
    No. 369
    HELMUTH v. HESSLER
    Ohio Appeals, 8th Dist., Cuyahoga County
    Nos. 4741, 4740.
    Decided Jan. 14, 1924
    Middleton, Sayre and Mauck, JJ., sitting
    313. CORPORATIONS — -Directors knowing corporation -insolvent-, held liable to purchaser of stock represented sold to erect' new plant.
    Attorneys- — P. R. White, for Helmuth et- al; Turney & Sipe, for Hessler. Both-of Cleveland.
   MIDDLETON, P. J.

Epitomized Opinion

Published Only in Ohio Law Abstract

Original action for damages in the Common Pleas wherein H. H. Hessler, Sr., was plaintiff and Donovan Helmuth and others, directors of the Empire Tile Co., and the company* were defendants. One of the agents of the company- sold stock in the company to Hessler representing that the proceeds from the salt was to be placed in.a trust fund by the company for the purpose of thereafter erecting a new plant and purchasing new equipment. Hessler averred), that these ¡representations were false and fraudulent, that no such use was made of said proceeds and that shortly after his purchase of the stock, the company went into bankruptcy. The trial court found that on the day of the sale of the stock to Hessler, the company was insolvent and the court rendered judgment for Hessler on the ground that the company, by reason of its insolvency, never was in -a position to carry out its plan to erect a new plant and purchase new equipment. Hessler and the other prosecuted error. Held:

The fact of insolvency alone affords no basis for a claim for damages. The agont represent the company to be solvent. The right of recovery must rest upon the fact that, when the stock was sold to Hessler, the directors knew that they could not use the proceeds for the purposes represented by the agent and that such proceeds must necessarily go to creditors of the company. As the determination of this question in its legal effect was as if made by the verdict of a jury this court does not feel warranted in disturbing it. Judgment affirmed.  