they must — 375 — have contemplated as the prohable consequences of their acts in the premises; and the bank is, therefore, only responsible to him, if liable at all, for the value of this property at the time of its transfer, less whatever sum could be treated as a payment by the Crowls to him, and the value of the mining stock taken as a security. Appellee would, also, be entitled to damáges in a sum equal to legal interest on such balance. O. & G. S. & R. Co. v. Tabor, 13 Colo. 41. The judgment of the district court is reversed, and the cause remanded for a new trial. Reversed and remanded.