
    SANKEY, Respondent, v. UNITED MERCANTILE AGENCY et al (Cutting, Appellant.)
    (167 N. W. 493.)
    (File No. 3766.
    Opinion filed May 13, 1918.)
    1. Appeals — Error — Corporate Stock Purchase — Damages For Fraud — Changing Complaint, Rescission to Damages, After Proofs In — Estoppel to Claim Error, After Compelling Election.
    Where, in a suit for damages for false representations by defendant concerning value of corporate stock purchased by plaintiff, It not being clear whether the complaint was drawn upon theory of rescission or for damages for tort based upon such representations, trial court at close of all evidence sustained defendant’s motion requiring plaintiff to elect whether he should seek to recover for rescission or for damages for wrongful representations, and plaintiff elected to seek- to ref-cover on the latter theory, held, that after compelling such election, defendant can not complain of the change in form of action.
    3. Damages) — Corporate Stock Purchase — Damages For False Representations — Measure of Damages, Actual Value, and Value if as Represented, at Time.
    . The measure of damages under a corporate stock purchase, for false representations concerning its value, is the difference between its actual worth, not when the false representations were discovered, but at the time of making of such representations, and what it would then have been worth had the representations been true.
    3. Damages — Corporate Stock Purchase — Damages For False Representations — No Change in Value Later — Instruction re Value When Fraud Discovered, Whether Error.
    There being no evidence of change in value of corporate stock sold to plaintiff, between date of making alleged false representations by defendant as to its value, and date of discovery of the fraud, while the evidence showed that the stock, if as represented, was presumptively equal in value to the contract price paid, as instruction that the measure of damages was the difference -between the amount paid less actual value at time of discovery of the fraud, was not prejudicial.
    Whiting, P. J., and Gates, J., dissenting in part.
    Appeal from Circuit Court, Beadle Gounity. Hon. Alva E. Taylor, Judge;.
    Action by J. L. Sanfcey, against the United Mercantile Agency and Ered H. Cutting, to recover damages' for false rep-r-esentaitions concerning corporate stock purchased-. From a judgment for plaintiff, and from' am order denying a new- trial, defendant Cutting appeals-.
    •Affirmed.
    
      A. W. WilmaTth, and Crawford & Warren, for Appellant.
    
      Null & Royhl, if or Respondent.
    ' (2) To point two of thie opinion, Appellant cited1: Civ. Code, Sac. 2305; Western Twine Qa v. Wright, (S. D.) 78 N( W. 942; Aiuttman -Co. v. Ferguson', 8 'S. D. 459; Roberts v. H)alli'day, 10 S-. D-. 5.76; Haveners v. Freese, (S. D.) 145 N. W. 564; Gunderson v. Havana-Slyde Mining Co- (N. D.) 133 N. W. 554; Reare v. Wright, (N. D.) 103 N. W. 632.
    Respondent cited: Civ. Code, Secs'. 2312, 2329; Rockefeller v. Merritt, 35 L. R. A. 633; Stratton Ind. v. Dimes' 68 C. C. A., 161; Hansen- v. Hell-ie, (Minn.) 120 Ns. W. 341; Smith v. Bowie® 132- U. S., 125; Roberts- v. Ho-lliday, 10 S-. D., 576.
   McCOY, J.

Plaintiff brought this action- to recover from defendants the sum of $5,000 damage® alleged to have been suffered by him by reason of the purchase Of 250 shares of the capital stock of the defendant United! Mercantile Agency. The defendant Cutting wasi one of the soliciting -agent® of the' mercantile agency, who, as plaintiff claims, by -false and fraudulent statements, induced plaintiff to subscribe for said shares of -capital stock. Tire trial of the cause resulted in a verdict and judgment in favor of plaintiff flor the sum of $3,540.30, from wihi'ch judgment the -defendant Cutting appeals.

It i-s first ¡alleged by appellant that the court erred in overruling am objection to the introduction of any testimony und-er the complaint because it -did not -state f-acts sufficient to -constitute a cause -of ¡action and also in permitting -plaintiff to change the form of -action, at the -close oif all the testimony. While we are olf the -view that the complaint states facts sufficient to 'constitute a cause -olf- action, it is not clear whether the complaint was -drawn on the theory -of redission -or for damages for font based -on alleged false and fraudulent representations. At the ¡close of all the -testimony the defendant moved that the plaintiff be put to 'an election of his remedy and -choose whether he should sleek to recover in an action oh- rescission -o-r for rescission loir to recover -damages Ishoiwm to have been- sustained by ihi-mi on account of -alleged wrongful -representations -of the defendant. Upon such motion being made the ¡plaintiff elected and astead to he permitted to -recover from the defendant Cutting damages for 'faitee -representation's; and the- case wa-s thereupon submitted! to the jury upon that thielciry. We are therefore of tha opinio® -that the defendant, having compelled plaintiff to make such an election, is not now in a position to -complain of the change in the form off action, -and) we shall consider this- oase purely friona thle -standpoint -of 'a tout action to recover -damages for -alleged falsie and fraudulent representations-.

lit was- alleged- in- the complaint that the appellant falsely and fraudulently represented and stated to plaintiff that said shares of stock were being offered and sold- -at $20 ,pier share; and- that the money ,so realized! from.' -such slalesi wto being paid te» the treasurer of said aigiency to constitute 'its capital -stock; and1 that as a further inducement to; plaintiff to- make such, -s-uibscriptioin said defendant falsely and- fraudulently -represented' -and -stated- to him that said agency had purchased -and them owned -allí the 'business assets and go-od will of ith-e Pacific -Coast 'Mercantile Agency, an agency with- 'headquarters at S-an Francisco, doing a large and profitable business as a mercantile agency; land that plaintiff confided in the integrity of said 'appellant, and, fluffly believing the representations1 -and -statements' made by him to be true, and without any knowledge -or s-uslpitiloini om his pant that such representations Were falsie or untrue, dfid- ¡subscribe for 250 shares of the capital stock -o-f -said United Mercantile Agency at the pri-ce of $20 per share, and' did p-ay therefor to said Mercantile Agency the sum of $5,000.

It appeared' from tibe evidence that only a -portion off the mtomey subisoribieidi for -shares' was paid1 into' the treasury of the defendant Mercantile Agency as caipii-tali stock, the -other portion being used to pay expenses of promotion; it also- appears that the said defendant Mercantile Agency never purchased and never -owned' the said1 Plaidifi-c Coast Mercantile Agency. These ■were -the fake and fraudulent representations- claimed! by respondent and f-o-r which he seeks toi -recover diamiage-s' in this, action-The jury was instructed that plaintiff wias1 entitled1 to recover what the evidence -shows he had actually lost, and that the measure of damage w'as th-e amount he tpa-id for the stock, with interest, less the actual value of the -stock at -the- time he discovered toe fraud. While we are of tote view that this ¡instruction- was wholly -erronelcius and does not oorrectly state the ruile or measure of damages 'applicable to -the facts- of tods case, we are, however, of 'the view that toe instruction was just as favorable to appellant as would have been toe correct instruction, -and therefore appellant has been in no manner prejudiced by this, instruction. The measure of respondent's damage under the circumstances- and theory of tods case i;s the difference between what the stock in question wias 'actually worth and ¡what it would have been worth if At had; 'been as represented. There is evidence An to-is case to the effect toa-t 'toe -contract price of said stock was $20 per share, and it is reasonable ' to' infer or presume toerefrom- that if said stack had' been .as represented, it would have been' worth at least the contract .price, and, respondent having paid cash for the stock -siiib'sicribed for by him,- h!is loss wiouid be the same whether dlt was based) upon the difference between its actual IwOrtoi and -whaife lit would have been worth, if it had been as represented, or 'whether -it was based Upon the difference between its actual worth and what he p'add flcir it. From this it necessarily follows that appellant by reason- thereof has suffered nio prejudice by that part of toe instruction. The instruction also stated that toe value of toe stock should .be determined' a® of the time when respondent first discovered the fraud. W;e -are of the view that this 'statement is inCarreot. The general-rule seem® to be that the value lin such cases should be determined as of toe time toe transaction took place, that is, at toe time toe fraudulent representations were made; but from toe evidence in this case dt appears that all- toe facts and circumstance® 'bearing Upon toe question of toe value of to'e stock in question existed at the time respondent siubisonibed for said stack the same a-s they existed at toe time he discovered toe fraud, and that there (is no reason or evidence from which to' infer that toe value of this stock was any different at toe time respondent discovered toe fraud from what it was at the time the representations were made. W'e are of the view, therefore, to,at appellant, taking the instructions as a wfalclle, was 'in no manner whatsoever prejudiced by the giving of this instruction.

Having considered aid assignments ■ of error, and' finding no prejudicial error, die judgment and order appealed from are affirmed.

WHITING, P. J.

(dissenting). . I am of the opinion that ■the evidence was sufficient, under instructions that might right1-fuMy halve ¡been given, to sustain the verdict (herein. I ami, however, of the 'opinion that certain evidence, very prejudicial to defendant, wa;s erroneously 'admitted, and also that, under -the instructions given, the evidence was insufficient to support the verdict. I cannot agree with the majority in what they hold to" be the proper measure of damages in -this case.

GATE'S, J.

While concurring in toe result readied in the majority opinion, I concur in what toe Presiding Judge says as te¡ the measure of damages.  