McNair v. Southern States Finance Co.

191 N.C. 710
CourtSupreme Court of North Carolina
DecidedMay 12, 1926
StatusPublished
Cited by6 cases

This text of 191 N.C. 710 (McNair v. Southern States Finance Co.) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McNair v. Southern States Finance Co., 191 N.C. 710 (N.C. 1926).

Opinion

Clarkson, J.

Succinctly, tbe main material contentions of plaintiff and defendant, tbe Finance Company, are: On tbe part of plaintiff: That prior to 9 May, 1923, J. J. Quinby came to James L. McNair and represented that be was agent of Tom G. Taylor, who was tbe duly appointed agent of tbe Finance Company, to organize to sell its preferred and common stock. J ames L. McN air entered into tbe negotiations with Quinby and purchased tbe stock on 9 May, 1923, for bis father, tbe plaintiff. Tbe false and fraudulent representations which be relied on and which induced him to purchase tbe 4,000 shares of common stock of the company are: (1) That it was a new corporation then being organized by Tom G. Taylor & Co.; (2) that none of tbe common stock bad been sold or disposed of or would be sold or disposed of for less than $2.50 per share; (3) that all tbe provisions of law with reference to organization and sale of stock bad been complied with; (4) contracting and agreeing that in tbe event of bis failure to dispose of tbe stock at a large profit, within six months, plaintiff would be repaid tbe sum of $10,000 with interest from 13 May, 1923; (5) all of tbe representations made by Quinby, agent of Finance Company, were false, with knowledge of their falsity, with intent to deceive and actually did deceive plaintiff, and be was thereby induced to buy tbe stock; that plaintiff offered frequently to return tbe stock, as soon as be discovered tbe fraud, and demand tbe payment of tbe purchase price and interest. Plaintiff’s evidence abundantly tended to support these contentions.

On tbe part of defendant, Finance Company: (1) Tbe Finance Company admitted tbe contract for tbe' purchase of 4,000 shares of tbe common stock was executed on 9 May, 1923, by James L. McNair, for plaintiff; denied all allegations of fraud; that tbe books of tbe corporation show there was no fraud, and that any representation made was true; (2) that in tbe agreement of purchase of tbe stock by tbe plaintiff was tbe following: “It is understood and agreed that this contract contains tbe entire agreement between tbe purchaser, whose signature appears below, and Tom G. Taylor & Company, and no agent, representa-^ [715]*715tive or any other person bas any power to change, modify or make any new conditions, statements, promises or agreements whatever.” (3) That J. J. Quinby was not the agent of the Finance Company or Tom G. Taylor, and was not authorized to make any representation or contract binding on Finance Company, and it had no knowledge of any alleged act or thing done or said by Quinby and is not liable thereon; (4) that plaintiff is bound by the terms of the written contract and estopped to deny them; “that J. L. McNair was induced to enter into this contract, for that he telephoned Jas. 0. Walker, president of the company, and Walker replied that he was going to give .the matter his personal attention, and at least one-half of his time. The defendant contends that that was one inducement to enter into the contract, and that another inducement was at the time he entered into the contract for the purchase of the stock and before he ever entered into it he had a contract and agreement with Tom G. Taylor & Company, that they would sell stock for him, for which he was paying ten thousand dollars, would sell it in six months for him for thirty thousand dollars, and upon failure to do that that they would refund him his money, the ten thousand dollars that he had paid for the stock with three hundred dollars, being the interest for six months, from 13 May,, making ten thousand and three hundred dollars.”

The defendant introduced no evidence, but relied, in part, on plaintiff’s evidence and cross-examination of plaintiff’s witnesses and the written evidence in the case, to establish its defense.

The record is voluminous, but from a thorough digest we think the only material assignments of error to be considered are to the allegations and proof as to actionable fraud and the agency of J. J. Quinby. These go to the very heart of the action and on which the defendant, Finance Company, predicates its motion, under C. S., 567, at the close of the plaintiff’s evidence for judgment as in case of nonsuit.

The issue as to fraud: “Was such subscription procured by means of misrepresentation and fraud as alleged in the complaint?”

' The court below charged as follows: “The burden of this issue, gentlemen, is upon the plaintiff to satisfy you by the greater weight of the evidence that such subscription was procured by means of misrepresentation and fraud. Fraud may be defined as ‘any trick or artifice where a person by means of false statements, concealments of material facts or deceptive conduct which is intended to and does create in the mind of another an erroneous impression concerning the subject-matter of a transaction whereby the latter is induced to take action or forbears from acting with reference to a property or legal right he has which results to his disadvantage and which he would not have consented to had the impression in his mind not been created and in accordance with the real [716]*716facts.’ ” On this issue the court below states that the defendant asked for the following instructions, which in obedience to the request were given: “The burden is on the plaintiff to prove by the greater weight of the evidence that Quinby not only made such representations, but also made them with the knowledge of their falsity or recklessly and wilfully with intent to deceive and defraud the plaintiff, and unless the plaintiff has proved this by the greater weight of the evidence, you will answer the second issue No. That if the jury should find that the plaintiff was induced to subscribe for said stock by the representation that James 0. Walker was president of the company and would devote one-half of his time to the affairs of the company you are instructed to answer the second issue No.”

It has been hard for the courts to lay down any exact definition of fraud or rule to apply to the varying cases, but to fit the contested facts in the present controversy, we think the definition as laid down by the court below correct. In fact, the Finance Company made no exception to the rule as to fraud as charged by the court. Evans v. Davis, 186 N. C., 43; Machine Co. v. Feezer, 152 N. C., 516; Pate v. Blades, 163 N. C., 267; Massey v. Alston, 173 N. C., 215; Bank v. Yelverton, 185 N. C., 318; Sanders v. Mayo, 186 N. C., 109; Oil Co. v. Hunt, 187 N. C., 159; Indemnity Co. v. Tanning Co., ibid., 190; Wolf Co. v. Mercantile Co., 189 N. C., 322; Furst v. Merritt, 190 N. C., 397.

The defendant, Finance Company, relies on Pritchard v. Dailey, 168 N. C., p. 332. It is there said: “The material elements of fraud, a commission of which will justify the court in setting aside a contract or other transaction, are well settled. First, there must be a misrepresentation or concealment; second, an intention to deceive, or negligence in uttering falsehoods with the intent to influence the action of others; third, the misrepresentations must be calculated to deceive and must actually deceive; and, fourth, the party complaining must have actually relied upon the representations.” In that case the Court said the representations of the defendant seemed to be what are called “promissory representations” or “opinion representations” — not so in the present case. In the Pritchard case,

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Bluebook (online)
191 N.C. 710, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcnair-v-southern-states-finance-co-nc-1926.