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LAUGHLIN, J. This is a statutory action to recover for the death of Hazel Carr, an infant two years, two months, and six days old, alleged to have been caused by the negligence of the driver of one of defendant's ice wagons. On the afternoon of the 31st day of July, 1902, the mother of decedent was at the street door of No. 342 West Thirty-Sixth street, where she resided with her daughter Ella, who was a little over four years of age, and the decedent. Ella asked her mother for something to eat, and the mother, according to her testimony, after directing Hazel to sit down, and Ella to sit down and keep Hazel by her side, went upstairs for the purpose of getting bread for Ella, and was gone about three minutes. The evidence shows that in the meantime Hazel, in answer to a call, crossed to the opposite sidewalk, where other children were playing. At this time defendant's wagon was coming along the street from the east with the horses on a "jog" or "dog trot.' There was evidence tending to show that the driver was engaged in conversation with his helper, and not looking ahead or paying attention to where he was driving, although children were playing in the carriageway ahead. The evidence tended to show that the course of the wagon was from one to five feet from the northerly curb, and that, as the horses were passing opposite the decedent, who was on the northerly sidewalk, at the edge of the curb, she started back, evidently intending to recross the street, and, either in stepping from the curb, or in taking the second step, was struck by the right front leg of the offhorse, or fell between his front and hind legs, or between his hind legs and the front wheel, and was run over and crushed by the right front wheel.

The court properly instructed the jury that, as matter of law, the child was non sui juris, and that, if the mother was negligent in leaving the child upon the street under the circumstances, that negligence was imputable to the child, and would defeat a recovery; but the court further instructed the jury that, if they found that the child exercised the decree of care and precaution required of a person possessing sufficient discretion and ability to care for its own safety, then the negligence of the mother, if you find from the evidence that there was any, in permitting the child to be on the street, is immaterial, and it is no defense to the action." Counsel for the defendant duly excepted to this instruction, and requested the court to charge that, if the mother and driver were both negligent, the defendant was entitled to a verdict, and excepted to the refusal of the court to so charge. The court then remarked, "They might find the child was not guilty of negligence, and in that case the plaintiff would be entitled to recover, irrespective of the negligence of the mother," and to this the defendant also excepted. The proposition of law involved in the first of these instructions is correct, as an abstract proposition. McGarry v. Loomis, 63 N. Y. 105, 20 Am. Rep. 510; Cumming v. Brooklyn City Ry. Co., 104 N. Y. 669, 10 N. E. 855; Lafferty v. Third Ave. Ry. Co., 85 App. Div. 592, 83 N. Y. Supp. 405, affirmed 177 N. Y. —, 68 N. E. 1118. We are of opinion, however, that this rule of law was not applicable to the facts of the case at bar. The theory of that rule is that where the child, if he had been an adult, would be free from contributory negligence, or, in other words, if and 120 New York State Reporter the child neither did nor omitted to do anything that contributed to the injuries, then the negligence of the mother is immaterial, for it could not be said to be à proximate cause of the accident, which in such case would be due solely to the negligence of the defendant. Here, however, if the child had been an adult, she would have been chargeable with contributory negligence, as matter of law.

86 N.Y.S.-24

The second instruction excepted to was also erroneous and misleading. It indicated that the jury were to consider whether the child was negligent. This was not a subject for the consideration of the jury. The child, being non sui juris, could not be chargeable with personal negligence. If it appeared that she had been run down under circumstances that would permit a recovery by an adult, then her acts or omissions did not contribute to the accident, as a proximate cause, and they became immaterial, as does, also, any negligence on the part of the absent mother. Lafferty v. Met. St. Ry. Co., supra. But as has been seen, this was not a case for the application of that rule. It follows, therefore, that these exceptions were well taken, and they require a reversal of the judgment.

The judgment and order should be reversed, and a new trial granted, with costs to appellant to abide the event. All concur.

(91 App. Div. 103.)


(Supreme Court, Appellate Division, First Department. February 5, 1904.)


Defendant issued a prospectus offering for sale certain shares of a zinc mining corporation, which falsely stated that the company owned a ten-year lease of certain property, which had been operated for two years at a large profit; that the net earnings from January 1 to June 30, 1899, were $12,134.20, every dollar of which was applicable to dividends; and that it was the intention to pay from 1 to 142 per cent dividends semimonthly, and extra dividends as often as should be prudent. Plaintiffs subscribed for stock on the faith of these representations, without making an examination of the mine. When the prospectus was issued, the corporation was indebted in the sum of $1,304.55, which continued to increase until September 30, 1899, when the last dividend was paid, when the indebtedness amounted to .000, a large part of which was due to defendant for money loaned to the corporation with which to pay dividends. The mine was only fitfully operated until March, 1900, when the lease was forfeited for failure to work the same, after which its entire machinery and tools were sold on execution for $1,000. Held, that defendant was liable to plaintiffs for the damages sustained by such fraudulent

representations. 2. SAME-DAMAGES.

Where plaintiffs purchased mining stock in reliance on defendant's fraudulent representations as to its value, the measure of plaintiffs' damages recoverable against defendant for such misrepresentations was the difference between what would have been the value of the stock, had the

representations been true, and its actual value at the time of the sale. 3. SAME-ACTIONS-DECEIT-ASSIGNMENT.

Where 18 different persons purchased mining stock, relying on defendant's fraudulent representations contained in a prospectus issued by it,

1 2. See Fraud, vol. 23, Cent. Dig. $ 61.

they were entitled to assign their rights of action against defendant for deceit to plaintiffs, to enable them to recover for the entire wrong in a single action. Appeal from Judgment on Report of Referee.

Action by Elias C. Benedict and others against the Guardian Trust Company. From a judgment in favor of plaintiffs, defendant appeals. Affirmed.

See 68 N. Y. Supp. 1082.

Argued before VAN BRUNT, P. J., and HATCH, PATTERSON, INGRAHAM, and LAUGHLIN, JJ. William M. Ivins, for appellant. Edwin T. Rice, for respondents.

HATCH, J. This action seeks to recover damages against the defendant for claimed fraudulent representations, whereby the plaintiffs and their assignors, 15 in number, were induced to purchase shares of stock in the Chicago Zinc Mining Company (hereafter called the "Zinc Company'), a corporation organized under the laws of the state of Missouri. It appeared that on June 12, 1899, F. B. Wilcox, at that time the assistant treasurer of the defendant, secured a written option upon certain lead and zinc mines near Joplin, Mo., and upon certain mining and milling machinery and tools used in connection with said mines. In this option Wilcox agreed to pay $20,000 for the property, and accordingly, on June 17th following, an agreement of purchase was entered into between Wilcox and Messrs. Ralston, Stark, and Stauffer. This agreement provided for the payment of the $20,000 as follows: $2,000 in cash, and the balance in three equal payments at intervals of 20 days thereafter. The assignment of the lease and bill of sale of said property was delivered to the Joplin Bank, and held in escrow, to be delivered to the vendee upon making final payment. On or about June 22, 1899, the zinc company was incorporated under the laws of the state of Missouri, with an authorized capital stock of $50,000, divided into 500 shares, of the par value of $100 each. The articles of association were executed by A. E. Stillwell, J. McDowell Trimble, F. B. Wilcox, J. M. Mason, and B. J. Hickman, who subscribed for all the capital stock. All of these incorporators were officers or employés of the defendant; Stillwell being its president, Trimble its vice president, Wilcox its assistant treasurer, and Mason and Hickman clerks in its employ in its Kansas City office. The articles of association so filed stated that all of the capital stock had been subscribed for in good faith, and paid for in lawful money of the United States, and that it was then in the custody of the persons named in said articles as its directors. Upon the formation of the zinc company the defendant received a certificate for 471 shares; Wilcox, one for 25 shares; and I share each was issued to each of the other stockholders. The consideration for the issuance of the stock of the zinc company was an assignment executed by Wilcox, and dated August 23, 1899, whereby, for an express consideration of $20,000, he transferred to the zinc company all the rights which he had acquired from Stauffer, Stark, and Ralston. No cash was paid by the subscribing incorporators upon their subscription to the stock of

and 120 New York State Reporter

the zinc company, and none of the cash payments were subsequently made that were required to be made by the agreement of June 17th, the same being advanced by the defendant; and the defendant alsó advanced from time to time various amounts to keep the mine running. The documents were released from escrow by the Joplin Bank upon the completion of the final payment, on or about August 14, 1899. In August, 1899, the defendant issued a prospectus offering for sale 500 shares of the stock of the zinc company... This prospectus was shown by the defendant's agents to the plaintiffs and to each of the plaintiffs' assignors. It set forth, among other things, that the zinc company owned a ten-year lease on ten mining lots near Joplin; that it had been operated for two years at a large profit; that the net earnings, after deducting all royalties and operating expenses, for the period from January 1, 1899, to June 30, 1899, were $12,134.20, every dollar of which was applicable to dividends, as all expense was charged directly to the expense account; that it was the intention to pay i or 172 per cent. dividends semimonthly, and extra dividends in addition thereto as often as should be deemed prudent, reserving at all times sufficient cash on hand to cover any contingency that might arise; that the affairs of the company were in the hands of experienced mining men; that all bills were settled weekly; and that the company had no debts or obligations of any description. On the faith of such representations, plaintiffs and their assignors purchased 310 shares of stock of the zinc company from the defendant. These purchases were all made between August 10 and October 1, 1899, and payment was made therefor to the defendant at par, except in one instance, where a discount of 27/2 per cent. was allowed. Dividends were paid at the rate of 1 per cent. upon August 15th and 31st, and September 15th and 30th, but no dividends were paid thereafter. Between the roth day of August and the day when the last dividend was paid, all the stock of the defendant was sold, except 18 shares. At the time the prospectus was issued, there were outstanding debts and obligations of the zinc company of $1,304.55. On August 15th, when the first dividend was paid, there were debts of $1,804.55; on August 31st, when the second dividend was paid, there were debts amounting to $2,318.55; when the third dividend was paid, there were debts of $3,196.55; and when the last dividend was paid, there were debts to the amount of $4,862.75. A large portion of these debts were due to the defendant. Upon each of the aforesaid dividend days the defendant loaned to the zinc company $500 for the express purpose of enabling those dividends to be made. By the terms of the leases, continuous operation was required to be kept up thereon under penalty of forfeiture, as the lessors had a 20 per cent. royalty therein. The mine was operated fitfully until about the month of March, 1900, when the lease was forfeited on account of failure to work the same. At that time payment of claims amounting to $5,000 was being pressed against the company, and in June, 1900, its entire machinery and tools were sold upon execution for $1,000. The referee found that plaintiffs and each of their assignors purchased their stock relying upon the statements contained in the prospectus, and that none of the purchasers made any examination into the affairs of the company; that the representations contained in the prospectus as to debts, earnings, and value were false and fraudulent, and that the defendant knew that the same were false, fraudulent, and untrue at the time they were made; that the said purchasers of stock suffered damage by reason of the defendant's fraud and deceit, and that the respective claims thereto were assigned to the plaintiffs prior to the commencement of this action; that the amount of damage so suffered by the purchasers of the stock was the difference between what would have been its value, had the representations contained in the prospectus been true, and its actual value at the time of such sales; that such damages amounted to the sum of $27,140, with interest thereon from October 1, 1899, together with costs, which interest and costs, together with the damages above mentioned, make the amount entered in the judgment from which this appeal is taken.

The defendant is a foreign corporation, organized under the laws of the state of Missouri. Upon a former appeal to this court from an interlocutory judgment overruling the defendant's demurrer to the complaint in the action, it was decided that the complaint stated a good cause of action, and that damages based upon fraud might be recovered against the defendant if the averments of the complaint were sustained by the proof upon a trial. It was also determined that the causes of action in favor of the assignors which were assigned to the plaintiffs were so assignable, and that the action was properly brought in the names of the assignees as plaintiffs. Benedict v. Guardian Trust Co., 58 App. Div. 302, 68 N. Y. Supp. 505. Upon the trial, evidence was given tending to support the averments of the complaint, and inter alia it was made to appear that the representations contained in the prospectus as to cash on hand and earnings from which to pay a dividend of 1/2 per cent. on the ist and 15th of each month, and extra dividends in addition thereto, were false, to the knowledge of the defendant. It may be conceded that the mere expression of an intention to pay divi. dends would not furnish the basis for an actionable fraud, but this representation of intention to declare dividends was based upon the further statement of the prospectus of the amount of the earnings of the zinc company, which were set forth therein for a period of six months, and that “every dollar of this amount was applicable to dividends, as all expenses for developing drifts, sinking shafts, new machinery, or any other improvements, is charged directly to the expense account.” This representation, therefore, amounted to something more than the mere expression of an intention. It was preceded with the statement of actual earnings, and thereupon was deduced the fact that payment of dividends in this amount could be made, and would be justified. Such representations were false, as is abundantly established by the proof, as were also the representations therein respecting the debts, earnings, and value of the property, in respect to which the prospectus made affirmative representations, which representations the referee found to be false and fraudulent, and to have been knowingly made by the defendant when it solicited subscriptions for the stock. Consequently every element upon which to found a judgment based upon fraud was established, within the case relied upon by the defendant. Kountze v.

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