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(113 Tex. 441, 251 S. W. 1034.)

representations were made for the purpose of inducing plaintiff to purchase the stock.

7. The jury found that said agents represented to plaintiff that the existing condition of the business at that time was such that they could and did guarantee that he would receive annual dividends of at least 8 per cent on the amount invested by him in said stock.

8. That said representations with reference to the condition of the business were not true, and that said agents knew that they were not true at the time they made the

same.

9. That plaintiff relied on said representations and was induced thereby to purchase said stock.

10. That said representations were made for the purpose of inducing plaintiff to purchase said stock.

11. That said agents represented to plaintiff at the time he purchased the same that said stock was then worth more than he was paying for it.

12. That plaintiff relied on these representations.

13. That said agents represented to plaintiff that in the event he should become dissatisfied with such stock, that said defendant company would refund to him the sum paid on such stock and cancel and return the note and contract.

14. That plaintiff relied on said representations and was induced thereby to purchase said stock.

15. That the reasonable market value of the stock in question on the first day of August, 1920, was unknown.

16. That the reasonable cash value of the stock at the time plaintiff purchased same was unknown.

17. That the reasonable cash market value of said stock at the present time (the time of the trial) was 55 cents on the dollar.

These numbers are not the numbers of the issues as submitted, but are arbitrary numbers given the findings by us.

The application for writ of error assigns the following errors alleged to have been committed by the Court of Civil Appeals, viz.:

1. That the Court of Civil Appeals erred in holding that the false representations charged and proved were merely expressions of opinion and could not form a basis for the judgment of the trial court, cancelling the contract and note and for recovery of the money.

2. That said court erred in reversing said judgment of the trial court because if such false representations are properly held to be mere expressions of opinion only, yet as they were found by the jury to have been false and known, at the time they were made by defendant's agents, to be false and they were made for the purpose of deceiving plaintiff and inducing him to make the contract and were relied on by him, that they were nevertheless actionable and formed the proper basis for such judgment of the trial court.

The defendant having affirmed the contract of its agent by retaining the money and, in this suit, seeking judgment on the note, the question as to whether or not the parties selling the stock to the plaintiff were its agents is not in the case.

The holding of the Court of Civil Appeals that the false representations alleged and proved were mere opinions of the agents, that is, "trade-talk," appears to be largely based upon the following reasonings of that court:

"No matter how intimately appellant's agents were acquainted with its business, and the value of its stock at the time they made the representations, they could not, and apparently must have reasonably known they could not, know what the stock would be worth after August 1, 1920, nor the dividends which would be paid out; nor could they know that in the event appellee became dissatisfied with his purchase, appellant would cancel his

note and return his money he paid for the stock."

We do not think the plaintiff should be so so heavily burdened with presumption

Evidence

presumption as of knowledge on his to knowledge. part and that such knowledge ought not be charged against him.

"As a general rule, if a vendor of property, in order to induce a sale, makes positive assertions as to any material fact which is peculiarly within his own knowledge and of which the purchaser is ignorant, such as the title, area, boundaries, location, rents, profits, or income, or incumbrances, may be relied on by the purchaser without further investigation; and if the statements are false and fraudulent and cause damage to the purchaser he may hold the vendor liable in damages. Nor need the fact be one within the vendor's exclusively within knowledge. Upon this principle positive misrepresentations of territorial rights under patents as to the merits and value

of the rights to be sold, are held not to fall within the rule of caveat emptor." 20 Cyc. pp. 55-57.

If the agents of the defendant, claiming to know all about the business of the company, the falsity of which claim the plaintiff could not know, made the representations and statements complained of, the plaintiff had the right to rely on them. Sales agents who are selling stock are certainly presumed to have been supplied with all information as to the company's busi

Fraud-reliance on representations.

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depart from their instructions and when they do falsify

Corporations—

liability.

the facts, it is prop- falsification by er that their em- sales agentployer, who has put them before the world as his agent for the transaction of his business, should suffer from their dereliction rather than the public who are preyed on.

"In every such case, the principal holds out his agent as competent and fit to be trusted, and thereby, in fact, he warrants his fidelity and good conduct within the scope of his agency." Story, Agency, §§ 127, 135, 137, 452.

Fraud-repre

value of stock as opinion.

That the representations made were not matters of opinion as indicated sentations as to above, is also supported by the following authorities: McDonald v. Lastinger, - Tex. Civ. App. —, 214 S. W. 829; Massirer v. Milam, Tex. Civ. App. —, 223 S. W. 302.

The statements which the jury found that defendant's agents made were statements of fact, in part are as follows: that they were intimately acquainted with defendant's business; that upon such knowledge of defendant's business they could and did guarantee that such stock would be worth on the market after August 1, 1920, 25 per cent more than he was paying for same; that plaintiff would receive annual dividends of at least 8 per cent on the amount invested by him; that the stock was worth more than he was paying for it.

In the case of Buchanan v. Burnett, 102 Tex. 492, 132 Am. St. Rep. 900, 119 S. W. 1142, in which case it appears that Buchanan had represented that he had a good title to the land which he was selling to Burnett, it was insisted that the statement made by Buchanan was only the expression of an opinion, and passing upon this question our Supreme Court held, that while the statement made by Buchanan to Burnett embodied a conclusion drawn from the facts relative to the

(113 Tex. 441, 251 S. W. 1034.)

title, it was in fact a representation that the facts which would constitute a good title to the land existed; that it was not an opinion as to the legal effect of known facts and muniments of title, for which the seller would not be responsible. In the case at bar the statement of the agents of defendant that the dividends would amount to 8 per cent and that the stock would be worth 25 per cent more after August 1, 1920, embodied a conclusion drawn by them from facts which they claimed to know by reason of their knowledge of defendant's business, the falsity of which plaintiff

could not know.

"Tendency of Modern Decisions. In cases where positive fraudulent misrepresentations have been made. by the vendor the modern cases show a strong tendency either to relax the doctrine of caveat emptor or to refuse to extend it further than it has been carried by previous decisions even with respect to 'dealers' talk;' the courts taking the view that a vendor guilty of a falsehood made with intent to deceive should not be heard to say that the purchaser ought not to have believed him." 20 Cyc. 62 (d).

-opinions or promises-when actionable.

But a party may become liable for false representation made in the form of promises for future returns. If the representations relied on by plaintiff and found by the jury to have been made for that purpose were merely opinions, or promises, yet if they were known to be false by the agents when they made them, and were made for the purpose of deceiving plaintiff and inducing him to make the contract, they were nevertheless actionable, having been relied upon by plaintiff. This proposition has been often stated and approved in the opinions of this court, but we cite only the following authorities:

The Supreme Court, speaking through Justice Greenwood, in the case of Edward Thompson Co. v.

Sawyers, 111 Tex. 378, 234 S. W. 874, say:

"Promises made without intention of fulfillment, in order to induce others to make contracts, are as culpable and as harmful as are willful misrepresentations of existing facts. Hence contracts may be avoided alike for such fraudulent promises and for such misrepresen

tations."

Also see 26 C. J. p. 1233; 14 C. J. § 879; 12 R. C. L. § 16, p. 248; Texas Co-op. Invest. Co. v. Clark,

Tex. Civ. App., 216 S. W. 220; Montgomery Southern R. Co. v. Matthews, 77 Ala. 357, 54 Am. Rep. 60.

It is elementary that where a false representation is charged to have misled a party into signing a contract, he must

Evidence-bur

not only show the den of proof-in-
falsity of the repre- jurresentatio
sentations, that he

was misled by such and induced to
sign the contract thereby, but he
must also show that he has been
damaged and the extent of his dam-
ages. The jury in this case found
that the value of the stock at the
time plaintiff entered into the con-
tract to purchase it was unknown.
Consequently there is no basis upon
which to determine
whether or not absence of
plaintiff was dam- knowledge of
aged and the case
must be reversed for the lack of
such proof or finding of the jury.

-of damages

value.

Our discussion of plaintiff's assignments of error, above, largely determines the disposition of defendant's assignments in the Court of Civil Appeals and we find no assignment presented by defendant

which is not so covered or which presents reversible error, or which presents error likely to arise on another trial, hence we overrule them.

The defendant's exceptions to plaintiff's petition petition because the names of the alleged agents of de

fendant are not given should not

Pleadingsufficiency of complaint-absence of names of agents.

have been sustained. The plaintiff alleged that the names of such agents were not known to him, but were known to the defendant. It may appear from the evidence that this allegation was in fact false, but this issue cannot be made an issue of law on the face of the pleading.

We therefore recommend to the Supreme Court that the judgment of the Court of Civil Appeals reversing the case be affirmed and that this cause be remanded to the trial court for another trial under the instruction given in this opinion as far as applicable.

A petition for rehearing having been granted, Pierson, J., on January 30, 1924, handed down the following opinion of the Supreme Court (113 Tex. 449, 258 S. W. 462):

This case is now before this court upon motion for a rehearing. Upon recommendation of the Commission of Appeals in an opinion written by Judge H. C. Randolph, of Section A (113 Tex. 441, ante, 3, 251 S. W. 1034), this court reversed the holdings of the Court of Civil Appeals

on the issue of actionable fraud, but remanded the cause to the district court for new trial on the proposition that plaintiff in error must show that he had been damaged, and the extent thereof.

In his motion for a rehearing, plaintiff in error vigorously insists that a contract secured by fraud may be rescinded without a showing that the aggrieved party has suffered any injury or loss. On account of the importance of the question involved, the cause was withdrawn from the Commission and set for argument before this court.

For a full and clear statement of the case, see the original opinion in 113 Tex. 441, ante, 3, 251 S. W. 1034. It is not deemed necessary to restate or to discuss any issues in the case, except the one raised by

plaintiff in error on motion for a rehearing, and for that purpose we quote the following paragraph from Judge Randolph's opinion near, its conclusion: "It is elementary that where a false false representation is charged to have misled a party into signing a contract, he must not only show the falsity of the representations, that he was misled by such and induced to sign the contract thereby, but he must also show that he has been damaged and the extent of his damages. The jury in this case found that the value of the stock at the time plaintiff entered into the contract to purchase it was unknown. Consequently there is no basis upon which to determine whether or not plaintiff was damaged, and the case must be reversed for the lack of such proof or finding of the jury."

Upon investigation, we find the general and correct

Contracts-re

rule to be that some scission-necessity of injury. injury must be shown in an action to rescind a contract for fraud.

In the Bill of Rights, § 13, we find the following: "All courts shall be open; and every person for an injury done him, in his lands, goods, remedy by due course of law." person or reputation, shall have

Judge Simkins, in his work on Contracts & Sales, defines "fraud” as follows: "Fraud is an act or concealment involving a breach of legal duty, trust or confidence justly reposed, and from which injury results to another, or by reason of which an undue and unconscientious advantage is taken of another."

Thus, actionable fraud is fraud from which injury results. Based upon that fact, Texas pursues the equitable rule that "whether misrepresentation is intentionally or innocently made, as far as the effect is concerned, it is the same and equally avoids the contract."

In discussing the essential elements of fraud, the existence of which is a "condition upon which a court of law will refuse to enforce performance, or a court of equity

(113 Tex. 441, 251 S. W. 1034.)

will rescind on the ground of fraud," Judge Simkins says: "Sixth. It is essential to support the action that the complaining party must be misled to his injury, otherwise it would be 'damnum absque injuria.' Bremond v. McLean, 45 Tex. 10; Moore v. Cross, 87 Tex. 561, 29 S. W. 1051, and authorities cited; Blythe v. Speake, 23 Tex. 436; Hopkins v. Woldert Grocery Co. - Tex. Civ. App. —, 66 S. W. 63; Ming v. Woolfolk, 116 U. S. 602, 29 L. ed. 741, 6 Sup. Ct. Rep. 489; Caffall v. Banderas Teleph. Co. - Tex. Civ. Tex. Civ. App., 136 S. W. 105; Lissner v. Stewart, Tex. Civ. App. —, 147 S. W. 610."

In the case of Moore v. Cross, 87 Tex. 561, 29 S. W. 1051, Judge Brown, after stating and discussing the facts, says:

"The proof does not show that the property was worth less without these improvements than it would have been with them, nor that plaintiff would have derived any pecuniary benefit from their construction.

"If the promises of Moore be considered as representations fraudulently made, they belong to that class of frauds for which there is no redress in courts, because there was no pecuniary injury resulting from them, and courts do not undertake to deal with the breach of moral obligations. Bigelow, Fr. p. 540; Lemon v. Hanley, 28 Tex. 226; Bremond v. McLean, 45 Tex. 17."

Judge Hodges, in the case of Hoeldtke v. Hortsman, 61 Tex. Civ. App. 148, 128 S. W. 646, says: "Courts of equity will not interpose to rescind a contract for fraud, except where it becomes necessary to relieve the complaining party against some injury. Atlantic Delaine Co. v. James, 94 U. S. 207, 24 L. ed. 112; Henninger v. Heald, 52 N. J. Eq. 431, 29 Atl. 190; Wenstrom Consol. Dynamo & M. Co. v. Purnell, 75 Md. 119, 23 Atl. 134; Bomar v. Rosser, 131 Ala. 215, 31 So. 430; Hairalson v. Carson, 111 Ga. 57, 36 S. E. 319; 2 Pom. Eq. Jur. § 899."

Judge Key, in the case of Hopkins v. Woldert Grocery Co. - Tex. Civ. App. 66 S. W. 63, held plaintiff's petition insufficient because it failed to allege injury as a result of the fraudulent misrepresentation. The same principle is supported in Caffall v. Bandera Teleph. Co. - Tex. Civ. App. -, 136 S. W. 105.

Mr. Pomeroy very clearly states the correct rule in the following forceful language: "The statement of facts of which it [fraudulent misrepresentation] consists must not only be relied upon as an inducement to some action, but it must also be so material to the interest of the party thus relying and acting upon it that he is pecuniarily prejudiced by its falsity-is placed in a worse position than he otherwise would have been. The party must suffer some pecuniary loss or injury as the natural consequence of the conduct induced by the misrepresentation. In short, the representation must be so material that its falsity renders it unconscientious in the person making it to enforce the agreement or other transaction which it has caused. Fraud without resulting [in] pecuniary damage is not a ground for the exercise of remedial jurisdiction, equitable or legal; courts of justice do not act as mere tribunals of conscience to enforce duties which are purely moral." [2 Pom. Eq. Jur. 4th ed. $ 898.]

Thus we see that the rule is fairly well settled in Texas, and the general rule announced by that excellent authority, Mr. Pomeroy, to be that it is essential that some injury or damage be shown in order to rescind a contract for fraud.

Of course, as stated by Judge Roberts in Blythe v. Speake, 23 Tex. 437: "A party, defrauded in a contract, has his choice of remedies. He may stand to the bargain and recover damages for the fraud, or he may rescind the contract, and return the thing bought, and receive back what he paid."

This in no wise affirms the prop

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