Opinion
No. 26622.
January 28, 1929. Suggestion of Error Overruled March 25, 1929.
1. FRAUD. Testimony that purchasers' employee, after consummation of contract for sale of timber and accessories, misrepresented timber, held properly excluded as incompetent to establish alleged conspiracy.
In action for damages for alleged false representations in the sale of timber, sawmill outfit, dry kiln, and railroad, testimony that employee of purchasers, after the consummation of the contract, showed them certain timber which he represented was included in the sale, which they later discovered was not embraced within the deal, was properly excluded on ground that such person was in the employ of purchasers, and that representation was as to quality of timber, whereas the action was based on quantity, and incompetent of itself and alone to establish alleged conspiracy.
2. APPEAL AND ERROR. Permitting defendants to introduce telegram was not harmful error, where plaintiff had theretofore testified to every material fact therein.
Where one of plaintiffs, in action for damages for alleged false representations in sale of timber, had testified to every material fact in certain telegram, there was no harmful error in thereafter permitting defendants to introduce telegram in evidence.
3. FRAUD. Instructions requiring evidence of fraud in sale of timber, sawmill outfit, and railroad to be clear and convincing held not erroneous.
Instructions, in action to recover damages for alleged false representations in the sale of timber, sawmill outfit, dry kiln, and railroad, requiring the evidence on issue of fraud to be clear and convincing, held not erroneous.
4. FRAUD. Instruction precluding recovery for alleged false representations, if purchasers relied on certain estimates and not on vendor's representations, held not erroneous.
In action to recover for alleged false representations in the sale of quantity of timber, instruction that there could be no recovery in case purchasers relied, in making the purchase, on a certain estimate, and not on any representation made by the defendants, held not erroneous as being without support in testimony, in that qualification that reliance was not on any representation by vendors was sufficient, even though there had been no estimate referred to.
5. FRAUD. Purchasers cannot recover for alleged false representations as to earning capacity of railroad purchased, in view of purchasers' knowledge.
Purchasers held not entitled to recover for alleged false representations in regard to earning capacity of railroad purchased, where they saw condition of railroad and equipment before they made the deal, by an inspection, and knew that railroad was in bad condition, and immediately, on consummation of the deal, began to expend large sum of money upon railroad.
6. FRAUD. Instruction precluding recovery for alleged false representations in sale of timber against one having no knowledge of representation held not erroneous.
In action to recover damages for alleged false representations in the sale of timber, instruction that, in case one of defendants did not know of the representations, there was no liability, held not erroneous.
7. DAMAGES. Punitive damages predicated on actual damages are not recoverable, if no actual damages are allowed.
In all cases where punitive damages are predicated on actual damages, punitive damages are not recoverable, if no actual damages are allowed.
APPEAL from circuit court of Lauderdale county, HON. R.M. BOURDEAUX, Judge.
Neville Stone, S.A. Witherspoon and Currie Amis, for appellants.
The court erred in excluding the testimony of J.A. McCain with reference to the showing to himself and Herbert Arky after the purchase of the property by them of certain timber as timber acquired from C.W. Cochran, which timber was not in fact so acquired and did not in fact belong to them.
There would have been no doubt about the admissibility of this testimony under the pleadings had the wrong timber been exhibited to McCain and Arky prior to purchase. The only reason for this exclusion would be that the sale had been made and if, as a matter of fact, although the sale had been made, a large part of the purchase price was still owing, then the accomplishment of the purpose originally agreed upon had not been had, and any act or representation of West in carrying out that common purpose was, as we submit, competent as evidence against the defendants. That a co-conspirator is liable for any act or representation made by the others in the carrying out of the common purpose until the object of the conspiracy has been finally accomplished has been repeatedly held by the courts as has the rule that the wrongful act of one is the wrongful act of all. — Globe Rutgers Fire Insurance Co. v. Firemen's Fund Insurance Co. et al., 97 Miss. 148; Gurney v. Tenney, 84 N.E. 428.
The court erred in allowing a certain telegram made an exhibit to the testimony of Herbert Arky, the telegram being from Colmer-Green Lumber Company, of date February 2, 1922, addressed to C.W. Cochran Lumber Company, and being as follows, to-wit:
"McLean, Miss. 9:00 A.M. Feb. 2, 1922.
"C.W. Cochran Lumber Company, "Meridian, Mississippi.
"We will pay you one hundred fifty thousand dollars for your holdings in Wayne and Choctaw County all other provisions of the contract to apply wire what we may expect.
"COLMER-GREEN LUMBER COMPANY."
This telegram was sent four days after the offer made by the appellants on the night of the 27th had been accepted by Mr. Cochran, and at the time of its receipt Mr. Cochran was bound by a contract to the appellants and P.C. Hargrave for the sale by him to them of this proposition at and for the sum of one hundred forty-two thousand five hundred ($142,500) dollars. Its highly prejudicial effect on the appellants before the jury can be easily understood.
This telegram was certainly not admissible to show that the timber was there nor was it admissible to show that the earning power of the railroad was as represented, or as to the value of the proposition or on any other issue of fact raised in the pleadings in this cause. No citation of authority is necessary to show that an offer made by some third person is inadmissible in a suit of this nature after the closing of a deal on which the suit is based as to the value of the proposition purchased, or as to the representations made. If that were not true, then any person could defraud another and when sued by the person defrauded have conveniently on hand third persons who had made offers equal to or in excess of the offer made by the person defrauded and suing.
The court at first refused to admit this telegram, but thereafter decided to admit it. Its admission was objected to by the appellants and exception taken. The court evidently admitted the telegram because of certain testimony theretofore given by Herbert Arky, one of the appellants, with reference to it. The record discloses with reference to this telegram that the appellants on the examination of Mr. Rothenberg from whom it was sworn by Arky he received this telegram between the dates of January 28th and February 6th, at the store of Marks-Rothenberg Company, questioned Mr. Rothenberg as to how the telegram came into his possession and as to his giving it to Mr. Arky. It was not offered in evidence by the appellants.
Under no theory do we see how the telegram could have been admissible. It was not contradictory of anything Arky had sworn to with reference to it, because in his examination by Senator Brooks he had stated that Colmer-Green had offered one hundred fifty thousand dollars and reference had been made to some contract which he had not seen and about which he did not know. It was not contradictory of Arky's statement that Mr. Rothenberg had given him the telegram because Mr. Rothenberg denied that. The telegram would not have affected the testimony either of Rothenberg or Arky on that question.
The court erred in refusing appellants' instructions for punitive damages. These instructions requested the allowance of punitive damages, in the event that the defendants, and each of them knowingly, wilfully, fraudulently, maliciously and deceitfully, or in utter and reckless disregard of the rights of the plaintiff, stated to the plaintiff, and each of them, as facts, there were thirty-two million feet of timber on the Cochran tract and that the Washington Choctaw Railroad earned one thousand dollars per month when the sawmill was in operation, for the purpose of inducing the plaintiffs to purchase such proposition, and on which statements the plaintiffs relied and were induced thereby to purchase it.
It is true that in this case the jury allowed no actual damages, but we think the trial court was clearly in error in refusing to grant these instructions. It will be remembered that the plaintiffs' testimony showed a common motive on the part of Cochran and Rothenberg for a sale of this timber and such a joinder of efforts as to leave a legitimate inference, if the jury believe the plaintiffs' testimony, of a conspiracy between them to sell this property to the plaintiffs. In the event there was a conspiracy and the statements made were false, and knowingly false, then as we submit, there could have been no question about the plaintiffs being entitled to these instructions. See 4 Sutherland on Damages, 4432; 27 C.J. 104, par. 265; Wheatcraft v. Meyers, 107 N.E. 81; Laughlin v. Hopkinson, 126 N.E. 592; Intermountain Lumber Co. v. Rodesky, 227 P. 564.
The first instruction granted to the defendants by the court, which we desire to discuss is in part, as follows: "But the law is that false representations and deceit must be established by testimony that is clear and convincing. The burden is upon the plaintiffs in this case to establish to the satisfaction of the jury by a preponderance of the testimony and by testimony that is clear and convincing that the defendants made to the plaintiffs representations, etc."
There is no explanation as to how clear or convincing the testimony must be. The jury was first told that the burden was on the plaintiffs to establish their case by a preponderance of the testimony and to the satisfaction of the jury which, as we submit, was the only burden that could be placed on these plaintiffs, or any other plaintiffs in a civil action; and then the instruction goes on to say not in the alternative but that in addition to proving this case to the satisfaction of the jury by a preponderance of the testimony, the plaintiffs must also prove it by testimony, clear and convincing. How clear and how convincing? The jury was left without any guide at all as to how clear or convincing the testimony must be. In addition to being unnecessary and of placing a burden on them not provided for by law, as we understand the rule in Mississippi, it left to the imagination of the jury and to their own ideas just how clear and how convincing the evidence might be. The evidence might have satisfied the minds of the jury and might have met the burden on the plaintiffs of the preponderance of the testimony. However, the jury may have concluded that not only must the testimony satisfy us but that in addition it must be convincing to them beyond any reasonable doubt.
This language in the instruction, taken with the other language that men are presumed to be fair and honest and that the law does not lightly impute fraud, might very easily have led and in all probability did lead the jurors to conclude that the burden of proof in this case must be much stronger than is usual in civil cases, and must approach that degree of satisfaction in the minds of the jury required in cases where one was being tried for crime.
There is no way to calculate how damaging the effect of this language may have been, placed as it was in this instruction, and taken in conjunction with the other language, upon the minds of the jurors in this case. We submit that the rule in Mississippi does not require clear and convincing proof and, as a matter of fact, the rules in a majority of the jurisdictions in this country require nothing more in a case of fraud than that the plaintiff establish his case by a preponderance of the testimony. An action of deceit is nothing more or less than a civil action. It is true that some of the courts have held that the evidence must be clear and convincting; some that it must be clear proof, and other expressions of like nature. However, as we submit, on examination of the authorities, a majority of the courts only hold that the plaintiffs must establish their cause, as in any other civil case, by a preponderance of the testimony. 27 C.J. 62; 12 R.C.L. 438.
We have carefully examined the holdings of the various courts on this question, and we find a hopeless conflict in the decisions from the various states. The federal courts likewise are in hopeless conflict. In many instances one state will hold both ways, as is true in Alabama, Arkansas, Ohio, Illinois, Maine, Kentucky, Missouri and California.
A number of the states held throughout that all that is necessary is to establish the material allegations in the declaration by a preponderance of the testimony, this being true of Michigan, Nebraska, Rhode Island, North Carolina, and as far as our investigation was able to develop, Massachusetts, New York, Vermont and Texas. Some of the courts seem to hold the other way; that is, that the evidence must either be clear proof, clear and convincing, clear and cogent, or other similar expressions, the principal courts holding this way being Wisconsin, Washington, Virginia, Oregon and Oklahoma.
As the law now is in Mississippi on the question of fraud and deceit, however, there would seem to be no occasion for any stricter rule as to the weight of evidence in a case of this kind than in any other civil action. Under our rule, as we understand it, the question of knowledge in the making of a false representation is immaterial. McNeer Dodd v. Norfleet, 74 So. 577; Alexander v. Meek, 96 So. 101; Hines v. Lockhart, 105 So. 449. We can understand, how, under the old rule, or how in a case of straight-out fraud where it would be necessary to prove knowledge that an instruction with reference to a presumption that a man was presumed to deal fairly would be correct, but even under that theory of the law, we do not see how or why there should be any greater burden upon the plaintiffs, as far as the weight of the evidence was concerned and the burden of the proof, than would be required in any other civil action. John Doe v. Anthony Fignowitty, 12 Miss. 57; 10 R.C.L. 1016. See Nelson v. Pierce (R.I.), 28 A. 806. It is true that our court in Carter v. Eastman-Gardner Lumber Co., 95 Miss. 654, said: "Fraud is not to be presumed but must be clearly proven." In that case Judge MAYES rendered the opinion of the court. That, however, was an equity case, and the facts consisted largely of circumstances, and as we understand the opinion, Judge MAYES was not here attempting to lay down a rule of evidence for the guidance of jurors on a trial of cases at law. Assuming, however, for the sake of the discussion that he meant this, and that he was announcing a rule of law for the guidance of trial judges in lower courts as to the weight of the evidence in a case of fraud and deceit, there is a great deal of distinction between "clearly proven" and "clear and convincing proof." We submit that it was not Judge MAYES' intention to lay down any such rule at all, nor was he intending to provide a rule as to the weight of evidence in a trial of causes involving fraud and deceit before juries, but that he was announcing a rule in equity of substantive law governing cases of the kind then being considered by the court.
There is a great deal of difference between clear proof and clear and convincing testimony. Clear proof is defined by one court as meaning nothing more than such preponderance of the testimony as overcomes the presumption of innocence. Virginia Ins. Co. v. Holt, 54 So. 8. See, also Ross v. Cleveland Sons, 133 S.W. 315; Gumberg v. Treusch, 61 N.W. 872; Walsch v. Taitt, 105 N.W. 545; Hampson v. Spong, 173 P. 909; Liggon v. Minton, 125 S.W. 304; Bean v. Bickley, 174 N.W. 675. The court was in error in charging the jury that even though they may believe that Rothenberg stated that the plaintiffs would have a profit of one hundred thousand dollars on the signing of the papers and that they would make a fortune out of it, that these were expressions of opinion for which he was not liable, unless the jury believe there was a conspiracy between them. Why was a conspiracy necessary to make these representations actionable, and how could the conspiracy make them actionable if they were not as a matter of law actionable in themselves? If a conspiracy exists for the perpetration of a fraud each conspirator is, of course, liable for every actionable act and representation of every other conspirator in the carrying out and accomplishment of the purpose agreed upon. Yet we know of no rule of law nor any rule of reason that would make a conspirator liable by reason of the mere fact of a conspiracy for an act or representation non-actionable in itself.
In a discussion of this question which is one of peculiar and particular interest, and as far as we have been able to ascertain has never been squarely decided by our court, we are going to do so in connection with the language of the instruction now under discussion and the language of another instruction given by the court for the defendant Rothenberg which is in the following words: "That if, from all the facts and circumstances in evidence in this case the experience and situation of the parties and their knowledge of and relations to each other, the jury believe that the plaintiffs knew that Rothenberg had no knowledge of his own as to the property involved, or its quantity, value and earning capacity, and knew that such statements as he may have made were necessarily mere opinions of Rothenberg, then the plaintiffs may not recover as against the defendant, Rothenberg, but should return a verdict in favor of Rothenberg, unless the jury believe that Rothenberg and Cochran fraudulently conspired to induce the plaintiffs to make the purchase. There are two questions involved in this instruction. First, when is a statement one of fact and one of opinion within the meaning of the law? Second, is one liable, situated as was Rothenberg, for the expression of an opinion at all?
There is no limiting language in this instruction at all. Under it the plaintiffs could not have recovered, no matter how consciously false the opinion of Rothenberg was, if the plaintiffs knew that Rothenberg had no knowledge of his own as to the property involved, its quantity, value and earning power, then the door was closed to them for recovery against him. This was virtually a peremptory instruction in favor of Rothenberg. The record disclosed the fact, without dispute, that he was a merchant and knew nothing about timber; that he had never seen this proposition and of necessity any opinion that he had must have been derived from others and not of his own knowledge. It would have been impossible for him, under the facts, to have had any knowledge of his own, but the only knowledge that he could have had was such as he acquired from Cochran or some other person. Under this instruction, even though he knew that Cochran's records disclosed there were less than thirty-two million feet of timber, and although he knew further that these same records disclosed that the proposition was a losing one and worth nothing like one hundred forty-three thousand five hundred dollars and even though he knew that the railroad instead of making one thousand dollars per month had been losing large sums, and with this information made the statements testified to by the plaintiffs for the purpose of deceiving and getting them to enter into this contract so that his company and affiliated interests could collect the money due them, yet notwithstanding all of this, under this instruction the plaintiffs could not have recovered against him, if they, as a matter of fact, knew he had no knowledge of his own but was merely expressing his opinion.
If this principle of law were correct, then Mr. Cochran was entitled to the same instruction, because it is undisputed that any information Mr. Cochran had as to the quantity of timber, at least, came from other persons. No one attempted to testify that he had estimated the timber or that he had any personal knowledge as to the amount of it, but that the only knowledge that he had was not his own and acquired by him but was that obtained from estimators on their opinion as to the amount of timber on the land.
We contend that the expression a consciously false opinion is a representation of fact, irrespective of knowledge. 26 C.J. 1093; Vulcan Metals Co. v. Simmons Mfg. Co., 248 Fed. 853.
The well-established and general rule is, as between the buyer and seller, that misrepresentations with reference to matters of opinion where the parties deal at arm's length are not actionable. However, this is not the rule with reference to representations made by an apparently disinterested third person. 26 C.J. 1161.
We shall now address our argument to the question, is a third person liable for the expression of an opinion to a person defrauded? The court will bear in mind that there is no limiting language in either of these instructions, setting out that the opinions must be honest, and that Mr. Rothenberg must have had no interest in the transaction. No distinction whatever is made between false opinion and true opinion, nor is any rule given as to the opinion being made with or without scienter. The statement simply is, reduced to its last analysis, that opinions such as covered by the instructions were not actionable. The overwhelming authority in America condemns these instructions. Ensley v. Jones, 12 N.E. 347; Kenner v. Hardin, 28 Am. Rep. 615; Medbury v. Watson, 29 Am. Dec. 726; Prigge v. Selz-Schwabb Co., 158 N.W. 975; Adams v. Collins, 82 N.E. 498; Chellis v. Cole, 101 A. 445; Hancon v. Kline, 114 N.W. 504; McLean v. Parker, 129 S.W. 500.
Baskin, Wilbourn Miller, for appellee, Rothenberg.
It is insisted by appellants in their brief that the lower court erred in excluding certain testimony of the appellant, J.A. McCain with reference to alleged representations made to him by L.U. West, after the transaction was concluded and the timber purchased and during the time that West was a stockholder of the Turkey Creek Lumber Company and acting as manager of such company by appointment of its directors, appellants both being directors of such Turkey Creek Lumber Company.
We submit there is no merit in this assignment of error and the ruling of the court below was correct. The witness, Mr. McCain was asked a question which did not itself call for any statement about representations made by West. At any rate, after the witness had begun an answer to the question which indicated that he was going to detail conversations between himself and West at a time when the Turkey Creek Lumber Company was the owner of the property and was operating it and at a time when McCain was president of that company and had West in charge as manager for Turkey Creek Lumber Company, objection was made. The jury retired, and the witness was examined out of the hearing of the jury with reference to conversations had between him and West and representations made to him by West while West was manager for Turkey Creek Lumber Company, in which the witness contended that West had misled and deceived him about the timber and had showed him timber that did not belong to Turkey Creek Lumber Company and had not been purchased by it. This testimony was objected to and the court inquired: "All this was after your purchase?" The answer was made: "Yes, sir, all of it was after the purchase." The court sustained objections to this type of testimony and excluded it. We say this was proper under the facts. West was not a party to the suit, but in one count of the declaration it was alleged that he was a co-conspirator with the other conspirators. The extent of the conspiracy was alleged to be to make a sale of the property from Cochran to appellants and Hargrave. It was not shown that West was a party to any such conspiracy, and the testimony did not relate to any acts or conversations or statements of West made prior to the purchase of the property which was the consummation of any alleged conspiracy. Such acts or representations or statements of West, if made, even if he were a co-conspirator, could not have possibly induced the purchase and sale which was the alleged purpose of the alleged conspiracy. The defendants who were sued would not be bound, under all the settled law of the land, by any acts or statements done or said by West after the sale of the property had been completed and Cochran had transferred it to McCain, Arky and Hargrave.
The ruling of the court was further correct for the reason that after purchasing the property McCain, Arky and Hargrave conveyed it to Turkey Creek Lumber Company for stock in that company to an amount equal to the cash payment made by them and the Turkey Creek Lumber Company assumed the payment of the balance of the purchase price to Cochran. The Turkey Creek Lumber Company was not composed of Arky, McCain and Hargrave alone. Julius Arky had a material part of the stock; West himself bought forty-seven shares and became a stockholder in and employee of the Turkey Creek Lumber Company; and at the time of the acts and statements of West to which the witness McCain referred and as to which his testimony was excluded by the court, West, by independent transactions of his own with McCain, Arky, and Hargrave had become a stockholder in Turkey Creek Lumber Company and had been named by that corporation's directors as its manager and was the agent and employee of the Turkey Creek Lumber Company of which McCain was president. Under these facts, it seems perfectly patent that the court would have committed reversible error against the appellees had the court admitted this testimony about the alleged misrepresentations on the part of the manager of the Turkey Creek Lumber Company to the president of that corporation during the period that the Turkey Creek Lumber Company owned and was undertaking to operate it.
It is next insisted by appellants' counsel that the court below erred in admitting, over the objection of the appellants, a certain telegram from Colmer-Green Lumber Company to C.W. Cochran.
We submit that this objection is without merit. The appellants first brought this telegram into the record. Mr. S. Rothenberg, as previously stated, was the first witness called by appellants, and in volume 1, beginning on page 100, counsel for appellants asked questions about it of Rothenberg which Rothenberg answered. The appellants then sought to show by the witness, Arky, that the telegram had been delivered to him by Rothenberg; whereas Rothenberg had denied any knowledge of the telegram. The appellees showed by West that he was the one that delivered the telegram to Arky after the whole transaction had been completed and when he, Arky, McCain, Hargrave and Julius Arky had all gone down to the mill to begin the operations. It would have been extremely unfair to the appellees, in the light of the appellants' contention that such a telegram, the substantial contents of which had been outlined by the appellant, Arky, had been shown to him, not to allow the telegram itself to be introduced to be construed in the light of all of the statements which the appellants themselves saw fit to introduce into the record concerning it. If the jury were to consider Arky's statement that Rothenberg had given him the telegram, it would have been highly injurious to Rothenberg to permit the jury to consider that alleged circumstance without also having before them the telegram itself. Since Arky undertook to detail his recollection of the contents of the telegram, and since Arky had been in possession of it ever since it was given to him by somebody, we submit he could not be heard to talk about the telegram and to endeavor to detail its contents and strive to prejudice the appellees' case on the theory that Rothenberg had given him the telegram without the telegram being introduced in evidence to show to whom it was addressed and its date and its actual wording. In the light of the testimony concerning this telegram, there was no prejudice to the appellants on account of its introduction.
With reference to the contentions of appellants on the refusing and granting of instructions by the lower court, we submit as follows: The court below gave all of the instructions asked by appellants except two. The first instruction refused in substance told the jury that they were not confined to actual damages in the assessment of damages, but might in their discretion award and include in their verdict against Rothenberg punitive or exemplary damages. The second instruction refused, told the jury that they might award punitive damages against Cochran. Neither instruction had any bearing on the question of liability. We submit, therefore, that it is not necessary to consider such instructions in the light of the verdict of the jury in passing on this case. Any error therein was without prejudice to the appellants on the issues as to liability.
Appellants complain of the following instruction granted appellees: ". . . but the law is that false representations and deceit must be established by testimony that is clear and convincing, and the burden is upon the plaintiffs in this case to establish to the satisfaction of the jury, by a preponderance of the testimony, and by testimony that is clear and convincing that the defendants made to the plaintiffs representations . . ." etc. Counsel for appellants cite Doe v. Dignowitty, 4 S. M. (12 Miss.), 57 et seq., in an effort to sustain their point that the instruction in question was error. An examination of the case, however, discloses that it was not an action for deceit and fraud, but was simply an action of ejectment brought for the possession of lands. The court did not have before it for determination an action such as the present one for fraud and deceit. The later decisions of the supreme court of Mississippi hereinafter cited show the inapplicability of Doe v. Dignowitty. See McNeer Dodd v. Norfleet, 113 Miss. 611, 74 So. 577; Carter v. Eastman-Gardner Co., 95 Miss. 651, 48 So. 615; Willoughby v. Pope, 58 So. 705; Virginia F. M. Ins. Co. v. Hogue, 105 Va. 355, 54 S.E. 8; Wallace v. Mattice, 118 Ind. 29, 20 N.E. 497; Choate v. Pierce, 126 Miss. 221, 88 So. 627; Railroad Co. v. Turnbull, 71 Miss. 1029, 16 So. 346; A. V.R. Co. v. Kropp, 92 So. 691; See, also, Ely Walker Dry Goods Co. v. Smith (Okla.), 160 P. 898; Altoona Trust Co. v. Ison (Ky.), 186 S.W. 515; Jones v. Nichols (Mo.), 216 S.W. 962; Wolf v. Lawrence (Ill.), 114 N.E. 567; Nelson v. Drake (Idaho), 130 P. 85; Everist v. Drake (Colo.), 143 P. 811; Henderson v. Gilliland (Ala.), 65 So. 793.
It is next contended by appellants that the court erred in granting an instruction for the appellees as follows: "That if you believe from the evidence in the case that the plaintiffs purchased the timber in question upon the basis of the Flynn estimate and relied in making the purchase upon the Flynn estimate as to the quantity of timber on the land, and not upon any representations made by the defendants as to the quantity of the timber, then it will be your duty to find for the defendants."
There was no error to the granting of such instruction. If the jury believed the testimony of Judge Robert F. Cochran, which they were abundantly justified and warranted in doing, the appellants delayed making Cochran any offer to purchase the property until after they were apprised by Judge Cochran in his interview with McCain at the Merchants and Farmers Bank on the 27th of January, 1922, that the Flynn estimate had been completed and its approximate total; whereupon, they communicated an offer, through Judge Cochran to his brother, of one hundred thirty-five thousand dollars for the timber. This is confirmed by the testimony of Mr. C.W. Cochran. Then, later in the same day and after appellee, Cochran, had refused the one hundred thirty-five thousand dollars and while he was in Hattiesburg to determine whether or not he could conclude a trade with Colmer-Green Lumber Company to whom he felt honor bound to give an opportunity to purchase the timber which they had been having their man to estimate at the same time that Flynn was estimating for Cochran, the appellants communicated the offer on which they purchased to Cochran over the telephone through Rothenberg. There was ample testimony, as we see the record, to justify the instruction.
It appears from the whole record that neither McCain nor Arky attached any particular significance to the railroad. We submit there is no error in either of the instructions complained about for the following reasons:
1. Because the evidence is clear that the parties failed to make out their case of any right to rely upon the representations.
2. Because the parties made their own investigation before purchase.
3. Because the parties dealt at arm's length and conferred among themselves and with other than these defendants and took into account the investigation made by Daly, Arky and Hargrave regarding the proposition before they went into it, and had no right to rely upon any representations which may have been made, if any.
There was no error in the following instruction granted Rothenberg: "That if, from all the facts and circumstances in evidence in this case, the experience and situation of the parties and their knowledge of and relations to each other, the jury believe that the plaintiffs knew that Rothenberg had no knowledge of his own as to the property involved, or its quantity value and earning capacity, and knew that such statements as he may have made were necessarily mere opinions of Rothenberg, then the plaintiffs may not recover as against the defendant, Rothenberg, but should return a verdict in favor of Rothenberg, unless the jury believe that Rothenberg and Cochran fraudulently conspired to induce the plaintiffs to make the purchase."
As a matter of fact, Rothenberg should have a directed verdict. The evidence as we view it establishes the truth of the predicates laid down in the instructions, and the law sustains the legal result attributed to such facts. Furthermore, all that was stated was qualified by the concluding clause: " — unless the jury believe that Rothenberg and Cochran fraudulently conspired to induce the plaintiffs to make the purchase." In other words, the theory of appellants' declaration and proof and instructions was written throughout these instructions by the court, and the jury were allowed to pass on the question of conspiracy vel non and to hold Rothenberg, if they believed the conspiracy existed, even for the expression of mere opinions.
Reily Parker, for appellee, Cochran.
Appellants offered to prove that sometime during the autumn following the purchase of this property in February that the appellants made objection to their manager Mr. West, on account of the smallness of the timber that was being manufactured at that time, and when this objection was made, Mr. West then stated to them that there was better timber owned by the appellants than the timber being cut; whereupon, the appellants insisted that this better timber be shown appellants, which Mr. West pretended to do, but did actually show them, as being the timber of appellants, some very fine timber, but which did not belong to the appellants. This testimony was offered in the absence of the jury and when objection was made to its admission the court sustained the objection and the appellants now insist that this ruling was error. It will be observed that the appellants at this time were in no way concerned about the quantity of the timber they owned and were making no inquiry concerning the quantity of timber, and were making no effort to learn the quantity of timber, they being interested only in the quality of the timber. No complaint is made in this lawsuit concerning the quality of the timber sold, and any representations made by West or anyone else concerning the quality of the timber involved would have been incompetent under the allegations of this case. If all of the timber had been small but merchantable or inferior but merchantable, the appellants would not have been permitted under the allegations in their declaration to show that they were deceived concerning the quality of the timber, and for this reason any deception that might have been practiced by any party concerning the quality of the timber would not have been admissible. There is no proof in this record of any kind to show that this witness was guilty of conspiring in any way to defraud the appellants. He had been an employee of Mr. Cochran and was a kinsman of Mr. Cochran. His business connection with Mr. Cochran had been entirely severed, the transaction had been concluded, and he was then in the employment of the appellants and under no theory of law could his representations be competent testimony. As to the admission in evidence of the telegram complained of by appellants, see, Muller v. So. Pac. R.R. Co., 23 P. 265.
It is next contended that the trial court committed error in refusing two instructions requested by the appellants for the allowance of punitive damages by the jury, in the trial of this case. When we view the testimony as shown by the record, where the appellees had endeavored to ascertain the correct quantity of timber on this land, then the only possible way this information could have been obtained, in having the timber estimated by two estimators, one representing the seller and one representing the purchaser, and one of these estimates showed thirty-one million four hundred forty-seven thousand feet and the other showed in excess of twenty-eight million feet, and the latter would have been approximately the same as the first if the timber between eight inches and ten inches in diameter had been included; and that prior to this time another timber estimator had found according to his judgment in excess of thirty-five million feet of timber on this land. There is no way prescribed by law for the law to characterize the representation of thirty-two million feet of timber as being so wilfully erroneous as to justify the infliction of punitive damages, and for that reason, these instructions were properly refused. But, the refusal of these instructions was rendered wholly immaterial by the finding of the jury that the appellants were entitled to no recovery. McColman v. A.C.R.R. Co., 64 S.E. 781; Johnson v. Johnson, 108 N.W. 1011.
The appellant next contends that the trial court committed error in granting the defendants two instructions in which the court instructed the jury that the burden was on the plaintiffs to establish their case by testimony that was clear and convincing, and in support of this contention, other than discussing the Mississippi cases, the appellants cite five cases: Nelso v. Pierce (R.I.), 28 A. 806; Ross v. Cleveland Sons (Texas), 133 S.W. 315; Gunberg v. Trevach (Mich.), 61 N.W. 872; Walsch v. Taitt (Mich.), 106 N.W. 545; Hampson v. Spong (Kan.), 173 P. 909. The Rhode Island case was a suit for seduction wherein it was contended that inasmuch as seduction was a criminal offense the plaintiff should be required to prove his case beyond a reasonable doubt and the court held this was not necessary using the language quoted in appellants' brief. The Michigan court has not always announced the rule to the same effect. In the case of Bumpus v. Bumpus (Mich.), 26 N.W. 410, the court used the following language: "The general rule is where fraud is charged that it must be clearly proved as alleged and is not to be lightly inferred." Since the rendition of the Texas case cited by appellants, in the case of A.R.G.L. I.R.R. Co. v. Belman (Texas), 272 S.W. 550, the court used this language: "While conspiracy may be proven by circumstantial evidence, it must nevertheless be clearly established in order to support an action for rescission or for damages; and the same degree of proof is essential to show actionable fraud.
The note, following Lepley v. Anderson, 33 L.R.A. (N.S.) 836, collects a large number of cases showing the expressions used by the various courts in stating the rule of the degree of proof required in establishing fraud and seems to very nearly exhaust the subject under discussion.
Appellants contend that the Mississippi court had lined itself on the other side of this proposition and rely upon the case of Doe v. Dignowitty, 4 S. M. 57. This was a case wherein a fraudulent conveyance was involved and the rights of the parties were to be fixed and determined under our statute of frauds. A distinction may be seen between an action for fraud and deceit and an action concerning a fraudulent conveyance.
But if it be held that our court has condemned the expression used in that instruction requiring that fraud be clearly proved, then we may say that our court has since that time approved that expression. See Carter v. Eastman-Gardner Co., 48 So. 615; Wherry v. Latimer, 60 So. 642; Christian v. Green, 45 So. 425; Locke v. Freedman et al., 43 So. 673; Mohn Sons v. Tate, 78 So. 544; A. V.R.R. Co. v. Kropp, 92 So. 691; McNeer Dodd v. Norfleet, 113 Miss. 611; 12 R.C.L. 436.
It is next insisted that the trial court committed error in granting to the defendants the following instructions: "That if you believe from the evidence in this case that the plaintiffs purchased the timber in question upon the basis of the Flynn estimate and relied in making the purchase, upon the Flynn estimate as to the quantity of timber on the land, and not upon any representations made by the defendants as to the quantity of timber, then it will be your duty to find for the defendant." The appellants contend that the error of this instruction is found from the fact that there was no evidence in the record upon which to base this instruction, the appellants claiming that the record shows that the purchase was not made on the Flynn estimate. We feel confident that the record shows that the Flynn estimate constituted a part of this transaction from the beginning to the end and that there was sufficient testimony to warrant the court in submitting this question to the jury. In fact, it occurs to us that the record establishes it as a fact that the Flynn estimate was the basis of this transaction.
Bozeman Cameron, in additional brief for appellee, Rothenberg.
The issues of fact were these:
1. Did Cochran and Rothenberg represent to McCain and Arky to induce the sale, that there was thirty-two million feet of merchantable timber on the land, and that the Washington and Choctaw Railroad had an earning capacity of one thousand dollars per month when the mill was running?
2. Were the circumstances such that McCain and Arky had a right to rely upon these representations, without making an independent examination for themselves?
3. If these representations were made, were they false?
4. If made, were they fraudulent?
5. Was there a conspiracy between defendants Cochran and Rothenberg and West to defraud the plaintiffs?
Our contention is that there was no sufficient evidence to support a verdict or finding on these issues in favor of the plaintiffs and that Rothenberg, our client was certainly entitled to a directed verdict in his favor. But if we should concede, for the sake of argument, that the evidence on each of these issues of fact was conflicting, then we say that the issues were all submitted to the jury on instructions most favorable to plaintiffs and were resolved by the jury in favor of the defendants; that there was ample testimony in the record to support the verdict for defendants and that the judgment below should be affirmed as to both defendants.
1. As to punitive damages, refused plaintiffs. Plaintiffs requested and were refused two instructions to the effect that if the defendants knowingly, wilfully, fraudulently, maliciously and deceitfully represented to plaintiffs that there were thirty-two million feet of timber on the land and that the railroad would earn one thousand dollars per month when the mill was in operation for the purpose of inducing the trade and that plaintiffs relied on these statements and that the statements were untrue, then that the jury might in their discretion award punitive damages. Since the jury rendered a verdict below for the defendants the only questions properly involved in this appeal are questions with reference to liability. The judgment of the court below was that plaintiffs were not entitled to recover any damages; and whether or not punitive damages might have been awarded by the jury is an academic question only in this case. The general rule is that matters not necessary to a decision on review will not be considered on appeal. Miss. Digest Annotated, sec. 843, Appeal and Error.
As to quantum of proof necessary to establish fraud. The rule has long been established by this court that fraud must be proved by testimony that is both clear and convincing. A. V. Ry. Co. v. Turnbull, 71 Miss. 1029; A. V. Ry. Co. v. Kropp, 129 Miss. 616; Mohr v. Tate, 78 So. 544. The reason for the rule is apparent and wholesome when applied to the facts in this case and to the parties here involved. The record shows that the defendants Cochran and Rothenberg are both prominent and successful business men, both well over the age of sixty years, and who have lived in one community for much of that time and both known and recognized as men of unquestioned character and integrity. They are charged in this action with the perpetration of a miserable fraud upon two other business men of the same community. They are charged with having obtained from the plaintiffs McCain and Arky one hundred forty-two thousand five hundred dollars by false and fraudulent representations. The charge not only involves the money damages sought to be recovered of them, but also involves the good character and the reputation for integrity which each of the defendants has been building up in the community where they live for these many years. The action and the issues are only a little less serious, if any, than if the defendants were being prosecuted criminally for having obtained from the plaintiffs, one hundred forty-two thousand five hundred dollars by false pretenses; and while the law does not require that the fraud shall be proved in this action beyond every reasonable doubt; yet there is every reason for the rule that in this civil action it should be proven by evidence that is both clear and convincing before these defendants shall be branded with the dishonesty necessarily involved in the charge and deprived of their well-earned character and reputation for integrity and fair dealing as well as their money.
In support of their contention that in case of a purchase and sale of realty a third person, who is neither buyer nor seller, may be liable to the buyer in an action for fraud or deceit for damages for a mere expression of opinion as to the property in question, they cite certain texts and decisions. We think that these authorities fail to support the contention of appellants, when applied to the facts in this case. All cases are to be construed, of course, in the light of the facts therein involved. 26 C.J. 1093. The quotations in appellants' brief from the above text "that the weight of authority holds that if the falsity of the statement can be established, the misrepresentations of opinion, belief or intent is an actionable representation of fact" does not mean that a false opinion, that is to say, an opinion which proves to be erroneous, or not well formed, is actionable; but it means, as set out in the next sentence: "This redress may be had for the dishonest expression of an opinion contrary to that really entertained by the speaker, especially if he is an apparently disinterested third person, or if a deliberately false opinion is expressed in terms importing personal knowledge of its truth. . . . Under this doctrine the speaker has been held liable for misrepresenting his opinion as to," etc.
Under the authority cited by counsel it is not the expression of an opinion which was false or not well formed, that is actionable, but the expression of an opinion which was not in fact entertained by the person speaking. The instructions were, therefore correct as given. A judgment will not be reversed because even of an erroneous instruction, where the right result was reached. Nichols v. Gulf, etc., R. Co., 83 Miss. 126. Where it is clear that a correct result was reached by the trial court, the supreme court will not reverse for trivial and non-prejudicial error. Arky v. Cameron, 92 Miss. 632.
We concur heartily in the briefs which have been filed by other counsel for appellees.
Argued orally by J.H. Currie, for appellants, and R.E. Wilbourn and Marion W. Reily, for appellees.
The declaration in this case was filed in the circuit court of Lauderdale county by McCain and Arky, appellants here, demanding payment of two hundred seventy-five thousand dollars actual and punitive damages, of and from Cochran and Rothenberg, for alleged false representations made in the sale of a considerable quantity of timber, a sawmill outfit, a dry kiln, and a railroad about twelve miles long, operating from the sawmill in Mississippi to a point in Alabama connecting with the outer world; also the tramroad and appurtenances connected with the operation of a sawmill plant.
The declaration was in four counts; two counts thereof allege that the false representation was made scienter by Rothenberg and Cochran, and charged a conspiracy between these two, together with one West, to fraudulently induce the purchase of this timber, sawmill, and railroad by the appellants.
The other two counts do not charge a conspiracy by their actual language, but charge that, by a common plan, they sold this timber through false representation; they do not allege scienter on the part of the appellees as to the representations; neither do these counts seek to recover punitive damages.
This is the most voluminous record the writer of this opinion has ever had occasion to study. The briefs are voluminous, and every inch of the ground has been contested most vigorously and skillfully; and we shall not set forth the controverted facts in this case in detail, but will simply state enough of the case to make clear the decision of this court upon the various points raised on appeal; and such facts, in the main, will be set forth in the discussion of such of the errors assigned as we think deserve to be mentioned.
The assignment of errors herein consists of ten typewritten pages.
Cochran owned the timber and other property involved in the sale. Rothenberg was very friendly to both Cochran and McCain. Cochran was a business man, operating sawmills, plantations, and stores. The evidence shows that he owed the corporation of which Rothenberg was a member several thousand dollars; and also that he owed Threefoot Bros. Company, to the members of which firm Rothenberg was related, being an uncle, the amount of the indebtedness being about forty-five thousand dollars.
Rothenberg was an elderly man who had lived in Meridian, but for a good many years immediately preceding this transaction he had spent the greater portion of his time in New York. His main business was that of a dry goods merchant, and he was the buyer for the corporation, but had nothing to do with the credit, and had never had any experience whatever with timber.
McCain was president of a bank, had been connected with a bank for some time, had experience in loans on timber deals, and sawmill deals, to some extent.
Arky has had some experience in handling real estate, but, at the time of this transaction, was connected with a hotel.
West was not a party to the litigation; is a relative of Cochran's, and was employed by him in the operation of this sawmill, before this sale was made.
The purchase price involved here originally was one hundred forty-two thousand five hundred dollars, one hundred thousand dollars of which was evidenced by notes falling due for a term of several years, at stated intervals, and they were secured by a mortgage on the property sold.
Negotiations were begun by Rothenberg, who undertook to help his friend Cochran sell this property; the latter stating as his reason for the sale thereof that his wife was sick and he could not leave her. Rothenberg suggested that McCain could sell the property for him. This was five or six months before the sale was consummated. McCain and Cochran agreed that McCain would undertake to sell the property, and he at one time made an offer to Cochran for the property, which was rejected.
On the 27th day of January, 1921, at a time when Cochran was in Hattiesburg trying to consummate a sale to Colmer, Green Company, after conferences between Arky, appellant here, and his brother, McCain and Hargrave, who went in with them on this deal, and Rothenberg, they repaired to a lawyer's office, and had drawn an offer of purchase of all the timber owned in Wayne county and in Choctaw county, as above, by Cochran, together with the other property mentioned; providing that the offer must be accepted on the following day by Cochran, which was done. No mention was made in this instrument of any quality of timber.
On February 6th, this offer having been accepted, the parties agreed on terms, the deed from Cochran to McCain and his associates was executed, the notes and mortgage were executed, and what is called a "cutting contract" was entered into.
Thereafter McCain and his associates formed a corporation, and proceeded to operate the sawmill and cut the timber for about eighteen months, when the corporation sold its interest to Stark Brothers, etc., and in their sale guaranteed and warranted that there were twenty-nine million feet of timber, which was claimed by Stark, after he had operated the plant for about nine months, to be short of the amount warranted, and Arky and McCain were compelled to make good their warranty.
An estimate of the timber was then had, and in this suit it is alleged that the timber on all the land was less than sixteen million feet.
The representation was that in this deal there were thirty-two million feet of timber, or more, on the land, and that Cochran said that he would stand behind thirty-two million feet of merchantable timber.
Rothenberg's representations, according to the allegations and evidence of appellant, were that there were more than thirty-two million feet of timber on the land; that it was the best bargain that they had ever had; that they could make a fortune, that they would have a profit on the deals; that they would make not less than one hundred thousand dollars thereby; and that the railroad known as the Washington Choctaw Railroad had a large earning capacity, and that, while running the saw-mill, the railroad was capable of earning one thousand dollars a month; that Rothenberg stated to both appellants that he had no interest in the sale — when in truth and in fact Cochran owed the corporation in which he had stock a large sum of money, and owed the firm in which his kinsmen were interested a considerable sum of money.
It will be observed from this brief outline of the case that a mass of figures and a mass of evidence has accumulated in the record in this case, on the question of representations as to the amount of timber actually on the land, this being in sharp dispute — and on the earning capacity of the railroad — which we forego undertaking to detail here.
First. The first assignment of error is to the effect that the witness, McCain, offered to show that while West, one of the alleged conspirators, was managing the sawmill plant of the appellant corporation, upon complaint being made to him of the quantity of timber being manufactured into lumber, West claimed that this was free timber, and, upon demand to see whether they had good timber, they were carried to a place by West, and shown splendid timber, which satisfied Arky and Cochran; but they later discovered that this timber was not embraced within the deal here being inquired into.
The deal was closed in February, 1922. This evidence was offered presumably as tending to establish a conspiracy and the carrying out of such designs on the part of West, in conjunction with Cochran and Rothenberg.
We think the court correctly sustained the objection to this part of the testimony, for the reasons, first, that West was the employee of the appellants, and made the statement while in their employ, long after the fraud had ultimated into a closed and completed contract; second, that there is no complaint in the declaration or evidence as to any representations as to the quality of the timber, and this statement and action of West is strictly confined to the quality of timber, and not to quantity; and, third, there is no sufficient evidence in this case, either direct or circumstantial, to establish that West was connected with any conspiracy; and, if it were not for the other reasons given, the testimony would not be competent of itself and alone to establish the alleged conspiracy, and therefore would not be competent as against the parties to this litigation, who are not shown to have participated in whatever wrong there might have been in West's statements and actions on this occasion.
Second. It is urged that it was error to permit a telegram to be offered in evidence, the same being from Colmer, Green Company to Cochran, offering Cochran one hundred fifty thousand dollars for his timber.
No possible harm could have come to the appellant because of the introduction of this telegram. Arky, one of the appellants, before its introduction by the appellees, had testified to every material fact in the telegram, and whatever injury there might have been in it appellants themselves put into the record. The telegram was produced by Arky, though offered in evidence by the appellees.
Third. The main assignment of error in this case is the giving of two instructions by the court on behalf of the appellee, on the question of fraud, as follows:
"The law does not lightly impute fraud or false representations in business matters to any man; but the law is that false representations and deceit must be established by testimony that is clear and convincing, and the burden is upon the plaintiffs in this case to establish to the satisfaction of the jury, by a preponderance of the testimony, and by testimony that is clear and convincing that the defendants made to the plaintiffs representations as an existing fact as to the quantity of timber on the lands; that such representations were, in fact, false; that plaintiffs had a right to rely on such representations, and did rely on such representations. And you are further charged that you are the sole judges of the credibility of the witnesses, and that the term preponderance of testimony does not necessarily mean the greater number of witnesses, nor the greater volume of testimony, for the lesser number of witnesses and the smaller volume of testimony may be of greater weight than the larger number of witnesses and the greater volume of testimony; but the preponderance of the testimony as used in these instructions means that character, kind and quality of testimony which is more persuasive in establishing the truth of the issues involved, than the testimony offered in opposition thereto, and this is true, regardless of how many witnesses or how much testimony has been offered by either side."
Counsel for appellants has very ingeniously assembled the authorities, and made the most of the want of unity and conformity in the many opinions on the subject. But, analyzing his position, he says that the rule ought not to be in this state that the burden of proving deceit and misrepresentation or fraud should require more than a mere preponderance of the evidence, and that the use of the words "clear and convincing" is not proper, because this court has held that fraud may be predicated upon a misstatement of the facts without knowledge of the truth, where the misstatement injures the party to whom it is made, and who acts upon the misstatement, even though it is innocently made.
In the first place, in two counts of their declaration, the charges, in our opinion, amounted, when properly analyzed, to a charge of actual fraud against the appellees, and their proof, instructions, and the weight of their arguments here are to support that contention; and, of course, having secured instructions to that effect, under their own idea of the rule, they cannot complain that the answer to the proposition of actual fraud is made by the defendants that the burden is upon them to establish it by the preponderance of the evidence, "clear and convincing," unless this case should be reversed because of the use of the language "clear and convincing," as to the character and of the evidence in any case where the issue of actual fraud, or not, is submitted to the jury.
Appellants submit authorities from the appellate courts of six states; in Montana the opinion of the court is clearly controlled by the statutory limitations of that state; the Michigan Supreme Court has not adhered strictly to its announcement that a mere preponderance of the evidence is all the burden that is cast upon the complaining party in an action for fraud; and, while the Texas court has held sustaining counsel's contention from one of its appellate courts, the last utterances seem to be in conflict therewith.
Apart from the jurisprudence of our own state, there are many decisions holding that on a charge of fraud the testimony should be "clear and convincing," "clear and satisfactory," "cogent, clear and satisfactory" — some courts holding that the burden is upon him who alleges fraud to prove it beyond a reasonable doubt.
Counsel for appellees cite us to the law court case of Railroad Co. v. Turnbull, 71 Miss. 1029, 16 So. 346. This is a case in which a railroad company was sued for damages, and interposed as defense a release secured from the plaintiff, to which defense the plaintiffs set up that the release was procured by a fraud, and in that case the court held that the plaintiff had not established his allegation of fraud by evidence that was "clear, convincing and indubitable," saying that on a charge of fraud this burden was upon him who alleged the fraud.
In the case of A. V.R.R. Co. v. Kropp, 129 Miss. 616, 92 So. 691, another law court case where a plea of fraud was interposed, the opinion in the Turnbull case, supra, was approved to the extent of using the words "clear and convincing."
In the case of Choate v. Pierce, 126 Miss. 209, 88 So. 627, this court approved the use of the words "clear preponderance of the evidence."
In two cases before this court, in the instructions on this subject, the words "clear and convincing" were used, and were assigned as error, but were not condemned by this court, although the cases were reversed on other grounds. We refer to the case of McNeer Dodd v. Norfleet, 113 Miss. 611, 74 So. 577, Ann. Cas. 1918E 436, and Hines v. Lockhart (Miss.), 105 So. 449.
There are numerous equity cases in Mississippi where this court has held that one who alleges fraud must prove fraud in the execution, or in procuring the execution, of an instrument, contract, or document — must prove his allegation by "clear and convincing" evidence.
Among this number, on a bill to cancel an instrument, the chancellor was reversed in the case of Carter v. Eastman-Gardner Co., 95 Miss. 651, 48 So. 615, and the rule announced that the evidence must be "clear and convincing."
In the equity case of Christian v. Green (Miss.), 45 So. 425, the court said that clear proof was required in order to prove that the document sought to be overturned was procured by fraud or misrepresentation.
In the equity case of Locke v. Keiler, 90 Miss. 3, 43 So. 673, this court said:
"We have weighed them in every aspect in which the subject can be viewed, under the well-settled rule that fraud must not only be proven, but proven clearly and convincingly [italics ours] and we are driven to the conclusion that the evidence in the record, taken as a whole, fails to meet the rule — fails to satisfy clearly and convincingly that there was such fraud as is alleged. . . . Fraud is not a thing to be lightly charged, and most emphatically is not a thing to be lightly established." etc.
Referring to the proof in the case of Mohr Sons v. Tate, 117 Miss. 606, 78 So. 544, the court again said that evidence, where fraud was charged, must show the fraud by "clear and convincing" evidence.
We are unable to perceive any reason why there should be any difference in the rule enforced in an equity court as to a charge of fraud and in a law court as to the same character of charge. There are not degrees of fraud, and whether a man wilfully misstates a fact knowingly, or wilfully misstates a fact without any knowledge, the fraud is the same, and the stigma upon him who perpetrates it cannot be differentiated. In the one case, his utterance is a falsehood, knowing the extent of it; in the other he utters a falsehood without knowledge, creating the impression that he has the knowledge, and lets his imagination have full rein — thereby injuring his neighbor.
The truth is that in the earlier decisions in this country a higher degree of proof was required in law courts than was demanded in equity courts, but now the courts generally require the same degree of proof.
Counsel for appellants cited the case of Doe v. Dignowitty, 4 Smedes M. 57, where the court had before it an ejectment suit, and one of the defendants in ejectment sought to interpose a deed, and the deed was attacked by the plaintiff in ejectment on the ground that the deed was made between the parties during the incapacity of the grantor, and for the purpose of hindering, delaying, and defrauding creditors, and used this language with reference to the instrument:
"The only other charge we shall notice is in these words — `If the plaintiffs rely on fraud to destroy the deed to Dignowitty, the fraud must be clearly proved.' It is not easy to say precisely what is meant by the words clearly proved. If anything more is intended than that the jury must be satisfied, by the proof of the existence of the fraud, then the instruction is too broad. The plaintiff's testimony must be sufficient to produce belief in the jury that there was fraud in the transaction; this may be done by circumstantial as well as by positive proof. The law only requires such proof as will convince the jury of the truth of the allegation." (Italics ours.)
This case was reversed by the court in this language, which we do not now, after having quoted, fully comprehend. Nor did the court base its reversal upon this instruction alone, but had found other errors in the record.
So, in our own state, there has not been called to our attention a case that has been reversed because of the use of this or similar language; but in both the law and the equity courts the rule has been announced that he who asserts and undertakes to prove fraud must do so by "clear and convincing evidence."
The writer of this opinion does not think the word, "indubitable," as used in the Turnbull case, supra, should be approved by the court, as it is too comprehensive and too broad, and would put the requisite evidence to a degree amounting to "beyond a reasonable doubt." But we have not that word before us in the case at bar.
We do not think, in the light of the facts in this case, that it was error to give these instructions, requiring the evidence to be "clear and convincing."
Fourth. The court gave an instruction as follows:
"That if you believe from the evidence in this case that the plaintiff purchased the timber in question upon the basis of the Flynn estimate, and relied, in making the purchase, upon the Flynn estimate as to the quantity of timber on the land, and not upon any representations made by the defendants as to the quantity of the timber, then it will be your duty to find for the defendants." (Italics ours.)
Appellants say there was no evidence in this record to sustain the court in giving this instruction. We shall only give our conclusion that the testimony amply warranted the court in giving the instruction and the jury in believing that the Flynn estimate was the thing that brought about the deal.
Counsel overlook the fact that the instruction contains the words, "not upon any representations made by the defendant;" and with that qualification as to the Flynn estimate, if there had been no Flynn estimate in this case, we could not reverse.
However, Judge Cochran testified that on the day before the night when the offer was made in writing in this case he told McCain of the Flynn estimate, which was approximately thirty-two million feet of timber.
When the deed was executed and the cutting contract, which was the final consummation of this deal, the Flynn estimate was made the basis of settlement, and it is interesting to note that terms were made upon the Flynn estimate by Cochran and the appellants, as per the cutting agreement, and that, with this estimate before them, for nearly three years no complaint was made, although the estimate of the many acres of land involved in this transaction was made in forty-acre tracts by Flynn. There are many inconsistencies in the estimate of Flynn, but there are just as many in the statements of the other witnesses with reference to the estimate of timber.
Fifth. We do not think there was any error in giving the instruction as to the alleged false representations in regard to the earning capacity of the railroad, and that they would make a fortune, and that they would make one hundred thousand dollars, in the light of the knowledge of all the parties of each other, and of the timber, and of the railroad, and of the fact that these appellants admitted they saw the condition of the railroad and equipment before they made the deal, by an inspection, and knew that the railroad was in bad condition; and immediately upon the consummation of the deal they began to expend thousands of dollars upon this railroad.
The statements of Rothenberg as to these matters were prophecy, and we think that the record demonstrates that Rothenberg had no experience in timber, and had no particular advantage in the knowledge of the situation, from that of appellants; in fact, the latter had the advantage — he had no experience whatever. McCain and all of his associates had experience, to some extent, and they had investigated the proposition. The appellees offered evidence tending to show that the railroad was capable of earning one thousand dollars per month while the mill was running. Appellants only offered evidence showing that the mill lost money as operated by them and by Cochran.
We do not say that the opinion of an expert, or of one who has an advantage in his knowledge of a particular subject or object, may not operate upon the minds of his hearers as being a fact — as, for instance, a chemist as to the effect of chemicals, or a physician as to the condition of the body, or of a druggist as to the value of drugs; but certainly a dry goods merchant, who, so far as this record is concerned, never saw a sawmill, could not have any advantage of the shrewd banker, invester in real estate and timber and sawmill transactions, associated with a real estate dealer, and also with an experienced sawmill man and timber dealer.
Even if this were true, this record is far from showing the earning capacity of this railroad. There is proof positive that the railroad would, under certain conditions, earn one thousand dollars a month. There was no error in the giving of this instruction as to Rothenberg, even if any case of fraud were made out against him, which we are not called upon to decide.
Sixth. Appellant complains of an instruction to the effect that, if McCain and Arky knew that Rothenberg did not know of the representations, etc., there was no liability.
It is obvious that, when a person is acquainted with the fact that an informant has no knowledge on a given subject, he cannot base a false representation on that statement. Rothenberg gave to Arky and to McCain the sources of his information, and they had the same right to form an opinion on that information as had Rothenberg, with superior knowledge in regard to the given subject, and the superior advantage of ascertaining the truth at the time of the statement, and before it was made, and subsequent thereto, before closing the deal. The instruction could not have influenced the verdict in favor of Rothenberg in this case.
Seventh. Counsel assign as error the refusal of the court to grant him instructions on punitive damages.
It is well settled that in all cases where punitive damages are predicated on actual damages, if no actual damages are allowed, punitive damages are not recoverable, so it is unnecessary for us to discuss this proposition.
In conclusion, we will say that we have given this case much thought, we have carefully read every word of it, we have checked the authorities cited by counsel for appellants and appellees, and we think the case, considering its magnitude and the amount involved, and the clearness with which the issues were presented to the jury, has been fairly tried; and we do not think that we would be warranted in interfering with the verdict of the jury, where the same is sufficiently supported by the evidence.
Affirmed.