Cross a. Sackett.

The second count in that case was sustained by the court, and when analyzed, it presents this case :-That the defendants, and others unknown, had formed a company for the purpose of smelting and refining the ores of certain mines in Spain, and divided it into 96,000 shares of £1 each, out of which 12,000 shares were to be appropriated to the public at 12s. 6d. each, free from further calls; that such 12,000 shares were actually offered to the public; that the defendant was promoter and managing director; and being such on the day, &c., intending to defraud, deceive, and injure the public, and to cause it to be publicly advertised and represented that the company was likely to be a safe and profitable undertaking, and also to deceive the public who might become purchasers of the said 12,000 shares, and to induce them to become such purchasers, falsely, fraudulently, and deceitfully procured, and caused it to be publicly made known and advertised, in and by a certain prospectus issued by the defendant as such director, that the promoters did not hesitate to guarantee to the bearers of the 12,000 shares a minimum dividend of 33 per cent. payable half-yearly, to remain in force until the 12s. 6d. per share should be paid. That the defendant, by means of such false and fraudulent pretences and representation, after the making of the same, wrongfully and fraudulently induced the plaintiff to become the purchaser and . bearer of 2,500 of the said 12,000 shares, and that he paid 12s. 6d. for each share; that, in truth, the statement, &c., was false.

Lord Campbell said that had the declaration been, that the defendants delivered the prospectus to the plaintiff, containing the false representation, there could be no question in the case. If the plaintiff had only averred further, that having seen the prospectus he was induced to purchase the shares, objection might be made that a connection did not sufficiently appear between the act of the plaintiff and the act of the defendant; but the count goes on to aver "that the defendant, by means of the said false and fraudulent representations, wrongfully and fraudulently induced the plaintiff to become the purchaser and bearer," &c. Judgment was given for the plaintiff on this count.

I may observe, that the inducement to purchase was a false representation of the defendant. By means of that the plaintiff was deceived, and that false representation was contained in a prospectus issued by the defendant, but, as his lordship impliedly

Cross a. Sackett.

admits, not delivered to the plaintiff by the defendant. It appears to me this means simply, that the fact of a prospectus issued by the defendant, inducing the plaintiff to purchase, and being false and fraudulent, was enough.

In the course of the argument Justice Coleridge said—“It is a continuing representation to the public, and amounts to a representation to whomsoever shall hold shares."

See, also, the National Exchange Company v. Drew, in the House of Lords (32 Eng. L. & Eq., 10).

The proposition of the defendant's counsel, that the action can only exist if at all in favor of one to whom the false and fraudulent statement has been directly made, and his reasoning to support it, is similar to that of Justice Selden, in the Farmers' and Mechanics' Bank v. The Butchers' & Drovers' Bank (Court of Appeals, December, 1857). He cites the cases of Grant v. Norway (10 Com. B. R., 665); Coleman v. Riches (29 Eng. L. & Eq., 323), and The Mechanics' Bank v. The New York & New Haven Railroad Co. (3 Kern., 599). He says "they are plainly distinguishable from the case before the court. In neither of these cases was the document upon which the question arose negotiable. It was sought there to make the principal responsible for a false representation of the agent; not responsible to the person to whom the representation was made, but to one with whom the agent had no dealings, and to whom he had made no representation."

But a great distinction exists between the present case and that of the New Haven Railroad Company, or that of the Farmers' and Mechanics' Bank, connected with the question of a transferred responsibility. In each of these cases the directors of the companies were wholly innocent; they were themselves the victims of a misplaced confidence. But here the instrument sent forth by the directors is framed by themselves: if it was false, the falsehood is their own, and the imposition it produces must be treated as the result of their own deceptive practices."

* Seiser a. Mali (Supreme Court, First District, Special Term, January, 1858), was an action against Mali, the president, and Jewett, the secretary of the Parker Vein Coal Company, who, it was alleged, had made an over-issue of stock, some shares of which the plaintiff had been induced to purchase. The complaint stated the incorporation of the company, the number and par value of its shares, and that, before a day named, the company had issued certificates for such stock to

Cross a. Sackett.

Grant v. Norway, commented upon by the learned justice, is fully stated by Justice Bosworth and Justice Comstock, in the New Haven Railroad case. There, the immediate holder of a bill of lading had no right of action, the goods not being put on board the vessel. The master, as agent of the owners, had not conferred any right of action upon the party to whom he gave the false bill of lading.

So in Coleman v. Riches (29 Eng. L. & Eq., 323), the false

the full extent of its capital, which certificates were outstanding and valid, and were in great demand in the market; that defendants, being officers of the company, and knowing the premises, then together made out, issued, and sold in the market a great quantity of paper writings, partly written, and partly engraved or printed, signed, and purporting to be, and resembling in all respects, the original certificates of stock lawfully issued, and intended to be sold in the market, with the object of raising money; that defendants, by such sale of spurious certificates, held out the false pretence that purchasers thereof would obtain the rights and privileges of stockholders in the company, whereas the certificates were utterly worthless and void; that within a period named, defendants so issued and sold in the market 128,000 shares, and realized $1,300,000; that, at various times within that period, the plaintiff, ignorant of the over-issue, bought, in the market in New York city, spurious certificates for 3,000 shares, and paid therefor $19,250, induced thereto by the fraudulent acts and pretences of defendants. On information and belief, that all of the certificates so purchased by him were of the spurious issue, and sent into the market for the purpose of defrauding any person into whose hands they might fall; but that if any of them were genuine they were rendered worthless by the alleged acts of the defendants, and that on the discov. ery of the over-issue, subsequently, the credit of the company was destroyed, and the certificates of its stock became unsaleable, except at nominal prices. Damages were laid at $19,250, and interest.

Defendants demurred.-1. That the complaint did not state facts sufficient. 2. That plaintiff's remedy was exclusively against the parties from whom he purchased. 3. That a cause of action against defendant, as officer, for official misconduct, injuring plaintiff as stockholder, was improperly joined with one for deceit, and obtaining money on false pretences. 4. That so far as the action was based on official misconduct of defendants, to the injury of the corporation and its stockholders, the corporation was a necessary party plaintiff. 5. That for such corporate injury the remedy was for the corporation, not for individual stockholders. 6. That so far as the action was for deceit, the complaint was defective, in not stating any false representations, nor when, by whom, or to whom made, nor knowledge of their falsity, nor intent to deceive plaintiff.

S. W. and R. B. Roosevelt, for the plaintiff.

Van Cott and Cady, for defendant Mali.

E. W. Crittenden, for defendant Jewett.

DAVIES, J., before whom the case was argued, overruled the demurrer, and ordered judgment for the plaintiff. No written opinion was rendered. (Compare also Cazneaux a. Mali, Post.

Cross a. Sackett.

receipt was given by Bond, the agent of the defendant, to Lewis, and Lewis obtained money on it from the plaintiff. It was a receipt given by the keeper of the defendant's wharf when the goods had not been received; and the plaintiff was defeated.

It is true Williams, Justice, said-Suppose Riches himself had given the fraudulent receipt, would that have constituted a representation by Riches to Coleman ?

This seems to me the nearest approach to the proposition, that the false representation of the principal himself to one party who could support an action, is unavailing in favor of another to whom that party has transferred fully the subject-matter of the action, in respect to which the representation was made.

But as I understand the opinion of the court, this suggestion is contradicted. The court say-There was no evidence from which it could be inferred, as between Coleman and Riches (plaintiff and defendant), that Riches agreed to give the vendee of corn, vouchers of the delivery, on which the vendee should act. Had there been such an agreement, it would have made the case very different, because Riches then would have undertaken to deliver vouchers to Coleman, and to employ proper persons to give such vouchers to him. But there is no evidence of any thing of the kind.

At any rate, I have come to the conclusion, that when a party projects and publicly promulgates the scheme of a joint-stock company; when he causes the usual books to be opened, and allows or causes the inscription of a person as an owner of an interest to a definite amount and value therein, which is false within his own knowledge; when he embodies such false statements in a certificate of this right directly issued, and of the same effect as if signed by himself; when he accompanies that certificate by a written power, authorizing a transfer at large, by the party to whom he has given the certificate; when that representation induces an innocent person to advance his money;the defendant's own individual act has created the privity of contract which the cases referred to appear to demand, and he must be held responsible to any one who has been deceived.

The representation was publicly addressed by the defendants to all; was intended to influence all who should become apprised of it; did exercise an influence upon the plaintiff, one of the mass addressed: that influence has resulted in his damage; and

The Opening of Albany-street.

the fact embodied in the representation must be treated, for the present, as untrue, and as meant to deceive.

We all agree that the order should be affirmed, with costs.

THE OPENING OF ALBANY-STREET.

Supreme Court, First District; Special Term, February, 1858. PROCEEDINGS FOR OPENING STREETS.*-ESTOPPEL.

The notice of application for the appointment of commissioners in proceedings to open Albany-street, in the city of New York, stated the proposed improvement to be the opening of Albany-street, from Broadway to Greenwich-street :— Held, a sufficient statement of the nature and extent of the improvement. The statute requiring an affidavit to show that the notice was posted in a conspic

* In the matter of the Widening of Reade-street (Supreme Court, First District; Special Term, December, 1857), the motion of the corporation counsel for the confirmation of the commissioners' report, was opposed by a number of counsel for various parties in interest. The grounds of objection were, that the proceedings were not regular in form in the following respects:

That the abstract had not been deposited for sixty days in the street commissioner's office, but only in the office of Mr. Devlin. [The title to the office of street commissioner was then in litigation between Mr. Devlin and Mr. Conover.]

That the report was an amended report, and that twenty days' notice had not been given of its presentation.

That the commissioners had not given thirty days' notice, that parties having objections to their abstract must send them in within that time.

That they had misled parties by giving a notice that the objections must be sent in within a time less than thirty days, and in refusing to receive objections within thirty days.

The court decided to send back the report on the last two grounds of objection, and an order was entered-"That the said motion to confirm the said report of the said commissioners be and the same is hereby denied; and that the said report be and the same is hereby referred back to the said commissioners to be proceeded on according to law.”

In the matter of the Widening of Duane-street (Supreme Court, First District ; Special Term, April, 1858), on the motion to confirm the report of the commissioners, counsel for parties in interest opposed the confirmation, on the ground, among others, that the abstract had not been filed with the street commissioner, but with one Conover.

The court held the objection untenable, saying that if it was shown that the abstract was filed in the office of the street commissioner, the requirements of the statute were carried out.

VOL. VI.-18