On petition for rehearing.
ERICKSTAD, Judge.A 24-page petition for rehearing, accompanied by a 6-page affidavit sighed by Mr. Kye Trout, president of Little Missouri Minerals Association, Inc., and a document entitled “Balance Sheet” and dated May 1, 1963, has been filed by the defendant, Little Missouri Minerals Association, Inc.
Little Missouri Minerals asserts that it bases its petition upon (1) mistakes of fact contained in the Supreme Court opinion," and (2) error in the decision with respect to the statutory provisions of law and controlling principles of law overlooked or not called to the attention of the court.
We shall discuss the points raised by the Corporation which we consider pertinent.
The Corporation contends that the evidence does not warrant a finding of fraud. In support of this contention the Corporation has cited several North Dakota cases to the effect that fraud, including its element of reliance, may not be presumed. Among the cases cited are Steinbach v. Bauclair, 38 N.D. 223, 164 N.W. 672; and Grabow v. Bergeth, 59 N.D. 214, 229 N.W. 282.
The contention of the Corporation is that this court, on the basis of the evidence presented, has presumed fraud and reliance, contrary to the rule stated in the aforesaid cases.
This contention fails to recognize the distinction between a presumption and an inference. In Grabow our court held that it was error for the trial court to instruct the jury that reliance on fraud could be presumed, stating: “There is no presumption which obviates the necessity of proving this fact.” Grabow v. Bergeth, supra, at 291.
This case is the subject of a case note and text discussion in 37 C.J.S. Fraud § 102, p. 408, which sets out the distinction between presumption and inference as follows:
There is no presumption which obviates the necessity of proving the fact of reliance on the representations made, [footnote 44] Such reliance, however, may be inferred from other facts, although not directly proved * * *.
44. N.D. — Grabow v. Bergeth, 229 N.W. 282, 59 N.D. 214.
The statement relied on by the Corporation, that fraud is not to be presumed, was *686contained in a quotation cited with approval in Steinbach, which contained the following:
* * * While, to prove fraud direct evidence is not essential, and the inference of fraud may he drawn from facts and circumstances, such inference must not be the guesswork or conjecture of a jury, but the inference must be the rational and logical deduction from the facts and circumstances from which it is inferred. * * *
This statement was incorporated by this court in Syllabus 1 of Steinbach.
In the instant case fraud was not presumed; it was, however, inferred from the facts and circumstances. The employment of inference from established facts to reach a judicial determination is a common and necessary process. This is especially true in fraud cases. See 25 Modern Federal Practice Digest, p. 699, key No. 58 (3):
C.C.A.Ill.1947. Fraud is rarely susceptible of direct proof, but must ordinarily be established by circumstantial evidence and legitimate inferences arising therefrom, which, taken as a whole, will show the fraudulent intent or purpose with which the party acted.
Connolly v. Gishwiller, [7 Cir.] 162 F.2d 428, certiorari denied 68 S.Ct. 166, 332 U.S. 825, 92 L.Ed. 400.
We accordingly adhere to that part of our opinion which held that fraud was in-ferable from the facts and circumstances.
Another contention of the Corporation is that the quoted argument of counsel for the landowners relating to the alleged unconscionable character of the transaction contained statements of fact and data not included in the record. We have reviewed these arguments of counsel and find that they are substantially supported by the record and that this contention of the Corporation is further without merit for the reason that we did not base our opinion upon the said arguments, as evidenced by the following language from our opinion:
Meritorious as the argument appears that the unconscionable arrangement and classification of the stock in itself constituted constructive fraud, we need not determine this question in the instant case, as we are convinced that actual fraud has been committed by the corporation.
The next point we shall consider is the Corporation’s contention that this court made a mistake in fact leading to its ultimate conclusions of law when it said:
In the letter which was sent to landowners soliciting the exchange of their minerals for stock, we note the following with reference to the structure of the corporation: * * *.
The Corporation alleges that this assumes without proof that this letter was sent or delivered to all of the plaintiffs and that the record is to the contrary, because only one stockholder, Robert Still, testified that he received it.
In respect to this contention, it is our view that under the circumstances of this case, the president of the corporation having acknowledged that in connection with the solicitation of the exchange of minerals for stock the corporation circulated various materials and literature, including the letter and the brochure, partly through the mail and partly by distributing them generally at solicitation meetings, testimony of their receipt by each plaintiff is unnecessary. The Corporation cannot escape the practical consequences of the distribution of this fraudulent material by asserting that each plaintiff must testify as a precedent to his recovery that he received *687the material, which was admittedly used and distributed by the Corporation, and which was intended for receipt by him as a prospective purchaser of the stock.
It is also significant to note that when Mr. Trout, president of the Corporation, was asked: “Did you say that the Class ‘A’ stockholders would have sixty per cent of the voting rights?” his counsel replied: “We concede that revelation was made in the prospectus and other literature in connection with the securities issue.”
Mr. Trout on cross-examination admitted that he said in a deposition taken before trial that the letter and brochure were parts of the publicity material the corporation instructed its representatives to use in soliciting exchanges of minerals for stock from the plaintiffs and that pursuant to these instructions this material was generally taken out in the field by the solicitors for this purpose.
Another alleged error on the part of this court is the statement contained in the opinion as follows: “Under a 1959 amendment to our Securities law, the sale of the stock in the instant case would today be prohibited.”
As the amendments were made to the securities law subsequent to the original registration of the stock issued by the corporation in the instant case, they are not controlling and were not intended to be controlling. The statement was made to draw attention to the change in the statute which authorized the Securities Commissioner to refuse to register stock that proposed disposal of securities on unfair terms. It was intended that this would discourage the offering of stock on unfair terms in the future by others. The record before us convinces us that the disposal of the securities in the instant case was on unfair terms.
The Corporation alleges that these securities were later reregistered in 1961, 1962, and 1963, and that this refutes our statement that under the amended statute the sale of the stock in the instant case would be prohibited. We have not been able to find the proof of this allegation in the record. It is our view, however, that mere reregistration, if it were accomplished, would not establish that the reregistration was legally proper.
The next contention of the Corporation is that the plaintiffs Charles Davidson, A. J. Gilman, Alfred G. Fasching, Edward H. Meyer, and Donald F. Wischow, all being members of the “Advisory Board of Directors,” had full knowledge of the corporate affairs, voting rights, total investments of Class B stockholders, and other matters, all contrary to the Court’s holding of concealment of facts. Our search of the record, however, does not disclose that the “Advisory Board of Directors” had knowledge of the fact that the Class A stockholders would have 60 per cent of the voting rights only if all of the Class A stock were issued. A reference to the transcript reveals that Mr. Davidson talked to Mr. Trout about voting rights and that Mr. Trout explained the voting rights to Mr. Davidson, but there is no indication that he explained the voting rights to Mr. Davidson any more fully or any differently than he explained them in his letter or brochure to the prospective purchasers.
A study of the corporate minute book discloses that names were suggested as proposed members of the “Advisory Board of Directors” at a stockholders’ meeting held March 29, 1958. The minutes of the meeting do not indicate that these names were selected because these persons had special knowledge of the corporate affairs, but, on the contrary, it appears that they were chosen because of the areas they represented. The minute book does not disclose that the “Advisory Board of Directors” had any special authority which would permit its members access to records and informa*688tion not otherwise available to the other stockholders. In fact, the minutes of that meeting state that Mr. Trout presented the matter of the establishment of this board as an item of business entitled “Creation of Advisory Board of Directors.” Mr. Trout asked for the creation of this board “to assist with ‘advising and counciling [sic] in the operation of the company.” This does not in any way indicate that the members of the “Advisory Board of Directors” were given or were intended to receive any information other than that given to the other stockholders.
The Corporation urges that the fact that the stock sale proposals were not unconscionable is proved by the actions of Mr. Abernethy, one of the organizers of the Corporation, and members of the “Advisory Board of Directors” in exchanging minerals for stock. In light of what we have previously stated, we do not believe that this point deserves a further comment. It is sufficient to say that we find it difficult to see the relevance of Mr. Abernethy’s exchange of minerals for stock. Mr. Aber-nethy is not a party plaintiff. He could very easily have exchanged his minerals for stock to aid in the promotion of the sale of Class A stock, for as a promoter and an owner of Class B stock, he was part of the group that benefited most from the successful sale of Class A stock. The significance of the actions of the members of the “Advisory Board of Directors” has been previously discussed.
The last point which we shall consider is the contention of the Corporation that: “The Court’s opinion overlooks the facts that upon trial, the trial court continually excluded and prevented, and foreclosed the defendants’ attempts to examine and cross-examine regarding knowledge that plaintiffs and plaintiffs’ witnesses had about their voting rights, and other matters being claimed. In other words, the trial court repeatedly took the position that fraud was not an issue and that no fraud was committed. (Transcript, pages 4S8, 459, and 468 through 470) * * * ”
Our study of the transcript pages cited in support of the first part of that contention discloses that plaintiffs’ counsel objected to a question which was asked to determine what action the witness took subsequent to the conveyance of the minerals to the -Corporation and following the receipt of the stock certificates therefor. It did not relate to the witness’s knowledge of the corporate structure prior to the consummation of the transaction. It therefore was a matter which, if relative at all, was relative to the question of laches rather than the question of fraud.
The fact that the trial court may have repeatedly taken the position that fraud was not committed resulted more in favor of the defendant corporation than it did in favor of the plaintiffs, for, in most instances, the court’s position prevented inquiry on the part of the plaintiffs or prevented presentation on the part of the plaintiffs of testimony or evidence designed to prove fraud.
Although the trial court’s findings of fact are entitled to appreciable weight, on trial de novo we are not bound thereby. We are certainly not bound by such findings when they are based on an erroneous conception of law.
We have reviewed the entire case and all of the evidence and have found actual fraud. We therefore adhere to our original opinion.
TEIGEN, C. J., and STRUTZ and KNUDSON, JJ., concur.
MURRAY, J., not being a member of the Court at the time of submission of the case, did not participate.