McDonald v. Smith

102 N.W. 668, 139 Mich. 211, 1905 Mich. LEXIS 909
CourtMichigan Supreme Court
DecidedFebruary 28, 1905
DocketDocket No. 47
StatusPublished
Cited by36 cases

This text of 102 N.W. 668 (McDonald v. Smith) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDonald v. Smith, 102 N.W. 668, 139 Mich. 211, 1905 Mich. LEXIS 909 (Mich. 1905).

Opinion

Carpenter, J.

Plaintiff brings this suit to recover damages resulting from an alleged fraud perpetrated by defendants. It is plaintiff’s claim that he was the victim of a fraudulent conspiracy planned and executed by defendants and their confederates. This scheme of fraud, which plaintiff claims is established by the testimony, may be briefly described as follows:

A corporation was formed, called the “ B-T Company,” [215]*215whose sole property consisted of a formula for the manufacture of a worthless medicine called the “ Hog Cholera Medicine.” Partly by false representations, and partly by promises which were never intended to be, and which were not, performed, defendants and their confederates induced plaintiff to believe that said worthless medicine was a sure cure for the disease known as “ hog cholera,” and to invest ■from time to time in the stock of said company money and property of the aggregate value of $7,300. Said money and property did not go to the corporation — whose organization was merely a step in the scheme of fraud — but went directly to defendants or to their confederates. The liability of defendant Smith is asserted, not on the ground that he himself defrauded plaintiff, but on the ground that he was a party to a fraud perpetrated by his codefendants and their confederates. The evidence that those codefendants and their confederates conspired to defraud plaintiff is very convincing, and there is evidence that Smith was on terms of familiar intimacy with them at the time they were most active in perpetrating the fraud. It also appears that certain stock in the Hillsdale Manufacturing Company, which was the first property fraudulently obtained from plaintiff, passed almost immediately to the ownership of defendant Smith. Smith contends that he paid full value for this stock. He paid for it in part by a transfer of land in which he had a mortgage interest subject to redemption. If we value this property — and we must so value it — at what was unpaid on the mortgage, Smith paid for the stock only two-thirds of its value. We are therefore bound to say that defendant Smith acquired this stock for two-thirds of- its value. Later, when plaintiff was contemplating his last investment in the worthless stock, defendant Smith told him that he had investigated the matter, and would buy his stock at 150 per cent, of its par value. It is impossible to believe that this offer — which plaintiff could not accept because of an arrangement he had made with defendant Cummins — was made in good faith. Still later, defendant Smith, as plaintiff’s testimony tends to [216]*216prove, purchased, for less than its value, a note given by-plaintiff and his mother to secure payment of part of an obligation arising from the last fraudulent transaction. (This note is involved in the succeeding suit, and the particulars relative to its execution will there be more fully explained.) On this issue plaintiff obtained in the lower court a verdict and judgment against all the defendants. We are asked to review that judgment upon a writ of error taken out by defendant Smith. He makes numerous complaints, which, so far as needful, will be stated and discussed in this opinion.

1. It is contended that the declaration, notwithstanding the fact that defendant has pleaded the general issue, was insufficient to justify the introduction of any testimony. Defendant’s principal objection to the declaration — and his other objections are of like character — is that it contains no averment that the alleged false representations induced plaintiff to part with his property. The declaration, which consists of 56 printed pages, does, however, clearly state a cause of action. If the averment in question is not charged in precise language, it is charged by inference. We therefore hold that defendant should have raised this objection —and this is true of the remainder of his objections to the declaration — by special demurrer, and that it cannot be considered after he pleaded the general issue. See Briggs v. Milburn, 40 Mich. 512; Aldrich v. Chubb, 35 Mich. 359; Sutton v. Van Akin, 51 Mich. 465.

2. Appellant claims that a verdict should have been directed in his favor. We dispose of these claims by saying:

(a) It cannot be said that all the alleged false representations were expressions- of opinion and therefore not actionable. Some of them, particularly the representation that the worthless medicine was a sure cure for hog cholera, were, under our decisions, misrepresentations of fact and actionable. See Nowlin v. Snow, 40 Mich. 699; Totten v. Burhans, 91 Mich. 495; Stoney Creek Woolen Co. v. Smalley, 111 Mich. 321.

[217]*217(6) The evidence justified the jury in finding that defendant Smith was a party to the fraudulent conspiracy.

(c) As the evidence in this case justified the inference that the corporation whose worthless stock plaintiff acquired was only an instrument in the scheme of fraud by which defendants and their confederates obtained plaintiff’s. property for their own exclusive use, the statute (section 9518, 3 Comp. Laws) requiring representations “made,concerning, etc., any other person * * * be made in writing,” has no application. See Bush v. Sprague, 51 Mich. 41.

3. It is contended that the court erred in many particulars in admitting testimony offered by plaintiff.

(a) Complaint is made because the court permitted plaintiff to prove various acts of misconduct on the part of defendant not charged in the declaration. Plaintiff did not claim that any of these acts, which were not averred constituted — and none of them did constitute — a cause of action. It is 'possible that some of these acts had no relation to the fraud complained of. If so, evidence to prove such facts should have been objected to on the ground of irrelevancy. That objection is not raised by defendant’s complaint that they are not averred in the declaration, nor by any other complaint in defendant’s brief. Assuming those acts of misconduct to be, as most of them were, relevant evidence to prove the charge of fraud, the complaint under consideration -is answered by the elementary rule that the plaintiff should not state in his declaration evidence which he intends to offer in support of its averments.

(b) Plaintiff was permitted to prove that, in connection with the other fraudulent representations, defendants promised him that he should be secretary and treasurer of the newly-formed corporation, and receive therefor a salary of $1,200 per year. Complaint is made because plaintiff was permitted to prove that this promise was not in fact performed. In support' of this complaint defendant relies upon Hubbard v. Long, 105 Mich. 442. In that case plaintiff charged that defendant had fraudulently in[218]*218duced him to purchase stock in a bona fide and operating corporation. He was promised a position in this corporation at a salary of $25 per week. He was permitted to prove the breach of this promise, and what he had been earning before he purchased his stock. This court held it was error to permit this testimony to be introduced, on the ground that a breach of promise “is not of itself either fraud or the evidence of fraud. ” That decision does not apply in a case like that at bar, where a fraud has been accomplished, in part by false representations and in part by false promises.

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Cite This Page — Counsel Stack

Bluebook (online)
102 N.W. 668, 139 Mich. 211, 1905 Mich. LEXIS 909, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdonald-v-smith-mich-1905.