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Fourth Department, July, 1911.
sentative of the deceased debtor to bring the action. Some suggestion was made that this should be done in Prentiss v. Bowden (145 N. Y. 342, 347 ), but that was an action by the creditor for his sole personal benefit. It was not authorized by the statutes above referred to, then in force, and, therefore, the suggestion was obiter dicta in that case. In the following year (1896) in Shoe & Leather Bank v. Baker (148 N. Y. 581-587), such an action as this was recognized as well brought. (See, also, Johnston v. Gundberg, 113 App. Div. 228, 231; National Bank of Republic v. Thurber, 39 Misc. Rep. 13, 16, 17.)
I think the action was properly brought under the statutes, although no request was first made that the executor bring the action. There must be a reversal and a new trial by reason of the erroneous exclusion of competent material evidence offered by plaintiff.
Judgment reversed and new trial granted, with costs to appellant to abide event.
CHARLES M. LANE, Respondent, v. ALBERT O. FENN and
Others, Defendants, Impleaded with JAMES S. WATSON and Others, Appellants.
Fourth Department, July 11, 1911.
Trial - action for fraud — when verdict for defendant properly set
Action to recover damages for fraud and deceit whereby the plaintiff was induced to purchase stock. Held, that as fraud might be predicated upon representations made by some of the defendants, it was proper for the court to set aside a verdict for the defendant, and that there was no abuse of discretion on the part of the trial court in setting the verdict aside as contrary to and against the weight of evidence.
APPEAL by the defendants, James S. Watson and others, from an order of the Supreme Court, made at the Monroe Trial Term and entered in the office of the clerk of the county of Monroe on the 17th day of December, 1909, granting the Fourth Department, July, 1911.
[Vol. 146. plaintiff's motion to set aside the verdict of a jury in favor of the said defendants and directing a new trial, and also from an order entered in said clerk's office on the 30th day of December, 1909, denying the said defendants' motion for leave to amend, correct or resettle the prior order.
John G. Milburn, Joseph W. Taylor, Walter S. Hubbell and Daniel J. Kenefick, for the appellants.
Alton B. Parker, James M. E. O'Grady, Elbridge L. Adams, John Desmond and Frank Sullivan Smith, for the respondent. KRUSE, J.:
The main questions in this case are similar to those involved in the case of Downey v. Finucane (146 App. Div. 209). The two cases were argued together. The plaintiff, as in the Downey case, seeks to recover damages for fraud and deceit, having purchased some of the bonds and stock, relying upon the prospectus referred to in that case.
In this case the jury rendered a verdict as to some of the defendants and disagreed as to the others. The trial judge set aside the verdict and the appeal is from the order setting aside that verdict. But four of the six alleged fraudulent statements were pleaded. The fourth and sixth are not included in the complaint.
At the close of the evidence the defendants moved for a direction of a verdict in their favor, which was denied. The defendants then asked that each of the four questions of fraud set forth in the complaint be taken from the jury. The motion was granted as to the representations regarding the New York city franchise and the issuing of the $41,000,000 of stock on the property at an overvaluation. The other two questions were submitted to the jury.
More than six peremptory challenges were allowed to each side, the judge taking the view that each of the defendants was entitled to six. In his opinion granting the new trial (65 Misc. Rep. 336) he adheres to the ruling as regards the New York city franchise and the $11,000,000 of stock, but as to the challenges, expresses the opinion that as the case finally developed,
Fourth Department, July, 1911.
all the defendants together should have been allowed not more than the six peremptory challenges, but that it was not apparent when the jury was impaneled. He also held that the finding of the jury which resulted in a verdict of no cause of action as to some of the defendants was against the weight of the evidence.
Of course, if we are right that the fraud may be predicated upon the representations relating to the New York city franchise and the $41,000,000 of stock issued, that of itself is sufficient to uphold the order granting the new trial. Furthermore, we are not persuaded that there was an abuse of discretion upon the part of the trial court in setting aside the verdict as contrary to and against the evidence. It follows that the orders appealed from should be affirmed,
All concurred; WILLIAMS, J., in result in a separate opinion, and McLENNAN, P. J., in result on the ground that it cannot be said that the trial court abused its discretion in setting aside the verdict because contrary to and against the weight of
Both orders should be affirmed, with costs. The order refusing to resettle the first order was a matter of discretion. While the trial justice considered various other grounds for granting the new trial than the one stated in the order, and discussed them in his opinion, he had a right to base his conclusion on the single one, that the verdict was contrary to the evidence; and if that was sufficient, it is unnecessary for us to determine the other grounds which the plaintiff now claims might have been relied upon for making the order. If we were to hold the one ground relied upon was untenable, we would then be called upon to decide whether some of the other grounds urged were not sufficient for granting the new trial. The record, the evidence and the briefs of counsel are voluminous, and the opinion of the presiding justice is valuable in calling our attention to the precise point upon which he believed the jury went wrong. Let us briefly consider the condition of things.
The action was brought to recover damages for fraud in the
Fourth Department, July, 1911.
[Vol. 146. sale of bonds and stock of the United States Independent Telephone Company, and the fraud was based upon a prospectus issued by the defendant Fenn. Four statements in the prospectus were alleged to be fraudulent. Upon the trial the court took from the jury two matters in these statements, holding they could not be found to be fraudulent. The jury was permitted to pass upon the other statements and say whether they were grounds for finding fraud. If they were not, then there could be no verdict against any of the defendants. If they were, then a verdict could be rendered against such of the defendants as were responsible for the issue of the prospectus. The jury having failed to agree as to four of the defendants, could not have agreed that there was no basis for the finding of fraud in the prospectus. And in order to relieve the five defendants from liability they must have found that they were not responsible for the issue of the prospectus. This is the particular question upon which the trial justice considered the verdict contrary to the evidence, and he discussed this question of fact at considerable length. There was a syndicate, of which these defendants were members. They were also directors of the United States Independent Telephone Company. The question was whether Fenn, in issuing the prospectus, was acting as agent for the syndicate or the company, and if for the company, whether the defendants as directors were personally liable for any fraud therein. The syndicate had managers which they selected, and it was claimed by the plaintiff that Fenn issued the prospectus under their direction. The trial justice says that the jury evidently agreed that none of the five defendants in whose favor their verdict was rendered was guilty of any personal wrongdoing, and in that finding he heartily concurred. The question discussed was whether they were legally responsible for the issue of the prospectus. He gave much care and attention to the trial, heard all the evidence, saw all the witnesses, and after the verdict, upon this motion, again went over the facts as he understood them, in great detail, and his conclusion was, not that there was no evidence to support the verdict, but that the weight of the evidence was against it. There was a great volume of the evidence bearing upon this question, and I do not think this court
Fourth Department, July, 1911. should go over it all and discuss it and say whether we agree with the conclusion arrived at by the trial justice. It is unfortunate that these defendants should be subjected to the annoyance and expense of another long trial after they have once secured a verdict in their favor as to disputed facts, but the uniform practice of this court has long been to leave a question of this kind to the discretion of the justice who presided at the trial, except in extraordinary cases, and I think this is not such an exceptional case.
Orders affirmed, with costs.
FRANK H. DOWNEY, Respondent, v. THOMAS W. FINUCANE and Others, Appellants, Impleaded with EUGENE SATTERLEE and Others.
Fourth Department, July 11, 1911.
Fraud – inducing purchase of stock and bonds by false prospectus — liability of members of syndicate for statements signed by one of them – prospectus issued by authority and direction of all defendants – evidence - trial – jury – peremptory challenges — several defendants.
Persons interested in promoting a telephone company, whether they themselves actually cause the stock and bonds to be put on the market or merely have knowledge that it is being done by one or more of them in the interest of all, are all severally liable to the purchaser of such bonds and stock for any fraud arising out of false statements contained in the prospectus, although it was signed by only one of them. Thus, whether the one who signed the prospectus and sold the stock and bonds was acting under the direction of the syndicate of which he and the other defendants were members, or whether he acted only as agent of the corporation whose stock was sold, is immaterial, if in fact the false prospectus was issued by the authority and direction of all the defendants. Even the promoters who were personally free from wrongdoing are liable for any damages arising from the falsity of the prospectus, for where one of two innocent persons must suffer from the fraud of another, the one who put it in the power of that person to perpetrate the fraud should suffer rather than the other innocent party. It seems that if fraud can be predicated upon any one of several alleged false statements in a prospectus, and there is evidence to sustain the ver
APP. Div.- VOL. CXLVI. 14