Beckwith v. Powers
Beckwith v. Powers
Opinion of the Court
This was a suit by appel-lee against J. W. Beckwith, a resident of El Paso county, and J. E. Bishop and J. E. Er-vine, residents of Harris county, brought in the county of the residence of the defendant Beckwith. Plaintiff in his petition averred that prior to and during April, 1910, the El Paso Grain Company was a corporation; that the three defendants owned all of the stock of said corporation and were the only directors thereof; that prior to the 20th day of April, 1910, the defendant Beckwith, acting for himself and as agent for the defendants Bishop and Ervine, had been negotiating with plaintiff for the sale to plaintiff of all the capital stock of said corporation; that defendant Beckwith was authorized by said Bishop and Ervine to act as their agent in selling said stock, and was held out by them as their agent for that purpose; that during the negotiations between said Beckwith and plaintiff the said Beckwith, acting for himself and as agent for Bishop and Ervine, furnished plaintiff a statement of the condition of the business affairs of said corporation, said statement having been furnished for the purpose of inducing the plaintiff to buy the stock in said corporation of said Beckwith, Bishop, and Ervine; that said Beckwith represented to plaintiff that said statement showed the true condition of the business affairs of said corporation; that said Beckwith also represented to the plaintiff that the books of said corporation showed the true condition of said corporation; that said statement purported to be a true statement taken from the books of said corporation; that plaintiff examined said statement so furnished him by said Beckwith and believed that said statement and the books of said corporation showed the true condition of said corporation; that, believing said representations of said Beckwith, he (plaintiff) during the month of April, 1910, agreed to buy the $10,000 capital stock of said corporation, and to pay par value thereof; that the plaintiff did, in fact, during the month of April, 1910, acting upon said statement and believing same to show the true financial condition of the said corporation, buys $10,-000 of the capital stock of the said corporation, that being the stock of the said Beck-with, Bishop, and Ervine therein, and paid $10,000 therefor; that said stock was bought by plaintiff from said Beckwith, who was selling his own stock and also was selling the stock of said Bishop and Ervine as *179 their agent; that thereafter, and after the plaintiff had bought all of said stock from the said Beckwith, who had been acting for himself and as the agent for Bishop and Er-vine, the said Bishop came to El Paso and agreed for himself and for Ervine to sell their part of said stock to plaintiff at the par value thereof, and that the said Bishop and Ervine thereby ratified and confirmed the sale so made by said Beckwith; that said statement so furnished to plaintiff was false, wrongful, and fraudulent, and known by all of said defendants to be so; that said statement was made and furnished to plaintiff for the purpose of inducing him to buy said stock at more than its value and had that effect; that plaintiff believed said statement of the condition of said corporation to be true, and buying said stock acted upon that belief; that he would not have bought said stock had be known the true condition of said corporation; that said statement was not true but was false, and that in fact said corporation had less assets than said statement showed and more liabilities than said statement showed; that in truth said corporation was worthless, and that said corporate stock was actually worthless.
On September 2, 1911, Bishop and Ervine filed a plea to the jurisdiction of the court over their persons and claimed their privilege of being sued in Harris county, and thereafter, on September 4, 1911, they filed their original answer, consisting of exceptions and a general denial, stating in same that they did not waive their said plea of privilege but insisted upon the same and answered subject thereto. On February 12, 1912, said defendants Bishop and Ervine, by leave of court, filed their first amended plea to the jurisdiction of said court over their persons in lieu of their original plea filed September 2, 1911. On February 15, 1912, the court sustained certain exceptions to the amended plea of privilege and held that the same was not filed in due order of pleading and struck out the plea and held same for naught. It seems to be contended that the amended plea of privilege was insufficient because it did not deny that Beckwith was a proper defendant, and did not allege a fraudulent joinder for the purpose of conferring jurisdiction upon the district court of El Paso county over the persons of Bishop and Ervine.
Upon trial the court charged the jury that, if they found for the plaintiff, they would allow him the difference between tie value of what the $10,000 worth of stock sold would have been if the statement made of its value had been true, and the value of the stock as it actually was.
It appears from the evidence that, according to a statement rendered to appellee by the defendant Beckwith, acting for himself and for his codefendants, the actual and intrinsic value of the stock of the El Paso Grain Company, as represented by its available assets, after deducting all liabilities, was $10,000, which was the par value of such stock. As a matter of fact, however, it developed that the liabilities of the corporation exceeded its assets, and that, in order to protect the assets of the company, appellee was required to pay debts of the company amounting to several thousand dollars.
It is contended by appellants that under the authority of George v. Hesse, supra, the correct measure of damage is the difference between what Powers paid for the stock and its value. A literal application of the rule contended for by appellants would preclude a recovery of the amounts which appellee had been obliged to pay out to creditors of the company to protect its assets. The authority relied upon sustains no such narrow and restricted view of the correct measure of damages.
Special charge No. 6 was also properly refused. In its requested form it was calculated to divert the minds of the jury from the controlling issue upon which the liability of Bishop and Ervine rested; i. e., the agency relation to them of Beckwith, or of their ratification of his fraudulent action inducing appellee to purchase the stock. Eor the reasons indicated, we are of the opinion the special charges noted were properly refused.
Eor the error indicated, the cause is reversed and remanded.
Reference
- Full Case Name
- BECKWITH Et Al. v. POWERS
- Cited By
- 10 cases
- Status
- Published