ADAMS, District Judge,
after stating the case as above, delivered the opinion of the court.
Some argument was made at the bar, as well as in briefs, touching the regularity of the practice resulting in the judgment below. It is said that plaintiff pleaded facts in the complaint on which issue was joined in the answer. This is true, and, if there had been nothing more, the case should have been tried to the jury. But besides •the denial, the defendants pleaded a separate affirmative defense, [457]*457complete in itself, in the nature of a confession and avoidance of plaintiff’s cause of action. If that defense is good in law, the action is defeated, notwithstanding the general denial. It is also argued that the replication to the affirmative defense puts in issue certain averments of fact therein contained, and that the issue so made should have been tried to the jury. But manifestly, if the replication does not avoid the legal effect of the affirmative defense, it presents no issue of fact for the jury. The legal sufficiency of the affirmative defense, and of the replication in avoidance of it, are the real questions to be determined by the court.
It is also contended that the trial court was not warranted by any admissible practice in striking out the replication and rendering judgment on the pleadings. The record shows that the replication was stricken out and judgment rendered for defendants by one and the same order, and that no request was made by plaintiff’s counsel to file further or amended pleadings. Whether the learned trial judge was technically correct in striking out those parts of the replication specially applicable to phases of the answer other than the second defense, we need not discuss. If, on all the pleadings, taken together, defendants were entitled to judgment, a practice resulting only in such a judgment cannot be substantially wrong. In such circumstances, motion for judgment on the pleadings is a useful and recognized practice. Steinhauer v. Colmar, 11 Colo. App. 494, 55 Pac. 291; Humboldt Mining Company v. American Manufacturing M. & M. Company, 10 U. S. App. 415, 62 Fed. 356, 10 C. C. A. 415.
We are brought, then, to a consideration of the substantial and decisive questions involved in the case—:whether the affirmative defense, known in the pleadings as the “second defense,” is good in law, and, if good, whether it is avoided by the replication. The conclusion reached on these questions, if favorable to the defendants, will dispose of this case, notwithstanding any or all other assignments of error. This defense, fully detailed in the statement of the case, is substantially that even if defendants’ testator made the false representations concerning his mines, as charged in the complaint, the plaintiff was not injured thereby, and sustained no damages as- a result thereof.
The preliminary contract of April 27, 1899, between Stratton and Butcher, known as the “principal agreement,” and the subsequent ratification of it by the plaintiff corporation after its organization, disclose the purpose of the contracting parties to have been to organize a corporation in London with a capital of £1,100,000 sterling, divided into 1,100,000 shares, of £1 each, which, when formed, should purchase Stratton’s mines with 1,000,000 of these shares, leaving 100,000 of them unissued. The principal agreement bound Stratton to make the sale to the corporation when it should be or ganized, and undertook to bind the corporation, when so organized, to make the purchase on the terms therein stated, namely, for 1,-000,000 shares of its capital stock. Within a reasonable time after the execution of the principal agreement, and in conformity with its provisions, plaintiff corporation was organized with the capital [458]*458stock as contemplated. The supplemental tripartite agreement made after the incorporation of plaintiff bound the corporation to-make the purchase on the terms stated in the principal agreement Words cannot more clearly express what parties agree upon, than do the words employed in these contracts. Referring to the subject of the sale then under consideration, the parties say:
“The consideration for the said sale shall be the sum of one million pounds,, to be paid and satisfied by the issue and allotment to the vendor [Stratton], of one million shares óf one pound each of and in the said intended company credited as fully paid up to be numbered 1 to 1,000,000 inclusive.”
Nothing is found in either of these contracts remotely suggesting that the corporation should pay Stratton any money or further consideration for his mining properties, excepting the 1,000,000 shares-of its capital stock; and nothing is found in them making provision for any sale by Stratton of his stock, or for the disposition of the proceeds of such a sale, if one should be made. The contracts,, in plain and unambiguous language, provide for the sale by Stratton of his mines for a fixed and definite consideration. It further appears that the sale was made by Stratton, and that 1,000,000-shares of its capital stock was allotted and issued to him by the corporation pursuant to the terms of the contracts; that the corporation has never issued any of the remaining authorized stock, except 7 shares to qualify the incorporators; and that, when Strattontransferred his mining properties to the corporation and received his allotment of shares, the corporation had no assets, except the properties so transferred to it, and never has since acquired any other assets, except the issues, profits, and emoluments accruing-from the operation of the mines so acquired from Stratton.
Such is the state of facts upon which the defendants base their second defense, and they contend that it appears that all that Stratton received from the corporation was shares of stock representing-in kind exactly what he transferred to it, and that, as a result, the corporation was not injured or damaged by any false representations, if made by Stratton. If the facts so stated are true—and for present purposes they must be so taken—it appears that, at the time Stratton conveyed his mines to plaintiff corporation, it had -no goodwill or prestige in business, or other assets that gave its stock any value over and above that which the properties actually conveyed by Stratton gave to it. In actions of deceit, injury or damage to-the plaintiff, as a result of the fraudulent representations, is a necessary prerequisite to recovery. Fraudulent representations and deceit, if not productive of injury or loss, are moral, not legal, wrongs; or, as often expressed by law writers, “Fraud, without damage, or damage without fraud, gives no cause of action.” In Ming v. Woolfolk, 116 U. S. 599, 602, 6 Sup. Ct. 489, 491, 29 L. Ed. 740, the Supreme Court, quoting from Baron Parke in Watson v. Poulson, 15-Jurist, 1111, says:
“The requisites to sustain an action for deceit are the telling of an untruth knowing it to be an untruth, with intent to induce a man to alter his condition, and his altering his condition in consequence, whereby he sustains damage.”
[459]*459After citing several cases in support of the proposition so announced, the court, speaking of the case before it, says:
“Considered, therefore, as an action for a deceit, it is plain that the case must fail, for, conceding the alleged representations to have been made by the defendant, and to have been false, the plaintiffs were not induced thereby to change their condition, and, moreover, have suffered no damage."
To the same effect is the case of Marshall v. Hubbard, 117 U. S. 415, 6 Sup. Ct. 806, 29 L. Ed. 919.
In order now to determine whether plaintiff, in the circumstances disclosed by the second defense, sustained any injury or damage, it is necessary to advert to the rule governing the measure of recovery in such cases. Whatever may be the measure of damages in actions of deceit in other courts, the rule laid down by the Supreme Court of the United States and this court, in harmony therewith, is that the measure of damages is not the difference between the contract price and the reasonable market value, if the property sold or exchanged had been as represented to be. As said by Mr. Chief Justice Fuller in the case of Smith v. Bolles, 132 U. S. 125, 129, 10 Sup. Ct. 39, 40, 33 L. Ed. 279:
“The measure of damages was not the difference between the contract price and the reasonable market value if the property had been as represented to be. * * * What the plaintiff might have gained is not the question, but what he had lost by being deceived into the purchase.”
In Rockefeller v. Merritt, 76 Fed. 909, 22 C. C. A. 608, 35 L. R. A. 633, this court had the same question before it, and there entered into an exhaustive consideration of the authorities, and announced the rule that:
“The true measure of the damages suffered by one who is fraudulently induced to make a contract of sale, purchase, or exchange of property is the difference between the actual value of that which he parts with, and the actual value of that which he receives under the contract. It is the loss which he has sustained, and not the profits which he might have made by the transaction.”
Smith v. Bolles, supra, and a large number of other cases, are there cited in support of the proposition announced.
The case of Sigafus v. Porter, 179 U. S. 116, 21 Sup. Ct. 34, 45 L. Ed. 113, was an action brought to recover damages for deceit alleged to have been practiced by the defendant in the sale of a gold mine to the plaintiff. Mr. Justice Harlan, in delivering the opinion of the court, reviewed extensively the authorities, both English and American, concerning the true measure of damages in such cases,, quoted approvingly from the opinion of Judge Sanborn in Rockefeller v. Merritt, supra, and finally concludes as follows:
“We adhere to the doctrine of Smith v. Bolles. Upon the assumption that the property was not worth what the plaintiffs agreed to give for it, they weye entitled to have * * * a verdict and judgment representing in damages the difference between the real value of the property at the date of its sale to the plaintiffs and the price paid for it, with interest from that date, and, in addition, such outlays as were legitimately attributable to the defendant’s conduct, but not damages covering ‘the expected fruits of an unrealized speculation.’ If the plaintiffs were inveigled by the fraud of the defendant into purchasing this mining property, a judgment of the character [460]*460just indicated would make them whole on account of the loss they sustained. More they are not entitled to have at the hands of the law in this action.”
Applying the rule thus authoritatively laid down, plaintiff’s only injury or damage in this case is the difference between the value of the 1,000,000 shares issued by it to Stratton, and the value of the property received in exchange therefor from Stratton. If that which plaintiff received is equal in value to that which it paid, clearly, plaintiff sustained no injury by the transaction.
It conclusively appears from the facts pleaded in the second defense that all the issued capital stock was allotted to Stratton for his mines, and that this stock had no other or greater value than the properties acquired from him. The plaintiff acquired the legal title by deed, and returned to Stratton, in other evidences of title, all the beneficial interest in the same property, and nothing more. It therefore gave back, in substance, that which it received, and no more.
Argument is made that the 7 shares allotted from the reservation for working capital to the 7 incorporators changes the situation; but this suggestion does not impress us. The value of the 1,000,000 shares allotted to Stratton was not increased by the allotment of the 7 shares to the incorporators. The second defense under consideration contains an averment (admitted in the replication) that, at the time of Stratton’s conveyance to the corporation, it had no assets or property other than the mining properties conveyed to it. Obviously, therefore, the transfer of these 7 shares to the incorporators was a formality resulting in no substantial increase of assets.
The conclusion reached on this part of the case follows so logically and irresistibly from the established rule governing the measure of damages in actions of deceit that we do not deem it necessary to attempt to harmonize or apply the many English and American cases to which our attention has been called. It is sufficient to say that they, generally speaking, are suits to recover from stockholders unpaid portions of capital stock, or to hold directors liable for fraudulent disposition of capital stock or fraudulent overvaluation of property for the purpose of defeating some constitutional or statutory enactments against fictitious issues of stock, or to hold promoters to liability for secret profits, and other cases of like kind. We have carefully considered those cases, as well as the arguments of counsel resting upon them, and find in the equitable principles announced in them nothing in conflict, but much in harmony, with the conclusion reached in this case. This is a case (in many respects different from any of them) in which a corporation, as an entity distinct from its shareholders, sues defendants, in an action at law, for an injury which it claims to have sustained by reason of fraud and deceit practiced directly upon it by their testator, in the sale of property by him to the corporation.
For the reasons given, we are unanimously of opinion that the second defense, as pleaded, is a good defense to plaintiff’s cause of action.
The question remaining for consideration is whether this defense is avoided by facts pleaded in the replication. The contention, as stated in the .replication, and as argued by counsel, is that contemporaneously with the execution of the Butcher “principal agreement” and the tripar[461]*461tite or “supplemental agreement,” which form the basis of the second defense, certain other agreements, which are fully set forth in the replication, were made by Stratton and others, which disclose that he was to, and did, receive from the plaintiff corporation $10,000,000 in money, and not 1,000,000 shares of its capital stock, as the consideration for the sale of his mining properties. What, now, do these agreements disclose? The Reed agreement of February 2, 1899, seems to be the initiation of Stratton’s undertaking. Its preamble discloses the ostensible general purpose to have a corporation formed under the British companies acts by Reed (who is called the “promoter”), and his associate, the Venture Corporation, Limited, “for the purpose of acquiring [Stratton’s mining properties] that the same may be worked, mined and operated thereby; and that the shares of the said Corporation so to be formed may be sold on the London market.” This agreement then provides for the organization of a corporation with a capital of ¿3,000,-000 sterling, divided into 3,000,000 shares, of ¿1 each; that 2,500,000 of these shares should be allotted to Stratton “in payment for” his mining properties; that Reed should have an option, for and during 18 months, to purchase these shares from Stratton at prices specified, and that in the meantime these shares, after allotment to Stratton, should be deposited with some depositary in London, with provisional transfers-ready for convenient delivery to purchasers; and that, if any of the shares should remain unsold at the expiration of the 18 months, the same should be returned to Stratton. The next agreement, of February 9, 1899, is between Reed and the Venture Corporation, Limited. It recites by way of preamble the substantial provision of the Reed agreement, and then obligates the Venture Corporation to proceed with the organization of the proposed corporation in place of Reed. It then assigns to the Venture Corporation Reed’s option to purchase Stratton’s stock in the contemplated corporation, carefully providing for substantial participation by Reed in the commissions to be earned on sales to be made by the Venture Corporation.
Each of these agreements, it will be noticed, discloses two purposes— one for organizing a corporation, and the sale of Stratton’s mines to it for a certain number of shares of its stock, and the other for selling these shares, when secured, on the London market. There is nothing in either of them remotely suggesting that the corporation, when organized, should have anything to do with the sale of the stock when issued, or that the sale should be avoided if the stock should not be sold. On the contrary, the sale was to be complete by itself; the title was to be fully vested in the corporation when and as soon as the agreed number of shares should be issued to Stratton. Stratton was to assume the chances of his agents making the sale of his stock. In so far as they failed to do so or to exercise their option within 18 months, the stock was to be delivered by the depositary back to Stratton. Moreover, it does not seem to have been intended in these early agreements that $10,000,000 should be the measure of Stratton’s receipts for stock sold. On .the contrary, his minimum was to be ¿2,000,000, and his maximum that much plus 60 per cent, of all moneys-realized from the sale of his stock over and above its face value. In other words, the original scheme was to sell the mines for a certain [462]*462fixed amount of the capital stock, and afterwards to so deal with this stock on the London market as to realize for Stratton from credulous investors (not from the corporation) the largest possible sum. Accordingly, giving to these first agreements, which, although abandoned, are relied upon by counsel as disclosing the original purpose of the parties, their plain and natural meaning, it is apparent that the original purpose was to make separate transactions of the sale of the mines to the corporation, and the sale of the stock to the public. In these initiative agreements we find nothing suggestive of the sale of the mines to the proposed corporation on any other terms than for a specified number of its corporate shares, and nothing suggesting that the corporation should have anything to do with the sale of the stock to be issued to Stratton. But whatever may have been the purpose of these first agreements, they were never carried into execution, but were abandoned, and the new scheme evidenced by the contracts of April 27th and May 4th was devised. These last-named contracts make no provision for disposing of the stock which Stratton should receive for his mines. They make no mention of Reed or the Venture Corporation. They relate exclusively to the details of the organization of an English corporation, and to the terms and conditions of the proposed sale by Stratton to it. The first or “principal agreement” was one whereby Stratton contracted with Butcher, a promoting agent, to sell his mining properties to a corporation to be formed. The consideration was fixed in unambiguous terms as “one million pounds to be paid or satisfied by the issue and allotment to the vendor of one million shares of one pound each of and in the said intended company, credited as fully paid up, numbered one to one million inclusive.” The next or supplemental agreement was between Stratton, Butcher and the corporation created pursuant to the principal agreement, wherein the parties make the following recital:
“Whereas, by the principal agreement, it is provided that one million shares of one pound each in the purchasing company * * * shall be allotted to the vendor as consideration for the sale of the properties therein mentioned. * * *>>
Following this and other recitals, the principal agreement made by the promoting agent is in terms adopted and ratified by the newly created corporation, and Butcher, the promoter, is discharged from all liability imposed upon him by the principal agreement. These last agreements are complete in themselves, and provide for the organization of a corporation, and the sale of Stratton’s mining properties to it, and nothing more.
Another contract, of April 27th, between Stratton and the Venture Corporation, relates primarily to the disposition of Stratton’s stock. It refers to the agreement of same date between Stratton and Butcher, and recites that thereby “the vendor [Stratton] has agreed to sell to the limited company to be formed as therein mentioned the properties therein described at the price of £1,000,000 to be satisfied by the allotment of 1,000,000 fully paid shares of £1 each in the said company, which is to be called ‘Stratton’s Independence, Limited,’ * * and then, for certain considerations in the nature of services to be rendered and advances to be made by the Venture Corporation, an option [463]*463for the period of 18 months is given it by Stratton to effect sales of his 1,000,000 shares, or any part of them, on the terms, namely, £1.16.0 per share for the first 666,666 shares, and £2.8.0 for the remaining 333,334 shares, net to Stratton; the Venture Corporation to retain for its commissions all it may realize above those figures, except that, if it should sell any of the shares for a price in excess of £2.10.0, three-fifths of such excess should be accounted for to Stratton. Further details of this agreement are unnecessary for the purposes of this opinion.
As in the original abandoned contract between Stratton and Reed, so in this, a depositary in the city of London is provided for, to hold Stratton’s shares, with transfers so arranged as to permit of ready and convenient delivery whenever sales should be made. As in that contract, so in this, it was distinctly provided that, if any of Stratton’s shares should remain unsold at the end of the option period, the same should be immediately delivered back to Stratton. As in that, so in this, a minimum of Stratton’s net returns for stock to be sold under the option was fixed, but’ the maximum depended upon the success of the undertaking. It thus appears that Stratton, by a contract made between him and plaintiff corporation, agreed to, and did, sell his mines for 1,000,000 shares of its capital stock, and that by another separate contract between Stratton and the Venture Corporation, with which the plaintiff corporation had no concern, he agreed that the last-named corporation might make an attempt to sell these shares for him so as to realize a liberal commission for itself in so doing, and as much over a fixed minimum as possible for Stratton. In the event the attempt should fail, Stratton was to keep his stock, or otherwise alienate it, as he pleased. Whether the proposed attempt to sell it succeeded or failed was of no concern to the plaintiff corporation. The mines belonged to it, and the shares to Stratton. They took their chances as to value and the ultimate outcome of the property mutually exchanged.
After the stock was issued to Stratton pursuant to the terms of these executory contracts, and when he, by the document of date June 9, 1899, delivered his 1,000,000 shares to the depositary, agreed upon, with instructions to facilitate their sale by the Venture Corporation, he stated what seems to us to be the true situation resulting from all the prior contracts, as follows:
“Except as far as may be necessary for the carrying into effect the arrangements herein, the said shares are for all purposes to be considered the absolute property of me the said W. S. Stratton and all dividends payable in respect of such shares, except those as are sold cum dividend, are to be remitted by you to me as I may direct and I or my nominees or my representatives are and am to have the sole right of voting in respect of the said shares or such of them as may from time to time be unsold.”
By the contract of April 18, 1900, between Stratton and the Venture Corporation, the latter, after reciting that it had already disposed of 592,500 shares of Stratton’s stock under the option contract of date April 27,1899, enters into an engagement, and purchases from Stratton all his remaining stock at such a sum as, with that before then received by Stratton for sales made under the option contract, aggregates the total sum of $10,000,000. In other words, this final contract shows [464]*464that, as. a result of all the contracts relied upon by plaintiff in its replication, and of the proceedings taken thereunder, Stratton ultimately received $10,000,000 for his stock in the plaintiff corporation. But certainly this did not come about proximately by reason of the contract of-sale between him and the plaintiff corporation, but rather as a result of the option contract and its successful execution. Whether Stratton’s contract with the corporation was for an exchange of his mines for its stock, or for a sale of his mines to it for ¿1,000,000, to be satisfied by an issue of a million shares of its stock (and certainly it is one or the other), when the contract was executed and the properties exchanged an indefeasible title to the mines was secured by the corporation, and a like indefeasible title to the stock was secured by Stratton. Plaintiff corporation thereafter, as an independent entity, could operate, sell, or otherwise dispose of its properties; and Stratton thereafter, without the consent or co-operation of the corporation, could retain or alienate his stock at pleasure. If, in alienating any of it, he either directly or indirectly deceived purchasers, to their injury, by false representations concerning its value, he became liable to such purchasers therefor. Any money which he received for stock sold came from the vendees of the stock, and not from the plaintiff corporation. Moreover, plaintiff, as an artificial entity, owed no fiduciary obligations to the shareholders, except to protect their legal title to shares owned by them by giving proper attention to transfers and reissues of shares. 2 Thompson’s Commentaries on the Taw of Corporations, 2, § 2486, and cases cited. It was not the duty or within the power of plaintiff corporation to prevent the Venture Corporation or Stratton from selling any of the stock in question for any price they could obtain, and any rights of action which might accrue to any purchaser by reason of representations made in so doing in no manner redound to plaintiff.
In view of the earnest contention of plaintiff’s counsel that all the contracts and documents set out in the replication, when taken together and properly understood and interpreted, lead to the conclusion that the sale was made to plaintiff corporation for $10,000,000 in money, we have given to them our most patient and careful consideration. We have given the language employed its fair and natural meaning; we have considered every fair and reasonable inference that may be drawn from them; we have regarded the rule of construction requiring the consideration of all parts of written documents in their relation to each other and to the object sought to be accomplished; and, as a result, we are unable to find any substantial support for the averment in the replication that the real transaction was the plaintiff sold and disposed of its capital stock for $10,000,000, and paid over that sum to Stratton for his mining properties. It appears incontrovertibly that plaintiff had nothing to do with the sale of its stock after it was once issued to Stratton, that it never received or had any interest in any of the proceeds of such sale, and that the $10,000,000 which Stratton ultimately received as a result of such sale did not directly or indirectly come from the plaintiff, but came from divers individuals who purchased the stock from him. Plaintiff therefore, cannot occupy the attitude in this case of having paid any money to Stratton. It exchanged 1,000,000 [465]*465shares of its capital stock for his mines. What money Stratton received came from independent investors in that stock, to whom he may or may not be under obligations.
We have also had regard to all facts well pleaded in the replication, other than the contracts and documents set out, and, as a result of all, we are unable to find anything in the replication to the second defense which is sufficient in law to avoid its legal effect.
Many other questions are presented by the assignment of errors, but their decision either way cannot make the second defense bad or the replication good.
The conclusion is that the learned trial court committed no error in rendering a judgment on the pleadings in favor of the defendants. Its judgment is accordingly affirmed.