Appeal from the District Court of the United States for the Middle District of Pennsylvania; Albert W. Johnson, Judge.
Before BUFFINGTON, Circuit Judge, and THOMSON and AVIS, District Judges.
THOMSON, District Judge. This was an action of assumpsit by the Farmers' Bank of McSherrystown against Halsey, Stuart & Co., investment brokers, to recover the purchase price of five bonds of the Elder Steel Steamship Company, of the par value of $1,000 each. As the basis of this action, plaintiff alleged that the bonds were bought from defendant, on the representation of its salesman, Edgar Paxon, that the two steamships which formed the security of the mortgage, under which the bonds were issued, were fully insured against all marine perils, and that, in addition, the company's earning or profits were insured, and that the interest on said bonds, therefore, would always be paid; that such statements as to the insuring of the company's earnings or profits were in fact untrue; and that defendant made the same with knowledge of the falsity of said representation, fraudulently intending to deceive plaintiff thereby.
At the former trial of the case, plaintiff amended its statement, changing the action from one in deceit, based on fraud, to one in assumpsit, based on the defendant's knowledge which it had, or ought to have had, "that the company's profits were not insured but that the insurance covered only profits from contracts not performed because of the total loss of the ships by marine perils."
The affidavit of defense denied that its agent, Paxon, had any authority to make such representations, or that any of its representatives made such representations, as alleged by the plaintiff, in connection with the purchase of said bonds, and averred that the plaintiff knew, or should have known, that insurance of the company's earnings or profits was a kind of insurance wholly unknown to the mercantile world and was not obtainable.
At the conclusion of the first trial, the court entered a judgment of nonsuit, which it afterwards refused to take off. On appeal, the judgment was reversed, the appellate court [21 F.2d 818] holding that the case was one for the jury. On the second trial, a verdict was rendered for the plaintiff for the amount of the bonds and judgment entered on the verdict. From the judgment so entered, this appeal is taken.
The errors assigned relate to the admission of certain testimony, and also complain as to certain portions of the judge's charge. From a careful examination of the whole charge, in the light of the pleadings and the issue between the parties, we are not convinced of any substantial error therein.
When the testimony of Mr. Paxon, as to the representations, had been given, counsel for plaintiff endeavored to prove what discussion took place as to the bonds by the board after Mr. Paxon left. Plaintiff's counsel stated that the testimony was offered for the purpose of showing that the directors were induced to their action by the representations of defendant's representative. This offer resulted in the following questions, answers, and rulings thereon.
"Q. Go ahead, Mr. Reigle, and tell the Court and jury what was said, what was done there -- you can relate any discussion that took place.
"By Mr. Mason: No, if the Court please, counsel for defendant objects to the witness relating anything except what took place in Mr. Paxon's presence -- not what took place after Mr. Paxon left.
"By Mr. Heckscher: That seems to the counsel for plaintiff, if your Honor please, to narrow the injury too much to limit it to what took place while Mr. Paxon was present, it seems to me Mr. Reigle, if he was present, can relate any discussion as to the buying of these bonds by the bank which was held immediately at the time Mr. Paxon made his statements there and what was in the minds of the directors, that would be the best evidence of what they had in mind at that time -- in other words what the discussion was showing their understanding of Mr. Paxon's statement and showing the state of mind of the directors produced by Mr. Paxon's statement.
"By Mr. Mason: Counsel for defendant objects to anything outside of what was said in the presence of Mr. Paxon who was there representing the defendant.
"By the Court: I think their discussion leading to their action might indicate whether or not they were induced by the statements or ...