Hixon v. Hinkle , 156 Ga. 341 ( 1923 )

Hines,'J.

(After stating the foregoing facts.)

The grant of a nonsuit was error, and requires a reversal of the judgment. Brooks v. Rawlings, 138 Ga. 310 (75 S. E. 157) ; Pierpont Mfg. Co. v. Savannah, 153 Ga. 455 (112 S. E. 462).

The defendant is now estopped by the judgment of this court from asserting, that the plaintiff is not entitled to recover, if the latter proves his case as laid in his complaint, in the absence of evidence traversing or avoiding the case made by plaintiff in his petition. When this case was here before, this court, in effect, held that the plaintiff was induced to make a loan to Eyan and Herbert by- a fraud perpetrated upon him by them, this fraud consisting in their false representation that they were the owners of 999 shares of the capital stock of the Mobile Tractor Co., of which they agreed to pledge 200 shares as collateral security for this loan, when in fact they did not own said number of shares in said company, and when in fact the 200 shares pledged by them to secure said loan were shares which the defendant had agreed to buy’ and which these borrowers had agreed to sell for him on commission; and that upon the discovery of this fraud the plaintiff would be authorized to repudiate the transaction, and recover from the defendant the bonds delivered to these borrowers in lieu of money, the defendant being chargeable with this fraud, if not from active participation therein, from having received the spoils and fruits of the fraudulent transaction. Civil Code (1910), §§ 4410, 4623, 3591, 3593; Lewis v. Equitable Mortgage Co., 94 Ga. 572 (21 S. E. 224).

The trial judge based his judgment of nonsuit upon the ground that the plaintiff was to have 200 shares of the stock of the tractor company as collateral security for his loam, that he got this number of shares, and that therefore he can not complain. Plaintiff was not to have any 200 shares of the stock of this company. He was to have that number of the 999 shares which the borrowers represented they owned in this company. The financial worth and responsibility of borrowers who are able to own 999 shares of the capital stock of a corporation is much greater than that of those who own no stock in such company and are borrowing to invest in such shares. Their financial standing would be appreciably less if the money they were borrowing was to go to a third person to pay for stock of the company for which such third person had subscribed. If the plaintiff had gotten the stock of the borrowers, their financial worth would be the value of such stock plus the amount of the loan. Besides, the value of the stock, if owned by the borrowers, who are officers of the compapy," would be greater as they would have a greater incentive to so manage the affairs of the company as to make it a success. It follows that the plaintiff did not get what he contracted for by way of security; and the borrowers did not possess the wealth and financial standing which they represented to the plaintiff that they enjoyed.

It is well settled and beyond doubt, that where a contract is procured by fraud, parol evidence is admissible to prove the fraud; and if the fraud be proved, the jury are authorized to set aside the contract. Ham v. Parkerson, 68 Ga. 830. The purpose of such evidence is not to add to, take from, or vary the terms of a valid written agreement, but its object is to show that the contract was originally void because of the fraud perpetrated upon the complaining party. This can always be shown by parol. Civil Code (1910), § 5790. The contrary contention is a mere cavil.

But all these matters were considered and passed upon when the case was here before.

Judgment reversed.

All the Justices concur.