Schilder v. Fort Worth National Co.

DUNKLIN, Chief Justice.

Adolph Schilder instituted this suit against the Fort Worth National Company, a private corporation, to recover money invested by him in certain Brazilian bonds which he alleged later proved worthless. The trial court sustained a general demurrer to his petition, and after he had- declined to amend, his suit was dismissed. From that ruling he has prosecuted this appeal.

It is an elementary rule that as against a general demurrer the allegations of the petition must be accepted as true. The facts relied on by plaintiff material to his recovery may be summarized as follows:

On September 13, 1928, plaintiff had on deposit with the Fort Worth National Bank the sum of $34,500, and on September 13, 1928, Raymond C. Gee, the defendant’s authorized representative, advised plaintiff to invest a part of said money in certain gold bonds issued by the United States of Brazil, which the defendant then had on hand. In order to induce such investment, Gee represented that the bonds were as safe and as valuable for investment purposes as gold bonds issued by the United States; that plaintiff could not lose anything by investing his money in such bonds; that plaintiff would receive a higher rate of interest than he would receive from the United States bonds; that the interest would be promptly paid as and when due; that plaintiff would receive his interest twice each year by clipping the coupons from the bonds and depositing them with defendant for collection. That plaintiff was a man of 65 years of age, of little education, unfamiliar with and incompetent to make investments for income purposes, which facts were well known to the officers of the defendant company. Plaintiff had implicit faith and confidence in the officers and representatives of the defendant company and believed the representations so made by said Raymond 0. Gee to be true and in reliance thereon accepted the same as true. He purchased from the defendant company, on September 26, 1928, six bonds issued by the State of Parana, United States of Brazil, stipulating for interest at 7 per cent, per annum, and reciting that they were external sinking fund consolidated gold bonds due and payable March 15, 1958; also five sinking fund gold bonds issued by the State of San Paulo, United States of Brazil, due July 1, 1968, for all of which plaintiff paid defendant company the sum of $9,556.39. Thereafter, plaintiff collected a part of the interest and a part of the principal on said bonds in the aggregate sum of $2,830 prior to January 14, 1932. On the date last stated, plaintiff learned for the first time that the Brazilian government had defaulted in payment of interest, and thereupon he called upon Raymond O. Gee, the duly authorized officer and representative of the defendant company, and demanded the return of the money paid therefor. Gee then represented to the plaintiff that the failure of the Brazilian government to pay the interest on the bonds was only temporary and that plaintiff would soon receive all the interest due on the bonds which were still worth all that plaintiff had paid therefor; plaintiff believed said representations to be true and relied thereon, refrained from taking any action to recover the money paid thereon, and, continued to hold the same as Gee had advised him to do until April 10, 1933, when he learned for the first time that said bonds were not as they had been represented by Gee, and thereupon plaintiff tendered the bonds to the defendant together with the sum of $2,830 which he had collected thereon, and demanded a rescission of the sale and a return of the money which plaintiff had paid for the bonds, which demand was refused by the defendant company. All of the representations so made by Raymond O. Gee as an officer of the defendant company were false, and made for the purpose of inducing plaintiff to purchase the bonds. Following those allegations was a prayer for a cancellation of the contract of sale of the bonds and for recovery of $9,556.39, paid by plaintiff therefor with interest thereon at the rate of 6 per cent, per annum from September 26, 1928.

The trial was upon plaintiff’s second amended original petition, which was filed October 9,1933. There is no showing in the record when the original petition was filed, but it is quite evident from the allegations in the second amended petition that plaintiff's original petition was filed between the dates of April 10,1933, and October 9,1933.

In appellant’s brief the alleged representations of Raymond O. Gee are summarized as follows:

“That the Brazil bonds were as safe and as valuable for investment purposes as gold bonds issued by the government of the United States.

“That appellant could not lose anything by investing his money in said bonds.

“That appellant would receive a higher rate of interest on said Brazil bonds than he would receive from the United States Government bonds.

“That said interest would be paid as and when due.

“That appellant would receive his interest I twice each year by clipping the coupons from' the Brazil bonds and depositing them with appellee for collection.”

All those representations were expressions of opinions, and the petition does not allege any misrepresentation of facts on which they were based and which induced plaintiff to rely upon the statements as true, and by reason thereof to purchase the bonds. All those representations so relied on by plaintiff were in the nature of speculations and guesses as to what might occur in the future.

As a general rule, misrepresentations as to present or prospective values of property offered for sale are expressions of opinion only and do not afford ground for rescission. 7 Tex. Jur. § 21, p. 916; Putnam v. Bromwell, 73 Tex. 465, 11 S. W. 491; Bank of Washington v. San Benito & R. G. V. Ry. Co. (Tex. Civ. App.) 293 S. W. 599; Texas Farm Bureau Cotton Ass’n v. Craddock (Tex. Civ. App.) 285 S. W. 949; Cope v. Pitzer (Tex. Civ. App.) 166 S. W. 447; Jackson v. Rice & Co. (Tex. Civ. App.) 295 S. W. 352; Downes v. Self, 28 Tex. Civ. App. 356, 67 S. W. 897; Starnes v. Motsinger (Tex. Civ. App.) 278 S. W. 496; Deming v. Darling, 148 Mass. 504, 20 N. E. 107, 2 L. R. A. 743; Kimber v. Young (C. C. A.) 137 F. 744; 1 Black on Rescission & Cancellation, §§ 76, 77, 79, 86.

As shown in the authorities cited, there are many exceptions to that general rule, depending upon a variety of the peculiar circumstances of different situations, such as fiduciary relations existing between the parties to the transactions and other facts which, under the rules of equity, justify reliance by the party deceived upon the opinions expressed by the other party as statements of fact.

Plaintiff’s suit was one in equity, and therefore it was incumbent upon him to make a elear showing of facts, entitling him to that relief, including a showing that he has not through laches lost his right to disaffirm the contract and that he has not ratified it or waived his right to complain of it, 7 Tex. Jur. par. 40, p. 949; par. 37, p. 943. According to allegations in his petition, during the period beginning September 26,1928, and ending January 14, 1932, some three years and four months, he collected all interest accruing on the bonds, and a part of the principal, aggregating $2,830. In the absence of any showing to the contrary, those acts on his part evidence an intention to reap the benefits of his bargain and take chances on the prospects of a continuation of payment of the interest on the bonds according to their terms. He could not thus enjoy the fruits of his-investment and speculate on its final outcome for such a period of time and then invoke the aid of a court of equity for the relief prayed for. And for that reason the court did not err in sustaining the general demurrer to his petition, even though it should be said that he had just grounds for a rescission and cancellation of the sale, in the first instance — a question it is unnecessary for us to determine and which we shall not undertake to decide.

Accordingly, the judgment of the trial court .is affirmed.