JUDGE GRACE
delivered the opinion op the court.
This is an appeal by J. G. Trimble from a judgment of the Montgomery Circuit Court against'him in favor of Mrs. E. J. Reid, for the sum of $1,525.
This suit was filed by appellee, alleging substantially the following state of fact: That in February, 1887, and in July, 1887, she purchased of defendant, J. G. Trimble, thjrtythree shares of stock of the Exchange Bank of Mt. Sterling, Ky., at the sum and price of $120 per share, and paid him for same. That at the time of said purchase, and in order to induce appellee to make same, Trimble stated that said stock was worth $120 per share; that the book value of same ,was $110 to $115 per share; that said bank had regularly declared a semi-annual dividend of four per cent.
And appellee further charges that appellant being the president of said bank at the time, on a salary, had, at the regular semi-annual periods next before each of said sales, caused to be published the card statement of the condition of said bank, sworn to by the cashier and endorsed on the back by the president and the directors of said bank, calling attention to same and soliciting business on the faith of same. That in this statement were gross errors affecting [715]*715the value of said stock in this, that of the loans and discounts, as published in said card, the sum stated exceeded by thirty thousand dollars or more the actual Iona fide loans and discounts held by said bank. That of the amount stated as held by said bank in over-drafts, some $7,500 was utterly worthless, old and stale claims. That in the item stated as due depositors same was stated at $7,500 less than was really due to same. That as to the undivided profits claimed as on hand in said bank at $14,000 to $15,000, that there were no undivided profits, and appellee said, that in these matters, both the personal obligations of appellant, made to induce this purchase, and the published statement of the bank, were false and untrue in point of fact, and that appellant knew them to be untrue at the time they were made and published, and were made with the fraudulent intent and purpose of deceiving the agent who purchased this stock for appellee, and of inducing him to purchase same at a price greatly in excess of its true and real value. That he, this agent, relied on said statement of the condition of the bank as well as on the personal representation of appellant in making said purchases.
Appellee says further that by reason of these several errors and false statements in this bank publication, the stock was not in fact and in truth worth more than $70 per share at the time of said purchase.
That the officers of the bank made the published statements, as charged (same being copied into the petition), was not denied by appellant, though he denied all knowledge as to the errors or false statements charged, to be in same, and denied all fraud, denied that he sold the first twenty-five shares to appellee at all. denied that he owned said twenty-five shares of stock, but said they belonged to V-Mrs. Allen, and that Thompson and Jones were her agents in the sale of [716]*716same. The evidence conduced to establish the truth of these latter statements. And denies that he had any personal interest in either of the sales, but admits that he acted as agent for Mize in the sale of the last eight shares of the •stock bought by appellee in July, 1887.
Neither Mize nor Mrs. Allen was made a party defendant in the suit.
This petition, it will be observed, was, in all its essential features, an action for deceit, and it was essential to allege, as it did, the false statements, whether personally or by the published statement of the bank. And that appellant knew them to be false when made, as well as that he made them with the fraudulent purpose to deceive appellee’s agent in making the purchases.
The petition thus framed presented a good cause of action, and had the case, as charged in the petition, been submitted to the jury by proper 'instructions we can not say that we would be inclined to disturb the verdict.
The instructions, however, did not follow the case as ■stated in the petition, but made a wide departure from same.
By the first and second instructions asked by appellee and given by the court, the jury were told, in substance, that it was admitted by the appellant that the statement of the assets and liability of the bank were published, as stated by appellee in her petition, substantially as pointed out heretofore. And that if the jury believed, from the evidence, that said published statement was untrue, to any material degree, and that said published statement was read and relied on by the plaintiff’s agent in making the purchase of the stock as described, then they will find for plaintiff.
Thus it will be seen omitting altogether from the question .submitted to the jury any inquiry as to whether the appellant Icneio that said statement was false, or whether he made [717]*717or published same with any fraudulent intent or purpose, either generally to, deceive the public or those dealing with the bank or dealing with each other on the faith of such published statement, or to particularly deceive the agent of appellee in purchasing this stock. This matter of knowledge of the falsity of these statements or some of them, going materially to the merits of the case, was of the very essence of this action of deceit, and upon which, and upon which only, could this action be maintained.
This defect in instructions one and two as pointed out is. not cured by the third instruction, also asked and given by the court. It is as follows: “No. 3. The court instructs the jury that it was the duty of defendant, Trimble, after having been president of the Exchange Bank for a reasonable length of time, to have known of any discrepancy, if any, between the note and bill register and the notes actually on hand, that the' jury may find existed at the dates of the purchases of the bank stock by plaintiff’s agent, Rogers, as aforesaid, and to have known of-any discrepancy-between the general and individual ledger, if any, such as the jury may find existed at that time, and to have known the amount of the worthless over-drafts, if any, such as the jury may find existed at that time. And the defendant, after such reasonable length of time, can, not rely upon lack of knowledge of any such discrepancies or Avorthless assets as a defense to this action.”
This instruction like the other withholds from the jury all investigation as to Avhether appellant at the time of the publication of these bank statements knew that they contained false statements, materially affecting the value of this stock sold, or that he published same with the fraudulent intent and purpose of deceiving either the general public, or of this particular purchaser.
[718]*718Thus abandoning the charge as made in the petition, and substituting in its stead a question of diligence or want of diligence in the discharge of his duty as president of the bank, for the one of knowingly making a false statement or of fraudulently making these false statements before referred to.
This departure from the allegations of the petition, and the substitution of one thing for the other, is attempted to be justified under the decision of this court in the case of Prewitt v. Trimble, 92 Ky., 176.
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JUDGE GRACE
delivered the opinion op the court.
This is an appeal by J. G. Trimble from a judgment of the Montgomery Circuit Court against'him in favor of Mrs. E. J. Reid, for the sum of $1,525.
This suit was filed by appellee, alleging substantially the following state of fact: That in February, 1887, and in July, 1887, she purchased of defendant, J. G. Trimble, thjrtythree shares of stock of the Exchange Bank of Mt. Sterling, Ky., at the sum and price of $120 per share, and paid him for same. That at the time of said purchase, and in order to induce appellee to make same, Trimble stated that said stock was worth $120 per share; that the book value of same ,was $110 to $115 per share; that said bank had regularly declared a semi-annual dividend of four per cent.
And appellee further charges that appellant being the president of said bank at the time, on a salary, had, at the regular semi-annual periods next before each of said sales, caused to be published the card statement of the condition of said bank, sworn to by the cashier and endorsed on the back by the president and the directors of said bank, calling attention to same and soliciting business on the faith of same. That in this statement were gross errors affecting [715]*715the value of said stock in this, that of the loans and discounts, as published in said card, the sum stated exceeded by thirty thousand dollars or more the actual Iona fide loans and discounts held by said bank. That of the amount stated as held by said bank in over-drafts, some $7,500 was utterly worthless, old and stale claims. That in the item stated as due depositors same was stated at $7,500 less than was really due to same. That as to the undivided profits claimed as on hand in said bank at $14,000 to $15,000, that there were no undivided profits, and appellee said, that in these matters, both the personal obligations of appellant, made to induce this purchase, and the published statement of the bank, were false and untrue in point of fact, and that appellant knew them to be untrue at the time they were made and published, and were made with the fraudulent intent and purpose of deceiving the agent who purchased this stock for appellee, and of inducing him to purchase same at a price greatly in excess of its true and real value. That he, this agent, relied on said statement of the condition of the bank as well as on the personal representation of appellant in making said purchases.
Appellee says further that by reason of these several errors and false statements in this bank publication, the stock was not in fact and in truth worth more than $70 per share at the time of said purchase.
That the officers of the bank made the published statements, as charged (same being copied into the petition), was not denied by appellant, though he denied all knowledge as to the errors or false statements charged, to be in same, and denied all fraud, denied that he sold the first twenty-five shares to appellee at all. denied that he owned said twenty-five shares of stock, but said they belonged to V-Mrs. Allen, and that Thompson and Jones were her agents in the sale of [716]*716same. The evidence conduced to establish the truth of these latter statements. And denies that he had any personal interest in either of the sales, but admits that he acted as agent for Mize in the sale of the last eight shares of the •stock bought by appellee in July, 1887.
Neither Mize nor Mrs. Allen was made a party defendant in the suit.
This petition, it will be observed, was, in all its essential features, an action for deceit, and it was essential to allege, as it did, the false statements, whether personally or by the published statement of the bank. And that appellant knew them to be false when made, as well as that he made them with the fraudulent purpose to deceive appellee’s agent in making the purchases.
The petition thus framed presented a good cause of action, and had the case, as charged in the petition, been submitted to the jury by proper 'instructions we can not say that we would be inclined to disturb the verdict.
The instructions, however, did not follow the case as ■stated in the petition, but made a wide departure from same.
By the first and second instructions asked by appellee and given by the court, the jury were told, in substance, that it was admitted by the appellant that the statement of the assets and liability of the bank were published, as stated by appellee in her petition, substantially as pointed out heretofore. And that if the jury believed, from the evidence, that said published statement was untrue, to any material degree, and that said published statement was read and relied on by the plaintiff’s agent in making the purchase of the stock as described, then they will find for plaintiff.
Thus it will be seen omitting altogether from the question .submitted to the jury any inquiry as to whether the appellant Icneio that said statement was false, or whether he made [717]*717or published same with any fraudulent intent or purpose, either generally to, deceive the public or those dealing with the bank or dealing with each other on the faith of such published statement, or to particularly deceive the agent of appellee in purchasing this stock. This matter of knowledge of the falsity of these statements or some of them, going materially to the merits of the case, was of the very essence of this action of deceit, and upon which, and upon which only, could this action be maintained.
This defect in instructions one and two as pointed out is. not cured by the third instruction, also asked and given by the court. It is as follows: “No. 3. The court instructs the jury that it was the duty of defendant, Trimble, after having been president of the Exchange Bank for a reasonable length of time, to have known of any discrepancy, if any, between the note and bill register and the notes actually on hand, that the' jury may find existed at the dates of the purchases of the bank stock by plaintiff’s agent, Rogers, as aforesaid, and to have known of-any discrepancy-between the general and individual ledger, if any, such as the jury may find existed at that time, and to have known the amount of the worthless over-drafts, if any, such as the jury may find existed at that time. And the defendant, after such reasonable length of time, can, not rely upon lack of knowledge of any such discrepancies or Avorthless assets as a defense to this action.”
This instruction like the other withholds from the jury all investigation as to Avhether appellant at the time of the publication of these bank statements knew that they contained false statements, materially affecting the value of this stock sold, or that he published same with the fraudulent intent and purpose of deceiving either the general public, or of this particular purchaser.
[718]*718Thus abandoning the charge as made in the petition, and substituting in its stead a question of diligence or want of diligence in the discharge of his duty as president of the bank, for the one of knowingly making a false statement or of fraudulently making these false statements before referred to.
This departure from the allegations of the petition, and the substitution of one thing for the other, is attempted to be justified under the decision of this court in the case of Prewitt v. Trimble, 92 Ky., 176.
In this, however, counsel for appellee forget or overlook the fact that this case is widely different from that in this, that in that case, assuming the condition of the bank to be the same, and the errors in the statements of the president of the bank as to its assets and liabilities the same as in this case, yet that case was upon a contract made by Prewitt’s trustee with Trimble, whereby Trimble on these statements sold lm men stock to Prewitt, at the price of $120 per share, and that suit was for a rescission of that contract, brought within a reasonable time, and tendering back the stock purchased. In such a casé the law is materially different from the law in an action for deceit as in this case. Here the evidence shows that Trimble was not the owner of any of the stock sold, and that as to the Mrs. Allen stock he was not her authorized agent, though he negotiated the sale.
In that case it was only necessary to show that the false or erroneous statement was made; that it formed the basis of the contract. That said statements entered into the price paid, and received bv the vendor for his stock, that the statements were relied upon by the party purchasing, and that they were in fact untrue at the time, and that by reason of same a price was paid far in excess of the true value of the [719]*719stock sold. In such a case the court will, on these facts, rescind the contract without any fraudulent intent being-shown, without any knowledge actual or constructive on the part of the vendor that the statements were in fact false.
So that while the statements and conclusions of the court were strongly against the vendor of the stock in the case of Prewitt v. Trimble, we are not prepared to say that on the facts of the case then under consideration they were erroneous.
Speaking on this subject Mr. Cook in his work on Stock and Stockholders, sec. 355, says: “In order to sustain an action for damages for deceit whereby plaintiff was induced to buy or sell shares of stock, it is necessary for plaintiff to prove that statements were made, or acts done, which were fraudulent; that the person guilty of them knew, they were fraudulent, and that the plaintiff acted on such statements in buying or selling said stock.”
In the case of Wakeman v. Dalley, 51 N. Y., 27, the court speaking of a case wherein the paid-up capital stock of the company was stated to be $150,000, said: “There is no proof that Dailey knew that the statement was false, or that he made it with- the intention to deceive any one. Such knowledge and intent can not be presumed, but must be proved.”
Other cases of our own court might be cited sustaining the general proposition that some knowledge of the falsity of the statement made is essential.
In reference to bank officers, and, especially to the president of the bank, the rule in Kentucky seems to be extended, looking- to certain states of case where such officer may be held to have this constructive knowledge.
In the case of the United Society of Shakers v. Underwood, and others, 9 Bush, 609, this court said: “It is the [720]*720duty of bank directors to use ordinary diligence to acquaint themselves with the business of the bank, and whatever information might be acquired by ordinary attention to their duties, they may, in a controversy with persons transacting- business with the bank, be presumed to have. They can not be heard to say, that they were not apprised of the facts shown to exist by the ledger, books,- accounts, correspondence . . . and statements of the bank, and which would have come to their knowledge-, except for their gross neglect or inattention.”
In the same case it is further said: “The community has the right to assume that the directors do their duty and to hold them personally liable for neglecting it.”
Again, in Graves v. Lebanon Bank, 10 Bush, 23 and 32, in speaking of a false statement as to the condition of the bank involving some dereliction of duty of its cashier, and of the liability of the sureties on the cashier’s bond, the court, assuming that the sureties read and relied on such statements, said: “A fraud may be perpetrated by the assertion of facts that do not exist, ignorantly made by one 'whom the person acting upon the assertion has a right to suppose has used reasonable diligence to inform himself, as by concealing facts known to exist.”
Again, it is said in Cooper v. Schlesinger, 111 Ü. S., 148, that “a statement, recklessly made without knowledge of its truth, but which is really false, is a false statement, knowingly made, within a settled rule.”
Thus, while it is true that there may be cases of constructive knowledge or of imputed knowledge, on the part of the president and the directors of a bank, sufficient to hold them liable for false statements made, yet the facts on which this constructive knowledge is made to depend should be found by a jury under appropriate instructions, and not be as[721]*721sumed by the court conclusively to exist, as was done in the third instruction in this case.
We gather from the authorities that the president of a bank may be held liable in an action for deceit for a false statement of material matters affecting the value of the stock of the bank:
1st. Where said false statement is made and the president has actual knowledge that it is false.
2d. Where a false statement is made, but without any reasonable knowledge bona fide to believe it to be true. Or
3d. Where it is made in reckless disregard of its truth or falsity.
And under appropriate instructions framed on this line the question should always be submitted to the jury. Of course, in all cases assuming it as proving that the party complaining, and to whom damage has resulted, has relied on such statements in making the contract complained of.
It may further be remarked that this question of fraudulent intent or guilty knowledge can not often be proved by direct evidence, but must, in nearly all cases, be supported by circumstantial evidence, leaving the main fact to be found by the jury from other facts present. It is quite proper that every fact and circumstance bearing on this question of knowledge, actual or constructive, within the lines indicated are competent in evidence. This seems to have been the view of the court below on the trial, and is, therefore, unobjectionable.
Wherefore for the error indicated this cause is reversed and remanded for further proceedings not inconsistent with this opinion.
Judge Hazelrigg not sitting in this case.