Joyce v. McCord

Kjbby, J., (after stating,the facts). The court erred in giving appellee’s said instructions and in.refusing to give instructions one and two requested by appéllanta. The suit was ¡brought for damages for alleged false representations made in the sale of the stock and the issue was not properly submitted to the jury upon the instructions given. (1-2) It is well settled that one who has been induced to purchase property by the fraudulent representations of the vendor has the right to recover in a court of law the damages which he has sustained thereby, but “in order for representations to be fraudulent in law, they must be material to the contract or transaction and must be made by one who either knows them to be-false, or else, not knowing asserts them to be true, and made with the intent to have the other party act upon them to his injury, and such must be their effect.” La. Molasses Co. Ltd. v. Fort Smith Wholesale Gro. Co., 73 Ark. 542; Jarratt v. Langston, 99 Ark. 438 Brown v. LeMay, 101 Ark. 95; Bank of Monette v. Hale, 104 Ark. 396. The said instructions asked by appellants properly stated the law applicable to the issue upon their contention and the court erred in not giving them. The testimony was in conflict but was sufficient if believed, to show that the representations as to the value of the stock had been made and that appellee stated further that while the stock had paid no dividends, he had been in a stockholder’s meeting, recently before the sale, in which it was determined that there were sufficient funds already made by the bank, out of which a substantial dividend was to be declared, and that the stock was good stuff and no more of it was oh the market; that he himself would like to be the owner of a great deal more of it. (3) These representations were evidently made to assure the buyers of the value of the stock and induce them to purchase without any further investigation of the matter. If the representations were false and knowingly made by the seller to induce the purchaser to rely thereon to his injury and such was their effect, then they were fraudulent and the seller could be required to answer in damages for the injury to the buyer by reason thereof. The instructions given ;by .the court ignored the theory of appellants’ cause of action for damages for alleged fraudulent representations made in the sale of the stock, and erroneously submitted it upon the question of appellee’s liability only in the event that the representations amounted to a warranty of the value. La. Molasses Co. Ltd. v. Fort Smith Wholesale Gro. Co., 73 Ark. 542. The representations were only an inducement to the making of the contract of sale, while a warranty would have been part of the contract and an action for its breach would have been upon the contract instead of for the fraudulent representations in the making of it. Adams Machine Co. v. Castleberry, 84 Ark. 573. For the error in refusing said instructions one and two and giving those in conflict with the law as stated therein, the judgment is reversed and the cause remanded for a new trial.