Osborne v. Holt

114 S.E. 801, 92 W. Va. 410, 1922 W. Va. LEXIS 55
CourtWest Virginia Supreme Court
DecidedNovember 28, 1922
StatusPublished
Cited by13 cases

This text of 114 S.E. 801 (Osborne v. Holt) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Osborne v. Holt, 114 S.E. 801, 92 W. Va. 410, 1922 W. Va. LEXIS 55 (W. Va. 1922).

Opinion

Ritz, Judge:

The plaintiff brought this suit to recover damages claimed to have been sustained by him because of false and fraudulent representations made to him by the defendants in the purchase of certain stock. He had judgment in the court below, and the defendants bring the ease here by writ of error.

It appears that in the spring of 1917 the defendants had an option on a tract of about one thousand acres of land in“ Lewis county which was supposed to be underlaid with valuable seams of coal. This option provided that they might purchase this land for the sum of one hundred thousand dollars. For the purpose of taking advantage of the option they determined to form a corporation in which stock would be sold to raise the money to pay for the land and carry on operations upon it. With this view they solicited subscriptions to the stock of the corporation to be formed for the purposes aforesaid, and procured such a subscription from the plaintiff, as well as from others. The corporation was subsequently formed in accordance with the design of the defendants, and the plaintiff’s stock issued to him in accordance with his subscription, and he paid therefor the par value thereof, to-wit, the sum of one thousand dollars. He shows that at the time and just prior to making the subscriptions, and as an inducement thereto, defendants represented to him that the option covered one thousand acres of land, and that the' same was underlaid with three seams of coal of the thickness of six, nine and eleven feet respectively; that the said coal was clean; that the eleven-foot seam was opened up upon the property, and that there were eleven feet of clean coal there that could be seen. As to the character of the coal in the other two seams, it does hot appear that any representations were made, except as to the thickness thereof, and it does not appear that the defendants represented that either of these seams were opened upon the property. In addition to making these representations to the plaintiff, the defendants, in 'procuring subscriptions to the capital stock, made the same representations to a number of other parties, and this was permitted to be shown upon the trial of the case. The com[413]*413pany formed for tbe purpose took over tbe property, and operations were begun tbereon, and carried on for a few months. It was discovered tbat there was no eleven-foot vein of coal upon the property; that the vein which had been opened up, instead of being eleven feet in thickness, was about seven feet in thickness, and that, instead of being clean coal, it was coal filled with slate and bone so as to only leave something like two feet of coal distributed in layers of varied thicknesses through the seven feet of thickness of the same. The company borrowed some five thousand dollars for the purpose of assisting in carrying on the operations, and executed'a deed of trust upon the property to secure the repayment of this sum. After several months the operations proved so unprofitable that it was found necessary to abandon them entirely. The coal produced was not merchantable, and the cost of production was so high that instead of being a profitable venture, a loss was incurred upon every ton produced. The holder of the lien for five thousand dollars, above referred to, foreclosed the deed of trust securing the same, and the property sold for just about enough to discharge this debt, and the company was left without anything. The plaintiff then instituted this suit against the defendants who secured his subscription to the stock of said company, and claimed to be entitled to recover the damages. sustained by him on the ground that said subscription was induced to be made by false representations made to him by the defendants. On the trial of the case the plaintiff testified to representations made to him as above stated, and introduced a number of other witnesses who testified that similar representations had been made to them by the defendants for the purpose of inducing them to subscribe to the stock of said company. He also proved the facts above stated in regard to the actual thickness,of said seam of coal, and as to its inferior quality, and the foreclosure of the lien against the property rendering the stock valueless. Upon this state of the case the defendants moved the court to strike out the plaintiff’s evidence and direct a verdict in their favor. This motion, the court overruled. The defendants declined to introduce any evidence, [414]*414and the plaintiff moved the court for an instruction to find in his favor the damages sustained by him, which instruction the court gave over the objection of the defendants. The jury found a verdict in the plaintiff’s favor for the sum of $1256.33. The motion to set aside this verdict was overruled, and the judgment complained of rendered thereon.

The defendants insist that they are entitled to have this judgment reversed on this writ of error; first, upon the ground that the court admitted improper evidence to go to the jury,. that is, evidence of representations made to other parties similar to those made to the plaintiff; second, upon the ground that it does not appear that the defendants knew that the representations made by them were not true at the time they were made; third, on the ground that the representations proved to have been made amount to no more than expressions off opinion, and as such could not be the basis of a right of recovery in an action for fraud and deceit; fourth, upon the ground that the plaintiff participated in a meeting of tfie stockholders of the corporation whose stock was sold to him by the defendants, at which meeting an order was passed to the effect that “several stockholders have investigated the property in question and authorized the purchase of it”; and lastly, that even though the representations proved to have been made might be construed as representations of fact, and not expressions of opinion, they were not necessarily susceptible of that construction, wherefore the question, what construction should be placed upon them under the circumstances, was for the jury, and the court should have submitted that question to the jury instead of directing a verdict in the plaintiff’s favor. We will discuss these questions in the order above stated.

Was it error for the court to admit in evidence testimony of witnesses to show that representations were made to> them similar to those made to the, plaintiff, which induced his subscription to the stock? It is argued that it does not appear that there was any purpose on the part of the defendants that these representations should be communicated to the plaintiff. In fact, it appears that some of them were made [415]*415after tbe plaintiff made the subscription to the stock of the proposed corporation. It is quite true that as a basis for recovery in this case this evidence was not competent. The plaintiff did not, however, introduce this evidence for the purpose of basing a recovery thereon. The recovery sought by him was based upon the representations made directly to him by both of the defendants. This evidence was introduced simply for the purpose of showing scienter, or the likelihood that the representations as testified to by the plaintiff were actually ma,de by the defendants. Of course, in the absence of any denial upon their part that they did make the representations to which the plaintiff testified, this evidence could have little weight in the case, but at the stage of the trial at which it was offered, of course, the plaintiff could not tell that the defendants would present no denial of the evidence offered by him.

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Bluebook (online)
114 S.E. 801, 92 W. Va. 410, 1922 W. Va. LEXIS 55, Counsel Stack Legal Research, https://law.counselstack.com/opinion/osborne-v-holt-wva-1922.