Walker v. Mobile & Ohio Railroad

Handy, J., delivered the opinion of the court. This action was brought to recover the amount due by the plaintiff in error, as a subscriber to the capital stock of the defendants in error. Two grounds of defence are set up in the pleas. 1st. That the subscription was taken by a person who represented himself to be the agent of the company for that purpose, but, in fact, was not authorized to receive subscriptions. 2d. That the agent who obtained the subscription, with the fraudulent design of obtaining the same, represented to the plaintiff in error that the Congress of the United States had donated to the company a large quantity of land, from the sales of which about three millions of dollars would be realized, which, together with other means, would enable them to complete the railroad within two years thereafter, from which the stockholders would receive large dividends. That the stockholders would not have to pay more than one-half the amount of stock, and that that would be received in provisions and labor at the highest prices. • But the lands donated are of but little value, and all the means of the company are greatly insufficient to complete the road, and that it cannot be completed by the time stated. That these statements were [255] relied upon by him when be made the subscription, and induced bim to subscribe, but were known by the agent to be untrue. That, in order to induce persons to subscribe, the agent procured one Nelson, an influential man in the neighborhood, to subscribe, whom he represented to be well acquainted with the costs and expenses of such works, giving to him, at the same time, an obligation in writing, that he would release him from his subscription when requested to do so, which pretended subscription was presented to the plaintiff in error by the agent, who stated that it was a bond fide subscription, when, in fact, the same was merely colorable, and that the subscription sued upon was obtained by these fraudulent means. To these pleas the defendants in error demurred, and they were held insufficient, and the plaintiff had judgment. The judgment upon the demurrer to the first plea was manifestly correct; for, though the agent act^d without authority of the company in taking the subscription, yet the act was adopted and ratified by the company, as was fully shown by the act of bringing suit upon the subscription. After such an act of ratification, it would not have been within the power of the company to disavow the contract and to deny that the plaintiff in error was entitled to all the privileges of a stockholder. And as the act of ratification appeared by the record, it was competent for the .court to notice it in determining the sufficiency of the plea. The defence set up by the second plea consists of alleged fraudulent representations and acts in several particulars. First, as to the representations in relation to the value of the lands donated by Congress, they must, from the nature of the subject, have been mere expressions of opinion upon a matter of which, the agent could not possibly have any precise knowledge, or anything more than a mere opinion. The means of information were equally accessible to both parties; and the expressions of opinion, however positive, by the agent, cannot, under such circumstances, be considered as a fraud. The same may be said with respect to the statements in relation to the means of the company to construct the road, the time of its completion, the profits to be derived from it, and the amount of the subscriptions which the stockholders would be required to pay. No reasonable man could ever become a stockholder in such a company, [256] thereby subjecting himself to pay his subscription, according to its terms and the law which governs it, and according to the charter which he is bound to know, and rely upon such statements of opinion to modify his liability. Such things are to be regarded as reasons which induced him to embark in the enterprise, but are not grounds for avoiding his contract; and, as he has the means of correct information, he cannot complain that he has acted upon erroneous advice. As to the allegation that the agent stated that subscriptions for stock might be paid in labor or provisions, — even if such an understanding could be incorporated into the contract by the agent, — it is not averred that any performance .in that way was offered, or that any damage has been sustained by the plaintiff in error by the refusal of the company to accept that mode of payment. With respect to the subscription of Nelson, the averments are in substance, that the agent represented to the plaintiff in error that Nelson had become a subscriber. He does not allege that he was thereby induced to subscribe, but merely that Nelson was falsely held out to the community by the agent as a subscriber. This allegation, therefore, appears to be immaterial. Upon the whole, it appears that he became a subscriber, relying upon opinions expressed to him by the agent, in relation to the resources of the company, the time of completion of the road, and its productiveness as stock to the stockholders. It is not alleged that the company have, by any fraud or neglect, failed to do what it was bound to do, and what was within its power, to complete the road and to make it profitable to the stockholders, or that the plaintiff in error has been deceived in anything which he might reasonably have expected, from becoming a stockholder. He must be presumed to have invested his money in the enterprise subject to all the hazards incident to it, and which a prudent man must necessarily anticipate; and if he has done so upon erroneous or even deceptive opinions in relation to matters open to his inquiry, though expressed by an agent of the company, it is his own misfortune or fault, and he has no right to complain. Let the judgment be affirmed.