Lane v. Smith , 1878 Me. LEXIS 59 ( 1878 )

DicKERSON, J.

This is an action of assumpsit to recover of the defendant the proceeds of the plaintiff’s promissory note, payable to his order, indorsed by him in blank and given in payment of his subscription for ten shares in the purchase of the patents of the Maine Abel Loom Company, at one hundred dollars a share. The alleged ground of recovery is that the note was obtained by fraud and discounted by the defendant at the Eastern Bank in Bangor.

If the action is maintainable,.it is upon the count for money had and received; and we think that it is not maintainable upon that count, as the evidence fails to connect the defendant, either with the plaintiff’s subscription for stock, or his giving his note in payment therefor, in such a way as to make him a party to the fraud, if any there was, in either of these respects.

There is not a scintilla of evidence that the plaintiff had any conversation with the defendant in respect to the purchase or payment of stock in the Abel Loom Company; nor does it appear that he requested or authorized any one to confer with or make representations to the plaintiff upon that subject. 1 The plaintiff testifies that all his negotiations were conducted with Shaw, the agent of the loom company. His language is, “ I signed the subscription paper from the representation that was made to me by Shaw at the time, and having the list shown me of the subscribers;....! should not have signed it if it had not been for Jewett’s and Smith’s names on it.” The defendant is not liable for the representations made by Shaw, as agent of the loom company; and this testimony of the plaintiff, therefore, negatives the defendant’s participation in the plaintiff’s negotiations for the purchase or payment of the stock in controversy.

But the plaintiff claims to hold the defendant responsible for his original engagement with the Abel Loom Company to pay for his shares in services and influence, and for his pretended conspiracy with others to hold out by the terms of subscription to the subscribers that the price of the patents to be purchased was $50,000, and that the subscribers were to stand upon the same footing, pro rata; whereas, the real cost of the purchase was only about half of the sum named, and fifty per cent of the shares was subscribed for fictitiously and in bad faith, upon the express understanding with the vendors that such subscribers should have their shares substantially without charge.

The obvious answer to the first of those alleged grounds of recovery is, that it was perfectly competent for the parties to make the contract complained of; and as it does not appear that the defendant, in fulfilling his part with the loom company, conducted fraudulently or illegally, he cannot be held liable on this ground. Upon the second alleged ground of the defendant’s liability, the evidence fails to show the defendant’s knowledge or participation in the purpose or transaction therein set forth. It does not appear that he had any knowledge of any agreement between Shaw and Jewett and Leavitt and others, inconsistent with the tenor of the subscription ; he, therefore, is not liable on account of any such agreement.

The purchase of the plaintiff’s note and other notes given for the patents is relied upon in the argument as a badge of fraud. This argument, however, ceases to have any legitimate force when it is considered that the evidence shows that that purchase had no connection whatever with, and was entirely independent of, the defendant’s subscription, or the payment and canceling thereof.

The defendant, as a prior signer of the agreement, whatever may have been his reputed sagacity and wealth, did not thereby guarantee the novelty of the invention or the' value of the patents to the subsequent subscribers. The plaintiff had the same opportunity for determining these questions as the defendant. The machine was on public exhibition in Bangor, weaving cloth, several days before the plaintiff subscribed ; he repeatedly witnessed its practical operations, and if he chose to subscribe upon the faith of Shaw’s representations and Jewett’s and Smith’s names, rather than upon his own judgment, he alone must abide the consequences ; it was a risk of his own seeking, not Smith’s.

As now presented, the evidence fails to show that the defendant made any false or fraudulent representations, used any false pretenses, or engaged in any conspiracy, whereby the plaintiff was induced to agree to take stock in the proposed purchase of the Abel Loom patents, or to give his note in payment thereof. The defendant bought the plaintiff’s note in the market, duly indorsed by him, for value, and we do not perceive any valid ground for denying to him the rights and remedies that appertain to a bona fide holder of a promissory note for value.

Plaintiff nonsuit.

Appleton, 0. J., Danfoeth, Yieg-in and Libbey, JJ., concurred in the result.