I am in accord with the opinion of Judge Barnes that Section 11226, General Code, is the statute of limitations controlling plaintiff's action. The court had jurisdiction over the defendants only because of that portion of Section 6373-3, General Code, which required the dealer to irrevocably consent that any action brought against it arising out of and founded upon a fraudulent disposal of securities might be brought in Franklin county. Whether or not the Blue Sky Law, as in effect when the cause of action arose, would support an action against the defendant dealer based upon misrepresentation not amounting to actual fraud if the dealer was properly in the jurisdiction of the court is not presented on this record. The dealer is only within the jurisdiction of Franklin county courts by virtue of the consent which it was required to file under the provisions of Section 6373-3, General Code, to which we have adverted.
I dissent from the majority opinion holding that as a matter of law the actionable language does not constitute overt fraud. This is an appeal on questions of law and the finding of the trial judge must be considered in all particulars, as would the verdict of a jury. In the determination of any factual issue every legal intendment must be indulged to support the finding and judgment. It is my opinion that the trial *Page 337 judge was within his province in determining that actual fraud had been established by the plaintiff. I shall not discuss this factual issue at length. The trial judge properly considered all of the printed matter on the circular issued by defendant dealer, setting forth information respecting the issue of the bonds of the Everglades Drainage District as it might reflect upon the meaning, import, intent and effect of that part of the circular which plaintiff averred contained the fraudulent misrepresentations of fact upon which it relied in the purchase of the securities. Part of the circular which was the subject-matter assigned in the petition of the plaintiff as constituting the fraudulent misrepresentations was "so that in practical effect the state of Florida guarantees the payment of all drainage taxes, and the bonds payable therefrom."
The trial judge calls attention to the fact that the circular emphasizes the proposition that the state of Florida guaranteed the payment of the bonds sold to the plaintiff in the particular that they were the obligations of the state. This conclusion is supported by the language employed and by the arrangement of subject-matter and emphasis by heavy type of certain of the printed portions of the circular.
It should be noted that all of the opinions except that of Mr. William H. Harris are almost identical in language pertinent to the representation which is the basis of plaintiff's suit. It is that:
"These bonds are also a quasi, or indirect obligation of the state of Florida, in that the state owns approximately one-quarter of the lands within said Everglades Drainage District, against which drainage taxes are now and have been since 1905 collected as required by law, and in the event that any other owner of lands within said drainage district neglects or refuses to pay his drainage taxes, the law requires that they be certified to the Trustees of the Internal Improvement Fund, a board of state officers, who hold all lands of *Page 338 the state in trust for the state, and at the end of two years, if not redeemed, the state's title becomes perfect."
This language is not as broad as the unqualified statement in the circular, to the effect that the state of Florida guarantees the payment of all drainage taxes and the bonds payable therefrom.
The circular carries the correct statement of the written opinion of the Attorney General of Florida, which is in accord with all the other written opinions made prior to the sale of the securities in question, but this is at another and different place in the circular than the actionable language which is a statement of fact, apparently made upon the knowledge of the dealer. In other words, the gist of most of the subject-matter in the circular might support the claim that it was an innocent reiteration thereof by the dealer but this does not support the actionable language heretofore quoted.
In the letter of William H. Harris to defendant dealer it is said:
"The state, as authorized by law, pays taxes on lands owned by it at the same rates as are paid by other owners of lands in this district; when taxes levied on lands of other owners in said district become delinquent and remain unpaid, such lands revert to the state of Florida, and such delinquent taxes are at once paid by the state, so that payment of the principal and interest of said bonds is by this method guaranteed by the state of Florida."
This letter would afford support to the defendant dealer for the actionable language in the circular but it was not written until July 15, 1925, some twenty days after the sale of the bonds to the plaintiff. The statement of fact that "when taxes levied on lands of other owners in said district become delinquent and remain unpaid, such lands revert to the state of Florida, and such delinquent taxes are at once paid by the *Page 339 state," was, if not a clear misstatement of fact, at least misleading in import. It is true that it had been the practice, up to the time that the Harris opinion was released, for the state of Florida to pay delinquent taxes when the lands reverted to it but the lands did not revert to the state for two years after the delinquent tax sale. Then, too, while the state had theretofore paid delinquent taxes on lands which reverted to it, it in no wise guaranteed the payment thereof beyond the proceeds which could be realized from the lands in the Everglades Drainage District.
Mr. Denman testifies, truthfully, no doubt, that a month or two before the date of the written opinion, he had orally stated the substance thereof to Mr. Rorick of the defendant dealer firm.
These opinions of the lawyers respecting the obligations of the state of Florida on the bonds of the Everglades Drainage District were admissible for two purposes: First, as they may have reflected upon the question whether the plaintiff relied upon the actionable statement of fact in the circular, inasmuch as it is claimed that it had the benefit of all the opinions before purchase of the bonds; and second, and the more important purpose at this juncture, whether the trial court could have found that the defendant, in the light of its information under the opinions, made the misrepresentations fraudulently. It is the claim of the defendant dealer that it is obvious that the actionable statement was made innocently and in good faith and grounded upon the written opinions of eminent lawyers.
The trial judge did not specifically discuss this question of the effect of the written opinions touching the fraud of the defendant dealer. However, it must be assumed that he gave attention to this important question and resolved it against the defendant dealer. Obviously, the trial judge, no more than this court, *Page 340 could not discuss in a written opinion all of the questions argued at great length by counsel for the parties.
Mr. Rorick of the defendant dealer firm was an attorney at law, skilled in the field of municipal bonds. It is established by extended testimony that he had been in close touch with the development of the Everglades Drainage District continuously for many years prior to the sale of the bonds in question. He had made several trips to Florida and was familiar with the physical set-up of the drainage district, every development thereof, and with the legislation under which the district was controlled and managed. It is not too much to say that in all probability he was as well informed on every phase of the law incident to the bonds as any attorney or firm from whom the defendant dealer secured opinions.
The experience of the management and control of the drainage district prior to the sale of the bonds was such that the defendant dealer had every reason to believe that every obligation enjoined upon the district by reason of its bonds would be promptly and faithfully observed. This, however, did not justify the general statement that the state of Florida guaranteed the payment of these bonds, nor was there anything in the legislation or in the practice of the state respecting delinquent taxes on lands in the district, which justified the conclusion that the state of Florida pledged its general credit to the payment of the bonds.
The trial court may have found that the Harris opinion did not fully justify the use of the actionable language; and that it did not appear that the defendant dealer, under all the facts, acted innocently in making the representation of facts upon which plaintiff's cause was predicated.
There is a difference in the statements on the face of the circular, where in one instance the defendant dealer expressly stated, as a matter of fact: "In practical effect therefore, the state guarantees the payment *Page 341 of all Everglades drainage taxes and bonds payable therefrom" and in the other instance merely set forth the language of the opinion of the Attorney General of Florida.
The qualification of the actionable statement, "in practical effect therefore," takes nothing away or adds nothing to the force of the language employed. The force of the statement is in that part wherein it is said that the state of Florida guarantees the payment of all drainage taxes, etc. Whether the state guaranteed payment in practical effect, or in any other manner, the language loses none of its convincing power.
The statement we hold to be actionable would, to the layman, indicate without qualification that the state of Florida was generally liable for such taxes if there was a delinquency in the payment of taxes on any tract of land, and no bid for any parcel thereof in a sum equal to the taxes due. The fact was and is that the state was only liable to the extent to which it could, through its trustees, realize money from the lands against which the taxes were levied.
The trial judge in the written opinion sets forth many other cogent reasons tending to support his conclusion that the representations were not innocent but were actionable, as upon common-law fraud.
I am further of the opinion that the trial judge adopted the correct rule as to the measure of damages. The general rule in Ohio is properly set forth in the brief of counsel for defendants, as announced in 19 Ohio Jurisprudence, 543, Section 272, that "the measure of damages for fraud inducing the purchase or exchange of property is the difference between the property as it was represented to be and its actual value at the time of the purchase or exchange."
To like effect are Linerode v. Rasmussen, supra; Elder v.Shoffstall, supra; Gray v. Gordon, supra; Molnar v. Beriswell,supra.
The trial judge recognized the general rule in Ohio, *Page 342 as announced in Schenck v. Knott, supra. He refused to follow this rule but chose to adopt the measure of damages as announced in Smith v. Duffy, supra, and particularly in Hotaling v. Leach Co., supra, with slight modification. This was an action for damages for loss claimed to have been occasioned by fraud in the sale of a bond. It was held that "the plaintiff should be entitled to recover from the defendants the loss which is the proximate result of the fraud that induced the investment * * *.
"The true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong."
It was further held at page 90:
"If we hold that the plaintiff's damages are the difference between the market value of his bond at the time of its purchase and the price paid, we deny him all remedy in an action at law for the deceit."
So in this case, if the rule of damages as announced in theSchenck case, supra, is followed, the plaintiff would recover none of the losses which it has actually suffered by reason of the misrepresentations of defendant dealer. In this case it appears that the bonds were purchased for investment and not for speculation. They were held until almost the date of their maturity. It fairly appears that plaintiff acted with reasonable promptness as soon as it learned that there was a default in the payment of the obligations on the bonds. The rule of damages adopted by the trial court merely accorded to the plaintiff that measure of damages which represented the actual loss which the record disclosed it suffered.
Under the facts here developed the general rule of the measure of damages takes away from the plaintiff any remedy for the wrong suffered. Such a situation is not contemplated in the law. *Page 343