Industrial Transp. Co. v. Russell , 1922 Tex. App. LEXIS 499 ( 1922 )

WILLSON, C. J.

(after stating the facts as above). [1] Appellant insists that the representations made by its agents, as found by the jury, were not statements of fact, but of opinions merely, and therefore could not properly be made the basis of a judgment against it.

As the general rule is that false representations are not actionable unless they relate to a fact susceptible of knowledge which existed at the time the representations were made, or had existed before that time (12 R. O. L. 244), the contention must be sustained, if the representations should be construed to have been opinions, unless they were, and we think they were not, within some exception to the general rule.

Appellee insists that the statements were not mere opinion, and if they were that they nevertheless entitled him to the relief he obtained, because they were fraudulently made arid were based on knowledge appellee had a right to believe appellant’s agents possessed of facts he was ignorant of.

[2, 3] We are inclined to think appellee’s insistence is tenable so far as it bas reference to the representation as to the value of the stock at the time appellee purchased it, and, if the jury had, found that the representation was false, that the judgment should not be regarded as unwarranted by the findings. Barber v. Keeling (Tex. Civ. App.) 204 S. W. 139; McDonald v. Lastinger (Tex. Civ. App.) 214 S. W. 829. But the jury did not so find. What they did find was that the value of the stock at that time was “unknown.” It is obvious, therefore, that the representation in question did not warrant the judgment in appellee’s favor.

[4] The other representations were: (1) That they [the agents] “had intimate knowledge of the value of the stock in controversy” and of appellant’s business. (2) That “the existing condition of the business at" that time was such they could and did guaranty (a) that the stock would be worth on the market after August 1, 1920, 25 per cent, more than he was paying for same,” and (b) that appellee “would receive annual dividends of at least 8 per cent, on the amount” he vested in it. (3) That in the event appellee became dissatisfied with the stock, appellant “would refund to him the sum paid on said stock, and would cancel and return the note he executed in payment therefor.” In the nature of things, 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 appellee reasonably must have known they could not, know what the stock would be worth after August 1, 1920, nor the annual dividends which would be paid on it; nor could they know that in the event appellee became dissatisfied with his purchase appellant would cancel his note and return money he paid for the stock. Therefore the representations, except the one as to knowledge the agents had of appellant’s business, which could not alone be made the basis of a judgment, were clearly expressions of opinion merely, on which appellee had no

right to rely. 1 Black on Rescission and Cancellation, §§ 86, 89; Crosby v. Emerson, 142 Fed. 713, 74 C. C. A. 45; Bank v. Fulton, 156 Iowa, 734, 137 N. W. 1019; Weston v. Railway Co. v., 90 Ga. 289, 15 S. E. 773; Swan v. Mathre, 103 Iowa, 261, 72 N. W. 522. The law applicable is stated as follows in the cited section 86 in Black on Rescission and Cancellation:

“In order to effect a sale, induce the making of a contract, or place a proposed investment in a favorable light, it is quite common to make representations as to future value productiveness, efficiency, or economy or as to expected earnings or profits. But since that which lies in the future cannot be a matter of certain knowledge, it is held that all such representations must be taken and understood as mere expressions of opinion, and therefore their non-fulfillment cannot be treated as a fraud. Representations which are mere guesswork, it is said, are not a proper basis for a charge of fraud, and statements of forecast, opinion, or expectation, which are in substance mere matters of inference, cannot be considered false representations justifying the rescission of a contract.

“This rule is frequently applied in statements made to persons to induce them to subscribe for stock in a corporation or to purchase the shares of an existing company. All assertions in regard to the future earnings of the company or the successful conduct of its business, in regard to the dividends it will pay or the profits to be derived from it, or in regard to an expected or predicted increase in the market value of the stock, are merely matters of opinion, on which the subscriber or purchaser has no right to rely, and though they are not verified by the course of events, or prove- to have been false when made, ór even to have been made with no expectation of their ever being realized, still they furnish no ground for rescinding the contract.” .

Appellee cites quite a number of cases as supporting his contention to the contrary of the conclusion we have reached. As we understand those cases, they are all so unlike this one in their facts as to render them of no value as authority in determining the question made by facts of this case.

[5] It follows from what has been said that we think the judgment was unwarranted, unless it should be held that it was supported by the finding that appellant’s agents “guaranteed” that the stock would be worth On the market after August 1, 1920, 25 per cent, more than he was paying for it, that he would receive annual dividends on it of not less than 8 per cent, on the sum he invested in it, and that if he should become dissatisfied with his * purchase appellant would cancel his note and pay back the part of the purchase price he paid in money. If the finding meant that the statements of appellant’s agents were not mere “representations,” but were “guaranties” in a contractual sense, it is plain it did not warrant the judgment; for appellee’s suit was to annul and not to enforce the contract he entered into.

As we view the record, the judgment was not warranted by the findings, and should be reversed, and judgment should be rendered here that appellee take nothing by his suit. It will be so ordered.

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