Warner v. Bates

Tayloe, J. This is an appeal from an order of the circuit court of Milwaukee county, denying a motion of the appellant to vacate and set aside an order of arrest made in said action, and to discharge the appellant, Bates, from arrest upon such order. The motion was made upon the pleadings in the action, the affidavit of the plaintiff upon which the order of arrest was based, and also upon the affidavit of the defendant Bates and others. On the hearing of the motion several affidavits were read on the part of the plaintiff. On this appeal, it is insisted by the learned counsel that i he affidavit of the plaintiff upon which the order of arrest was made is wholly insufficient to sustain the order. In this case the order of arrest is founded upon the affidavit of the plaintiff, and that affidavit sets forth at length and in detail the facts set up in the complaint. After a careful284 reading of the complaint and of the affidavit, it seems to us that upon the facts stated in the affidavit there can be no reasonable contention but that, if the facts stated in the affidavit constitute a cause of action, it states a cause of action in tort for obtaining money and property by false and fraudulent representations, and that the action is therefore an action in which the statute authorizes an arrest. See secs. 2689, 2691, R. S. The complaint in the action and the affidavit are of great length, and will not be set out in this opinion; but that the affidavit sets out facts sufficient to show that the plaintiff has a cause of action in tort against the defendants, including the appellant, cannot admit of a reasonable doubt. So much of the complaint and affidavit as is necessary to show the nature of the plaintiff’s cause of action will be inserted in the report of the case. The cause or causes of action stated in the complaint and affidavit are for obtaining money and notes of the plaintiff on the sale of certain mining stocks to her, alleging that she was induced to purchase the same, and pay her money and give her notes therefor, by reason of the false and fraudulent representation of the defendants as to the value of said stock, the productiveness of the mines which such stocks represented, and that the corporations by which such stocks were issued were legally organized and duly authorized to issue the same. It is contended by the .learned counsel for the appellant that the whole foundation of the plaintiff’s claim is swept away because she has alleged in her affidavit, among other things which she declares to be false, that it was represented to her “ that all the pretended corporations had been duly and legally organized and incorporated; that each and all of said pretended corporations had respectively issued their said respective stocks and certificates of stock in consideration of money, labor, and property estimated at its true money value, actually received by said respective pretended [285] corporations, equal to seventy-five per centum of the par value of the said respective stocks and certificates of stock of said respective pretended corporations.” It is said that this allegation shows conclusively that the plaintiff could not have been defrauded in the purchase of said stocks, because this representation notified her that such stocks were illegal and void and could have no value. This contention of the learned counsel is, we think, sufficiently answered by the counsel for the respondent, “ that this allegation was made in the complaint, not for the purpose of asserting that the defendants made it as showing that the corporations were legally organized, but merely for the purpose of showing that the defendants claimed that the stocks offered for sale to her were of great value, because the corporations were supposed to have received valuable property and large amounts of money thereon.” This construction of this allegation is sustained by the fact that it is immediately after-wards alleged that the defendants represented “ that at least one half the capital of said respective corporations had been duly subscribed, and at least twenty per centum thereof actually paid in.” This last representation would show a legal organization of the corporations. The affidavit then alleges, among other things, that, these representations as to the stock having been issued for seventy-five per centum of their par value in money or other property, and that one half of the capital of said corporations had been duly subscribed, and at least twenty per centum thereof actually paid in, were false, and that in fact “ said corporations had never issued their respective stocks and certificates of stock in consideration of money, labor, and property estimated at its true money value, actually received by said companies respectively, equal to seventy-five per centum of the par value of the said respective stocks and certificates of stock of said respective corporations, or in consideration of any money, labor, or property whatsoever, [286] or for or upon any consideration of any nature or kind.” If these allegations in regard to the issuing of the stocks by these corporations were stricken out of the complaint and affidavit, there would still be sufficient remaining to constitute a cause of action. If the plaintiff’s case depended wholty upon the invalidity of the stock sold to her as valid stock of the corporations, and she sought to recover upon that ground alone, there might be some force in the objection that she knew, or must be held to have known, of such invalidity; but that is not the real ground of her action. Her right to recover is based as well upon the worthlessness of the stock, admitting that it was legally issued, as it was upon the fact that it was illegally issued; and, if it were possible that she could be estopped from showing that the stock was worthless because illegally issued, she clearly would not be estopped from showing that it was worthless because the corporations issuing the same were bankrupt and worthless corporations, and the stocks valueless for that reason. It is also claimed by the learned counsel for the appellant that the affidavits of Bates and Benjamin, read on the hearing of the motion, show that Bates had nothing whatever to do writh negotiating the sales of the stocks to the plaintiff; that the sales were made by Benjamin alone, on behalf of Moore, Benjamin & Co. Bates was not a member of the firm of Moore, Benjamin & Co., but his wife was, and he, as her agent, represented her in all the transactions of the company. The complaint and the affidavit both allege that Bates, as agent of his wife, aided and assisted in making the sales to the plaintiff, and made the false representations set out in the affidavit; and this allegation in the affidavit and complaint is confirmed by other testimony offered by the plaintiff on the hearing of the motion. The rule seems to be pretty well established in New York courts, under a statute like ours, that when the facts which [287] constitute the cause of action stated in the complaint are the 'ground for the arrest as stated in the affidavit, the courts will not upon motion set aside the order of arrest because the facts stated in the complaint and affidavit are controverted by the proofs of the defendant presented on the motion to vacate the order. The reason of the rule is that it calls upon the judge hearing the motion to prejudge the whole case against the plaintiff, if he vacates the order on such proofs. Frost v. M'Carger, 14 How. Pr. 131; Solomon v. Waas, 2 Hilt. 179; Levins v. Noble, 15 Abb. Pr. 475; Barret v. Gracie, 34 Barb. 20; Cousland v. Davis, 4 Bosw. 619; Geller v. Seixas, 4 Abb. Pr. 103. There was some contention that the plaintiff could not recover as to a part of her claim for damages, because she had given her notes for the purchase price, which are still unpaid, and that until she pays the notes she cannot recover of the defendants. However this may be, it only goes to a small part of her claim and in no way prevents her from having an order of arrest as to that part of her. claim for which she may recover. If the point were well taken, which wre do not decide, it would only be ground for reducing the amount of the bail on arrest, and would be no ground for setting aside the whole order. By the Court.— The order of the circuit court is affirmed, and the cause is remanded for further proceedings according to law.