Roberts, J.,
delivered the opinion of the Court.
This is an action of deceit brought to recover damages for alleged false representations, claimed to have been made by the defendant to the plaintiff in the sale of certain stock of the Loomis Filter Company of Baltimore City. The grounds upon which the plaintiff seeks to recover are, that about the first of September, 1891, the defendant represented to him that he was largely interested in the stock of said company, and familiar with its affairs, which he represented to be in a good and prosperous condition; that all the stockholders had paid par value for their stock, which was one hundred dollars per share, and that plaintiff would be getting his stock at the same price paid by the other stockholders.
The plaintiff purchased from the defendant fifty shares of said stock at its par value, and alleges, that in so doing, he was induced solely and exclusively by the above mentioned representations of the defendant, in whose business capacity and personal integrity he had implicit confidence. The plaintiff further alleges that shortly after said purchase he discovered that he had been deceived by the defendant, who had made the false and fraudulent representations aforesaid for the purpose of deceiving him, and that instead of the stockholders having paid par value for the stock purchased by them, none of them had paid more, and some less, than fifty dollars per share; anl that the particular stock purchased by plaintiff was stock on which defendant had an option of fifty cents on the dollar from said company. This statement constitutes the plaintiff’s contention. The defendant denies that he made the alleged representations, or used language calculated to mislead or deceive the plaintiff, and asserts that the plaintiff had ample and better opportunity to ascertain the value and character of said stock than he had, and that the plaintiff did not purchase said stock until after he had been for the [542]*542space of nearly two months occupying a position at the New York house of the company, which gave him adequate means of becoming acquainted with the affairs and accounts of the company, its history and its prospects; that he was, by virtue of his position, brought into, almost constant personal intercourse with Mr. Manning, its president, from whom, subsequently to the purchase of said stock, he claims to have received, information of the price paid by other stockholders for their stock. The. plaintiff has one theory and the defendant has another; the plaintiff attempts to show fraud, and the defendant denies it.
The Court below found itself confronted, under the pleadings in the cause, with a state of case well calculated to embarrass its action, but under the practice prevailing in this State it was a condition that could not be avoided. It is quite reasonable that Courts should prefer to have cases presented in such manner as to enable them properly to determine the legal rights of parties with the least possible uncertainty. This however can only be accomplished in cases of the character we: are now considering, by consolidating the action of deceit and the action on the contract, thus bringing all the facts and circumstances relating to the controversy before the same Court and jury at the same time. In some jurisdictions this practice is permissible, notably in Massachusetts. Oh. J. Shaw, in Cook vs. Castner, 9 Cush.,277, says such a course in practice tends to do justice between the parties. But no such practice prevails in this State. Under the pleadings in this case, we think it makes no difference in so far as the plaintiff’s right of action is involved, that the appellant has not complied with the terms of his contract by paying the full amount of the consideration for the stock purchased. If after the discovery of the alleged .fraud the plaintiff treated the contract as still in force, and we think there is sufficient proof in the record to have justified the jury in finding that he did so, such ratification could only [543]*543have the effect of preventing a subsequent rescission. This Court iu Groff vs. Hansel, 33 Md., 166, has said, that: “ In all cases of fraud the vendee, who alone has the right of disaffirmance, may remain silent, and bring his action to recover damages for the fraud, or may rely on it, by way of defense, to the action of the vendor, although there has been a full acceptance by him, with knowledge! of the defects of the property. An affirmance of the contract by the vendee, with such knowledge, merely extinguishes his right to rescind the sale. His other remedies remain unimpaired.” The plaintiff had the undoubted right to bring his action in the form he has selected, and it was equally his right to waive his action for deceit, and avail of the alleged false representations as matter of defense in reduction of damages, or in bar of a recovery in the suit upon the promissory notes now pending. This we take to be well established law. Burnett vs. Smith, 70 Mass., 50 (4 Gray, 50); Harrington vs. Stratton, 22 Pick., 510 ; Groff vs. Hansel, supra; Brantly on Contracts, 127. The plaintiff by instituting his action for deceit before he had complied with the terms of his contract, has undoubtedly restricted the extent of any recovery which the jury might be authorized to make; but this fact in no manner tends to impair his right to the action of deceit. We are, therefore, of opinion that the Court below was in error in withdrawing the case from the consideration of the jury. The mere fact that it was, under the pleadings and the evidence, difficult to establish a rule of damages which would do substantial justice between the parties, could not be held to disentitle the plaintiff to maintain his action.
Coming now to the consideration of the plaintiff’s prayers, we think the Court below properly rejected both of them.
When the testimony in a case of this character is such as to justify the jury in finding that the plaintiff before he purchased the stock in question had the means of [544]*544knowledge at hand, or readily accessible to him, by which he conld have ascertained the price which the. other stockholders had paid for their stock, and failed to make inquiry concerning the same, must be deemed to have availed himself of such means, and be regarded as having notice of the true state of facts. Bigelow on Torts, 25. The defendant in his letter of March 26th, 1892, addressed to plaintiff, and which was read in evidence, says: “When question of selling part of my stock to you was proposed, although I was sanguine about it, I absolutely refused to do so until you could thoroughly investigate and satisfy yourself. I placed you in a position to know more about it practically than I could possibly know. I secured you in September a position with pay, in our N. Y. office. You were afforded every facility, were left in charge of our exhibit, were our confidential man with regard to our business and its future. After remaining in that situation from September up to the 24th of November, without a word to me during that period, you bought 50 shares of stock at par, and gave Mr. Manning on account for it §2,500. This check I saw, but never for one moment was that money in my possession.” The plaintiff in his testimony substantially admits these facts;.certainly does not deny them. During his stay in New York he was constantly brought into contact with Mr.
Free access — add to your briefcase to read the full text and ask questions with AI
Roberts, J.,
delivered the opinion of the Court.
This is an action of deceit brought to recover damages for alleged false representations, claimed to have been made by the defendant to the plaintiff in the sale of certain stock of the Loomis Filter Company of Baltimore City. The grounds upon which the plaintiff seeks to recover are, that about the first of September, 1891, the defendant represented to him that he was largely interested in the stock of said company, and familiar with its affairs, which he represented to be in a good and prosperous condition; that all the stockholders had paid par value for their stock, which was one hundred dollars per share, and that plaintiff would be getting his stock at the same price paid by the other stockholders.
The plaintiff purchased from the defendant fifty shares of said stock at its par value, and alleges, that in so doing, he was induced solely and exclusively by the above mentioned representations of the defendant, in whose business capacity and personal integrity he had implicit confidence. The plaintiff further alleges that shortly after said purchase he discovered that he had been deceived by the defendant, who had made the false and fraudulent representations aforesaid for the purpose of deceiving him, and that instead of the stockholders having paid par value for the stock purchased by them, none of them had paid more, and some less, than fifty dollars per share; anl that the particular stock purchased by plaintiff was stock on which defendant had an option of fifty cents on the dollar from said company. This statement constitutes the plaintiff’s contention. The defendant denies that he made the alleged representations, or used language calculated to mislead or deceive the plaintiff, and asserts that the plaintiff had ample and better opportunity to ascertain the value and character of said stock than he had, and that the plaintiff did not purchase said stock until after he had been for the [542]*542space of nearly two months occupying a position at the New York house of the company, which gave him adequate means of becoming acquainted with the affairs and accounts of the company, its history and its prospects; that he was, by virtue of his position, brought into, almost constant personal intercourse with Mr. Manning, its president, from whom, subsequently to the purchase of said stock, he claims to have received, information of the price paid by other stockholders for their stock. The. plaintiff has one theory and the defendant has another; the plaintiff attempts to show fraud, and the defendant denies it.
The Court below found itself confronted, under the pleadings in the cause, with a state of case well calculated to embarrass its action, but under the practice prevailing in this State it was a condition that could not be avoided. It is quite reasonable that Courts should prefer to have cases presented in such manner as to enable them properly to determine the legal rights of parties with the least possible uncertainty. This however can only be accomplished in cases of the character we: are now considering, by consolidating the action of deceit and the action on the contract, thus bringing all the facts and circumstances relating to the controversy before the same Court and jury at the same time. In some jurisdictions this practice is permissible, notably in Massachusetts. Oh. J. Shaw, in Cook vs. Castner, 9 Cush.,277, says such a course in practice tends to do justice between the parties. But no such practice prevails in this State. Under the pleadings in this case, we think it makes no difference in so far as the plaintiff’s right of action is involved, that the appellant has not complied with the terms of his contract by paying the full amount of the consideration for the stock purchased. If after the discovery of the alleged .fraud the plaintiff treated the contract as still in force, and we think there is sufficient proof in the record to have justified the jury in finding that he did so, such ratification could only [543]*543have the effect of preventing a subsequent rescission. This Court iu Groff vs. Hansel, 33 Md., 166, has said, that: “ In all cases of fraud the vendee, who alone has the right of disaffirmance, may remain silent, and bring his action to recover damages for the fraud, or may rely on it, by way of defense, to the action of the vendor, although there has been a full acceptance by him, with knowledge! of the defects of the property. An affirmance of the contract by the vendee, with such knowledge, merely extinguishes his right to rescind the sale. His other remedies remain unimpaired.” The plaintiff had the undoubted right to bring his action in the form he has selected, and it was equally his right to waive his action for deceit, and avail of the alleged false representations as matter of defense in reduction of damages, or in bar of a recovery in the suit upon the promissory notes now pending. This we take to be well established law. Burnett vs. Smith, 70 Mass., 50 (4 Gray, 50); Harrington vs. Stratton, 22 Pick., 510 ; Groff vs. Hansel, supra; Brantly on Contracts, 127. The plaintiff by instituting his action for deceit before he had complied with the terms of his contract, has undoubtedly restricted the extent of any recovery which the jury might be authorized to make; but this fact in no manner tends to impair his right to the action of deceit. We are, therefore, of opinion that the Court below was in error in withdrawing the case from the consideration of the jury. The mere fact that it was, under the pleadings and the evidence, difficult to establish a rule of damages which would do substantial justice between the parties, could not be held to disentitle the plaintiff to maintain his action.
Coming now to the consideration of the plaintiff’s prayers, we think the Court below properly rejected both of them.
When the testimony in a case of this character is such as to justify the jury in finding that the plaintiff before he purchased the stock in question had the means of [544]*544knowledge at hand, or readily accessible to him, by which he conld have ascertained the price which the. other stockholders had paid for their stock, and failed to make inquiry concerning the same, must be deemed to have availed himself of such means, and be regarded as having notice of the true state of facts. Bigelow on Torts, 25. The defendant in his letter of March 26th, 1892, addressed to plaintiff, and which was read in evidence, says: “When question of selling part of my stock to you was proposed, although I was sanguine about it, I absolutely refused to do so until you could thoroughly investigate and satisfy yourself. I placed you in a position to know more about it practically than I could possibly know. I secured you in September a position with pay, in our N. Y. office. You were afforded every facility, were left in charge of our exhibit, were our confidential man with regard to our business and its future. After remaining in that situation from September up to the 24th of November, without a word to me during that period, you bought 50 shares of stock at par, and gave Mr. Manning on account for it §2,500. This check I saw, but never for one moment was that money in my possession.” The plaintiff in his testimony substantially admits these facts;.certainly does not deny them. During his stay in New York he was constantly brought into contact with Mr. Manning, the president of the company, with whom he appears to have been on intimate relations, and from whom he claims to have received, subsequently to the date of his purchase of stock, the information that the other stockholders had not paid more than fifty cents on the dollar for their stock. Neither prayer submits this question to the consideration of the jury. Furthermore, both prayers are well calculated to mislead tbe jury by suggesting that the plaintiff is entitled to recover such amount as the jury may find that he has lost by tbe direct consequences of snch false representations, “nob to exceed, however, the amount paid in cash [545]*545for account of said stock, and the value of the North Carolina Railroad bond, and the People’s Bank stock transferred to the defendant on account of the same.” This too strongly suggests to the jury what their verdict should be, and has an undue tendency in limiting the discretion which they should be permitted to exercise. Nor do we perceive the ground upon which the plaintiff can recover in this action the amount which he has actually paid for the stock purchased by him, which is but fifty cents on the dollar, since his contention is that the deceit which the defendant practiced upon him consisted in the representation that the other stockholders had paid for their stock the full par value of one hundred cents on the dollar. Having paid but fifty cents on the dollar, he has lost nothing properly attributable to the alleged deceit. If he had paid the full par value of the stock he might then rely upon the alleged deceit as entitling him to recover for the excess above fifty cents on the dollar. But according to his own showing he has only paid the same price which the other stockholders paid, and he cannot now be permitted to recover, in the language of the prayer, “the amount paid in cash for account of said stock.” The true rule of damages properly applicable under the circumstances of this case, is that the plaintiff is entitled to recover such damage as the jury may find he has sustained as the direct consequence of the alleged false representations. Buschman & Cook vs. Codd, 52 Md., 209; Robertson vs. Barks, 76 Md., 123; Addison on Torts, sec. 1226, Wood’s edition ; Tuckwell vs. Lambert, 5 Cush., 23. For these reasons we think both prayers were properly rejected.
No exception' has been reserved to the defendant’s prayers, because the Court in taking the case from the jury failed to consider them. But as it may serve a useful purpose in avoiding further delay, we will give them present consideration. The defendant has embodied in his first prayer five separate statements of fact, which he claims [546]*546must be found by tbe jury to entitle tbe plaintiff to recover. We find no error in these several propositions, which we think are fully sustained by the following authorities: Cooper vs. Schlesinger, 111 U. S., 148; Lefler vs. Field, 52 N. Y., 621; Abbott’s Tr. Prac., 618; McAleer vs. Horsey, 35 Md., 453; Addison on Torts, 827-29.
(Decided 21st June, 1894.)
In the defendant’s second prayer there are five paragraphs numbered 2, 3, 4, 5 and. 6. We find no error in the second and sixth propositions, but the third, fourth and fifth must be rejected. The third fails to submit to the jury the question of the value of the stock at the time of its purchase by the plaintiff, which should have been done, and for this reason it is defective. The vice of the fourth proposition consists in the fact that there is no evidence in the cause, legally sufficient to sustain it. Nor is it requisite to prove the exact language used in the representation and set out in the narr., but proof of it in substance and legal effect is sufficient. Craig vs. Ward, 1 Abb. Ct. App. Dec.,454. The fifth paragraph .submits a measure of damages, which does not accord with the views already announced in this opinion.
We have held herein that the plaintiff is entitled to maintain this action, and have recognized the rule of damages, which we think ought to control the action of the jury, if they shall find the defendant guilty of the deceit alleged to have been practiced by him on the plaintiff.
If the plaintiff sustains his theory of the case, he would be entitled to recover in this action the value of the col-laterals at the time they were deposited with the defendant.
It follows that the judgment must be reversed.
Judgment reversed, and new trial aivarded.