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First Department, March, 1910.

[Vol. 137. It does not appear that the concession made to the former adds one iota to the cost of the service furnished to the latter. If the corporation chooses to exercise benevolence by granting a reduction from its regular charge to those who are universally recognized as the proper recipients of consideration, that is a matter between the corporation and its stockholders, who are conferring the favor, and not a concern of the defendant, which contributes nothing to it. If the corporation chooses to recognize its obligation to the city by assisting in decreasing the expenses of government to the extent of a percentage of the charges for telephone service for official needs, it is doing that which proportionately reduces the burden upon the defendant and all other taxpayers, and this unusual recognition of a debt of gratitude should not be discouraged.

The courts have recognized the right of a common carrier to carry a person free who is unable to pay fare, or to carry supplies at nominal rates to communities scourged by disease or rendered destitute by floods or other casualty (Hays v. Pennsylvania Co., 12 Fed. Rep. 309); these are exercises of benevolence. They have also upheld the right, even under the common law, of a common carrier to allow ministers of the gospel to travel on half-fare tickets (United States v. Chicago & Northwestern R. Co., 127 Fed. Rep. 790), and to extend more favorable terms to a State or municipal government. (Interstate Commerce Commission v. Baltimore & Ohio Railroad, 145 U. S. 278.)

In the case of a gas company, it was said that to furnish gas to the city of New York for seventy-five cents per 1,000 feet, while private consumers paid eighty cents, was not an illegal discrimination. (Willcox v. Consolidated Gas Co., 212 U. S. 54.)

That the general policy of almost every State where legislation has been had upon the subject of unjust discrimination is to recognize certain concessions in rates made under the common law as still proper to be made, even in the face of the existence of a general prohibition against discriminations, is found in the exemp. tions expressly made by the statutes themselves. Thus the right to give free or reduced rate transportation, despite the statute, either to persons or property, was granted to common carriers in Arkansas, Delaware, Indiana, Iowa, Louisiana, Michigan, North Carolina, Ohio, Oregon, South Carolina, South Dakota, Utah, Washington

TELEPHONE Co. v. SIEGEL-Cooper Co. 165 App. Div.]

First Department, March, 1910. and Wisconsin as to the government of the State or of a municipality ; in Arkansas, Delaware, Florida, Indiana, Iowa, Louisiana Michigan, Minnesota, North Carolina, Ohio, Oregon, South Dakota, Texas, Utah, Virginia and Washington as to ministers of the gospel; and in Arkansas, Delaware, Florida, Indiana, Iowa, Louisiana, Michigan, Minnesota, Mississippi, North Carolina, Ohio, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin as to certain specified charitable and benevolent objects.* Under the Interstate Commerce Act it was expressly provided, among other exemptions (24 U. S. Stat. at Large, 387, $ 22, as amd. by 25 id. 862, § 9), that nothing therein contained should prohibit the carriage, storage or handling of property free or at reduced rates for the United States, State or municipal governments, or for charitable purposes; or the free carriage of destitute and homeless persons transported by charitable societies, and the necessary agents employed in such transportation, or the giving of reduced rates to ministers of religion. (See, also, 24 U. S. Stat. at Large, 379, chap. 104, § 1, as aind. by 34 id. 584, 585, chap. 3591; 34 id. 838, Res. No. 47, and 35 id. 60, chap. 143.)

Finally in the Public Service Commissions Law of this State (Laws of 1907, chap. 429) common carriers were expressly allowed to give free transportation to ministers of religion, inmates of hospitals, charitable and eleemosynary institutions and persons engaged exclusively in charitable and eleemosynary work, indigent and homeless persons and the agents accompanying them when sent by charitable societies; as well as to give free or reduced rate transportation of persons or property for the United States, State or municipal governments. (§ 33.)

It follows, therefore, that the discounts of twenty-five per cent heretofore given to clergymen, to charitable institutions and to the city of New York do not amount to an unfair, unjust or unreasonable discrimination, and that they are not illegal. The contract between plaintiff and defendant not being void as violative of any statnte, nor as against public policy nor under the common law, defendant is liable to plaintiff thereunder for the amount due for the service concededly rendered. Judgment is, therefore, directed

* See N. Y. Supr. Ct. Cases and Briefs of Counsel (State Law Libr.), vol. 7826, No. 1, p. 11 et seq.- [REP.

First Department, March, 1910.

[Vol. 137. in favor of plaintiff against defendant in the sum of $37,750.61, with interest on $35,928.92 thereof from October 1, 1909, and with costs.

Ingraham, P. J., McLaughlin, Laughlin and Miller, JJ., concurred.

Judgment for plaintiff, as directed in opinion, with costs. Settle order on notice.

Russell THAYER, Respondent, v. Grant B. Schley and ELVERTON

R. Chapman, Appellants, Impleaded with Henry G. TIMMERMAN and GEORGE F. CASILEAR, Defendants.

First Department, March 11, 1910.

Fraud - proof necessary to recovery - false representations inducing

stockholder to retain stock — principal and agent - representations made by stenographer of copartnership – failure to show authority or knowledge - evidence – books of corporation - minutes of meeting of directors - erroneous charge.

In order to recover in an action for deceit whereby the plaintiff was induced to

refrain from selling stock, he must establish that false representations were made by the defendants; that they were calculated and intended to influence him; that they were made to him or brought to his knowledge; that the representations were false to the knowledge of the defendants, and that the plaintiff

acted in reliance thereon in good faith and was deceived and damaged thereby. A letter written on the letter paper of a copartnership and signed by a stenog. App. Div.]

rapher of the firm in the firm name, purporting to give an opinion as to the financial condition of a corporation in which two of the partners were directors, is not binding upon the partnership nor upon the individual members thereof, except in so far as they authorized the stenographer to make the statement and advised him of their knowledge or belier. There can be no recovery based upon the falsity of such statements when there

is no proof that the stenographer had authority to make the statements or that

the members of the firm had any knowledge of the letter. While a plaintiff, suing members of a firm for deceit, whereby he was induced

to refrain from selling stock of a corporation of which they were directors, having established the representations made by the defendants, may put the books of the corporation in evidence in order to show that the representations were false, they should be received for that purpose only and not to charge the defendants with knowledge thereof as directors, unless there be further evidence showing that they had knowledge of the entries.

First Department, March, 1910. In such action it is error to charge in substance tbat the jury may find the defend

ant directors liable for deceiving the plaintiff by declaring dividends from the capital instead of from the profits, where the complaint is based solely upon false representations made by the defendants, and allegations as to a con. spiracy of the directors to declare illegal dividends to deceive stockholders are

unsupported by any evidence of such conspiracy. In such action it is error to admit in evidence the minute books of the directors

of the corporation relating to meetings at which the defendant directors were not present, unless there be proof that they had knowledge of the transactions at the meetings.

APPEAL by the defendants, Grant B. Schley and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 17th day of April, 1909, upon the verdict of a jury for $48,550, and also from an order entered in said clerk's office on the 26th day of April, 1909, denying the said defendants' motion for a new trial made upon the minutes.

Julius F. Workum, for the appellants.

A. Leo Everett, for the respondent. DowLING, J.:

The American Malting Company was incorporated under the laws of the State of New Jersey in September, 1897, with a large capitalization, and the firm of Moore & Schley had been interested in the formation of the company. .

The plaintiff, a resident of Philadelphia, in December, 1898, gave an order to Ervin & Co., brokers in that city, to buy for him 700 shares of the preferred stock of the company, which order was executed through the firm of Moore & Schley of New York, of which firm Ervin & Co. were the Philadelphia correspondents, at prices ranging from eighty-three dollars and fifty cents to eighty-five dollars per share. The stock was then carried by Ervin & Co. with other stocks on margin. The plaintiff was never personally known to Moore & Schley in the transaction. On July 18, 1899, the plaintiff, still being the owner of the stock held by his brokers on margin, became disturbed because its market price was steadily declining, although it was a seven per cent dividend paying stock, and knowing that the firin of Moore & Schley had been the promoters

First Department, March, 1910.

[Vol. 137. of the company and having confidence in them, he told his brokers, Ervin & Co., that he would like to find out from Moore & Schley the real condition of the company, whereupon Ervin & Co. wrote the following letter to the firm of Moore & Schley:

“PHILADELPHIA, July 18, 1899. “Messrs. Moore & SCHLEY,

“80 Broadway, New York: “ Dear Sirs.— We have been asked the following question by a stockholder of the American Malting Company, which we are unable to answer. Will you kindly give us as soon as possible the information :

“ Amount of Capital Stock. “Amount paid on same. “What properties does the Company own? “In what condition was the Company at its last Annual Meeting ?

“We will thank you for any general information you can give us on this subject.

“ Yours truly,

“ (Signed) ERVIN & COMPANY." In reply Moore & Schley are claimed to have written and sent the following letters : " MOORE & SCHLEY « Bankers


“New York, July 19th, 1899. “Dictated. “ Messrs. Ervin & COMPANY,

“Philadelphia, Pa.: “GENTLEMEN.-- Referring to your letter of the 18th instant, we have to say that the American Malting Company does not issue a statement of its business, but we can say that the capital stock of the Company is as follows: « Preferred..........

.... $14,440,000 “Common .....

... 14,500,000

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