Bischoff v. Alderson , 247 S.W. 330 ( 1923 )

^* Writ of error dismissed for want of jurisdiction March 28. 1923. George H. Alderson, as plaintiff, brought this suit against J. E. Bischoff and J. E. Monroe for the sum of $1,475 actual and $2,950 exemplary damages, and for cause of action alleges, in substance: That on or about July, 1919, defendants organized a joint-stock company, called the Harry Arthur Oil Company, for the pretended purpose of prospecting for oil; that they issued stock and instituted a selling campaign for the purpose of selling stock; that one H. E. Fleming was induced to act as their agent in such sales; that they as an inducement to the sale of the stock represented in person and by their said agent that the oil company owned an oil and gas lease of 10 acres in the Burkburnett field in Wichita county, Tex.; that they guaranteed to sink one well to the depth of 1,000 feet, unless oil was discovered in paying quantities sooner upon said 10 acres; that it owned 320 acres in the Pecos field; and other promises too numerous to enumerate. Among others, a "prospectus" in print is attached to the petition and made a part thereof, and it is alleged that as an inducement they promised that they guaranteed to use the money received for stock sold for development and not for promotion; that they fraudulently appropriated the money to their own use. It is alleged that all statements made were false, and that he and others whose claims are assigned to him, were induced thereby to purchase 1,455 shares of stock at $1 per share; that the stock was worthless — and prayed for judgment for the amount paid for the stock as actual damages and for exemplary damages in the sum of $2,950. Defendants answered by general demurrer which was overruled, by general denial, and other special answers which are not important here. The case was tried to jury, submitted on special issues, and upon the verdict judgment was entered for plaintiff for $1,015 actual and $761 exemplary damages, and the defendants have appealed.

Appellant presents three propositions. Taking them up in the order which appear to be most convenient, the second is:

"Plaintiff sued for damages for fraud under articles 3973a to 3973c, Revised Statutes of Texas, but his petition failed to aver the value of the property (which was alleged to have been sold to plaintiff and his assignors by means of defendants' false representations and promises) as represented, or as it would have been worth had the promises been fulfilled and the actual value of the property in the condition it is delivered at the time of the contract, and by reason of the failure to aver such difference said petition did not state a cause of action, so the court should have sustained a general demurrer."

The third is that the plaintiff having sued under said articles of the statute, the court erred in refusing to give special issue No. 2, requested by defendant on the measure of damages.

"What would have been the value of each share of stock of the Harry Arthur Oil Company on the sale of which plaintiff sued and on which you find that he was damage if the value of the property had been as represented and the promise sued on had been fulfilled, and what was the actual value of each share of stock in the actual condition of things at the time of the contract by which it was sold."

We are unable to see anything in the plaintiff's pleadings which indicates that the cause of action is predicated upon the articles of the statute cited by appellant, except the plea for exemplary damages.

Article 3973a prescribes that —

As to joint-stock companies, actionable fraud shall consist "of either a false representation of a past or existing material fact, or false promise to do some act in the future which is made as a material inducement to another party to enter into a contract, and but for which promise said party would not have entered into said contract," etc.

Then article 3973b:

"All persons guilty of fraud, as defined in this act, shall be liable to the person defrauded for all actual damages suffered, the rule of damages being the difference between the value of the property as represented or as would have been worth, had the promise been fulfilled, and the actual value of the property" as "delivered at the time of the contract."

As may be seen from the statement of plaintiff pleading, above this action is predicated upon the general principles of law applicable to actionable fraud, and the measure of actual damages stated is that the plaintiff was induced to purchase 1,475 shares of worthless stock for $1 per share by fraudulent misrepresentations of existing facts, and there are no allegations which would in any wise tend to bring plaintiff's claim for damages within the provisions of the articles of the statute cited.

So plaintiff's petition is not subject to general demurrer, but a recovery may be had upon the allegations, and the measure of damages is not that which appellant asked to be charged by the trial court, but is the difference between the value of the property received and the amount paid therefor. Beckwith et al. v. Powers (Tex.Civ.App.) 157 S.W. 177.

The petition having stated a good cause of action, the true measure of damages is recoverable under the facts as alleged, in other words, the measure of damages follows as a matter of law.

But if the suit is predicated upon the statutes above noted, the special charge should not have been given, because it is obscure and confusing. It is incorrect, in that it does not submit the measure of damages prescribed by the second section of the statute. Judge HIGGINS is of the opinion that the suit and measure of damages is governed by said articles of the statute, but concurs in the view that such special charge was properly refused because as drawn it was objectionable in the particulars indicated. Ara v. Rutland (Tex.Civ.App.) 172 S.W. 993.

But we have concluded that the cause must be reversed and remanded upon the first assignment, which is that the court erred in refusing to suppress the deposition of H. E. Flemming. The facts upon which the question must be determined are substantially as follows: The depositions when delivered to the clerk of the trial court were first wrapped or rolled up in a piece of brown paper and tied with a string, not sealed, not so securely fastened as that it could not be untied. In this condition it had been placed in the envelope. The flap of this envelop was sealed, and both ends were split to the full extent of the envelop. The clerk then testified:

"The packet looked to me like the package had just been slipped into it, like it had been wrapped and slipped in there, and then a cord tied around the envelope so it would not slip out. After untying the cord and slipping the envelop off, the original package could have been extricated and another one inserted, and there was nothing to show that this had not been done."

He further testified that neither the inner string nor the one around the outside were sealed in any way. There is no evidence in the record to show the condition of the wrappings at the time the deposition left the hands of the officer who took them.

Article 3660, Vernon's Sayles' Statutes, provides:

" * * * The officer shall certify that the answers of the witness were signed and sworn to by the witness before him, and shall seal them up in an envelope, together with the commission and interrogatories, * * * if any, and shall write his name across the seal," etc.

Being statutory, these requirements must be substantially complied with. Barber v. Geer, 94 Tex. 581, 63 S.W. 1007.

These specific directions as to the manner of returning depositions are to be substantially complied with, in order that fraud may be prevented. Garner v. Cleveland, Adm'r, etc., 35 Tex. 74.

The court cannot say that this package is in the same condition as when mailed by the officer taking the depositions or not. It could have been properly sealed in the envelope, and the ends split and tied as it arrived after it left the hands of the officer. So far as this record discloses, it does not substantially comply with the statute. These requirements differ from others, failures to observe which have been held not to be fatal to depositions, in that their purpose may not be met by other information, therefore leave room for fraud. Hartford Fire Ins. Co. v. Becton et al., 103 Tex. 236, 125 S.W. 883.

We must therefore hold that the court erred in refusing to suppress the deposition, and for this reason the cause is reversed and remanded.