Sovereign Pocahontas v. Bond

120 F.2d 39 (1941)

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Nature of the Case

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Facts

Moyer (D) was President, and Bond (D) was Secretary and Treasurer of the corporation. Both were frequently in its office and frequently spoke for it. There was no evidence that they kept or examined its books, understood bookkeeping, prepared its financial statements, knew whether or not the statements were erroneous, or knew whether or not the corporation had made or was making money. There is evidence that the books were kept by other persons and no evidence that those persons did not prepare the financial statements. Ds misstatements related to the condition of a corporation. They said it was making money and had made about $800 in the previous quarter and over $3,000 in the preceding year, and that they caused certain financial statements to be sent to P. The corporation was losing money and had lost about $86 in the previous quarter and $2,700 in the preceding year, and the financial statements were incorrect. Because of these false statements, P refrained from debt collection and even made additional sales on credit to the corporation. Eventually, the truth came out and P collected less than it would have prior to granting more credit. P sued D for fraud. The trial court directed a verdict for Ds. P appealed.