Samuel Babcock and another, Executors of Samuel Babcock vs. The Middlesex Savings Bank and Building Association

Samuel Babcock and another, Executors of Samuel Babcock vs. The Middlesex Savings Bank and Building Association. The defendants were a corporation organized under the general law with regard to Savings Banks arid Building Associations. By an article of their constitution it was provided that, on the death'of any stockholder, his legal representatives might, at their option, upon giving one month’s notice, receive the net value of all shares held by such deceased member. In a suit brought by the executors of a deceased stockholder to recover the value of the stock of the testator, it was held, 1. That a statement in the bank book of the deceased of the computed value of his stock,- made by the treasurer of the company, was not conclusive upon the defendants, who might show that the computation was based upon the nominal and not upon the actual value of the assets, and that the stock was in fact of riiuch less value. 2. That if the value of the stock was to be determined by ascertaining the value of the assets, the inquiry should be as to their value upon a sale conducted fairly and in the usual manner of selling such property, neither force.d at a time'of unusual «depression in the'market nor [ *303 ] deferred in expectation of an unusual rise. 3. But that the proper mode of determining the value of the stock was by ascertaining the market value of the shares themselves. Where the question is as to the pecuniary ability of a party, the -mere opinion • - of a witness, upon whatever facts founded, is inadmissible. Assumpsit. The plaintiffs’ testator was, at the time of his death, on the 14th of March, 1857, a stockholder of the Middlesex Savings Bank and Building Association, which was a corporation organized under the general law with regard to building associations. The second section of the fourth article of the constitution of the company was as follows: “Upon the death of any stockholder in this association, the legal representatives of such deceased stockholder shall be entitled to the same privileges and shall be under the same obligations as the original stockholder; or, if by them perferred, shall, on giving one month’s notice .to the treasurer, be entitled to receive the net value of all shares held by said deceased member, deducting any amount due from the said member to the association.” On the 6th day of May, 1857, the plaintiffs gave notice to the treasurer of the company that they desired to receive from the company the net value of the shares of its stock standing in the name of the testator, and that they were prepared to transfer the stock to the company on receiving the net value of the same. The company neglecting to pay the same, the plaintiffs brought the present action to recover the amount. Upon the trial of the case to the jury, no question was made on the part of the defendants except as to the value of the stock on the 6th day of June, 1857, which was the time when the plaintiffs became entitled to payment. The plaintiffs offered in evidence a bank book of the deceased, in which all the entries were made by the treasurer of the company, which contained an account of the payments of the deceased on his stock, and of the sums carried to the credit of the stock, and in which an account of the stock was made up to a certain day before the death of the deceased, and the amount stated to be $2,359.35. This sum, with $98 afterwards paid in by the deceased, and interest, the plaintiffs claimed to be entitled to recover. [ *304 ] The defendants thereupon *offered evidence to prove that the sum entered in the bank book as the value of the stock was not the net value thereof, but the nominal value and that, in determining the value as entered in the book, the whole of the assets of the company were estimated at their par value, although many of them were worth very little, and some of no value whatever; and that, as they consisted in part of debts due from insolvent estates in a course of settlement, it was impossible, at the time when the valuation was made, to fix their real value and the real value of the stock. To this evidence the plaintiffs objected, on the ground that the entries were conclusive on the defendants, but the court overruled the objection and admitted the evidence. The defendants then claimed that by the net value of stock, as the term was used in the section of the constitution referred to, was meant what the property would bring in cash, on immediately winding up the affairs of the corporation and converting its assets into cash. The plaintiffs claimed that by the net value of- the stock was meant the net real value of the same in the hands of a prudent and reasonable man, and not what it would bring when the market was either temporarily depressed or inflated, or on a sudden winding up of the affairs of the corporation. ' The court construed the clause in question in accordance with the claim of the plaintiffs and so instructed the jury. Among the assets of the company on the 6th day of June, 1857, were notes of several persons who were claimed to be insolvent, and the value of which depended chiefly on the indorsements of Henry D. Smith. To show that these notes ought not to be accounted of any value, except to the extent to which the defendants admitted they had received dividends from the estate of Smith, the defendants offered evidence to show that the estate of Smith had been settled, and the dividends paid, in a regular course of insolvency, in the probate court of the district of Middletown. To rebut this evidence, and to show that the notes ought not to be accounted entirely worthless, the plaintiffs offered as a witness the judge of the probate court, who testified that he knew Smith, and described the style in which he and his family lived, and the “manner of his leaving the [ *‘305 ] state, and stated the fact that he had made before the court of probate no disclosure of his property under oath; and on these facts the witness said that he should judge that Smith was not entirely destitute of property. To this evidence the defendants objected, but the court admitted it. Sundry other rulings were made by the court with regard to the admission of evidence, to which the defendants excepted, but which need not be particularly stated. The jury returned a verdict for the plaintiffs for $2,483.60 damages, and the defendants moved for a new trial. W. D. Shipman, in support of the motion. Dutton and Tyler, contra. [MAJORITY — Storrs, C. J.] Storrs, C. J. The defendants, in reply to the evidence derived by the plaintiffs from the bank book received by their testator from the defendants, offered evidence to show the circumstances under which the estimate of the stock was made in that book, and its object, in order to detract from its weight, and that that estimate was intended to be the nominal and not the net value of the stock,’ and also to prove what was the real value of the several assets which composed the property of the defendants. The plaintiffs objected to this evidence only on the ground that the entry in that book was conclusive as to the value of the stock, and that the defendants therefore were precluded thereby from showing that it was of a less value. This objection was overruled,’and in our opinion correctly,'and no further objection was made by the plaintiffs to the inquiry thereupon made by the-defendants, as to the real-value of the assets of the defendants’ company. This inquiry of course assumed that the proper mode of determining the value of the stock of the company was by ascertaining the real value of the several items of property, belonging to it, and the trial proceeded on that ground by the common consent of both the parties, each of them adducing, without objection, evidence of the-real válue of those several items, for the purpose of ascertaining the [ *306 ][ value *of the stock of the plaintiffs’ testator. It would hot therefore be now competent -for the plaintiffs to claim, nor do they.insist before us,- that it was not a proper course of inquiry for that purpose, or that such evidence was inadmissible. They now claim only that, conceding it to be competent for the latter to show the value of their testator’s stock in this mode, the court below committed no error in its decisions in regard to the evidence offered by the defendants on that inquiry. Hence we must, in deciding this- motion, treat that course of inquiry as if it had been proper. We think that the court below erred in receiving the opinion of the judge of probate as to the pecuniary ability of H. D. Smith, for the purpose of rebutting the evidence adduced by the defendants to show that he was destitute of' property: The witness did not profess to have any knowledge whatever in regard to the property or pecuniary circumstances of Smith, ■or any .means of forming a judgment or opinion on that subject, excepting from the style in which he and his family lived, the manner of his leaving the state, and the fact that he had made, before the court-of probate, ho disclosure of-his-property under oath, in the proceedings in insolvency against him. Although, as to the value of property we resort to- the judgment or opinion of persons acquainted with it, its existence and ownership .are facts to be -proved, whether directly or otherwise, like other facts,- by the knowledge of witnesses, and not-by their opinions, inferences or surmises, derived from whatever source. The-present as not like the cases where an opinion is sought of an expert; - or those.in which, for .certain- purposes, the reputation of a person as to pecuniary ability may be shown by witnesses who have no personal knowledge of his situation. The inquiry here was not whether Smith was reputed to be, but whether he was in fact, destitute of property. On such an inquiry nothing could be more dangerous than to receive the opinions of pei’sons founded on such fallacious grounds as common rumor, or a man’s professions as to his circumstances, or the representations or opinions of others, or, what in many cases is still less to be relied on, his style or manner of living. *As a new trial must be granted on this ground, it [ *807 ] is not necessary to examine the other rulings on the evidence offered bv the defendants and excluded, especially because the points involved in them will probably not arise on a re-trial of the case. We would however remark, that, in our opinion, the construction of the 2d section of the 4th article of the constitution of the defendants which was adopted by the court below, furnished an imperfect if not erroneous guide to the jury in determining the value of the assets of the defendants. On the supposition that the plaintiffs were entitled to a proportion of the value of the property of the defendants’ company, we think that such value should be taken at the sum which it would bring on a sale of it conducted fairly and in the usual manner of selling such property, so however that on the one hand the sale should not take place when there was a temporary depression of its value in the market, or on the other, be delayed in the expectation of an unusual or speculative advance in its price. This excludes the claim of the defendants, that the property should be estimated as if it were at all events to be immediately sold, or the affairs of the company were to be immediately wound up; and it also excludes the claim of the plaintiffs, and which was adopted by the court below, that it should be estimated at what it would be worth in the hands of a prudent and reasonable man ; which last requirement, if not unintelligible, or incapable of practical application, rather convej's the idea, which we think an erroneous one, that if such an owner would keep the property in the expectation or hope of an extraordinary or speculative rise in the market, it was to be estimated with reference to such a rise. The proof of the defendants ought not therefore to have been confined to its value in the hands of such an owner. It is our prevailing opinion, however* that the, damages to which the plaintiffs were entitled in this, case, were not to be ascertained by the proportion of the value of the company’s assets which the number,¡of shaves of . its stock held by their testator bore to the whole stock, but that they were entitled to the value of his shares in the market, determined by the sum which, sold as such shares, they would have [ *308 J there brought, *and which, like the prices of shares in the stock of.similar and other incorporated companies, would not, as is well known, be governed wholly by the intrinsic value of their assets, but would depend also upon various other circumstances. This is the general mode of estimating or appraising such property when it becomes necessary to determine its value ; and the great difficulty and inconvenience of ascertaining it by an inquiry into the value of every item of property belonging to such companies and the deductions proper to be made from their gross amount, has induced us, notwithstanding some of the language of the constitution of the defendant’s company furnishes a plausible ground in'favor of the course of inquiry on the trial, to adopt the rule for determining the value of the stock which we have mentioned, as the best practicable one which can be devised. This rule rendered admissible the inquiries of the defendants as to the market value of the shares of stock in question. A'new trial is therefore advised. In this opinion the other judges concurred. New trial advised.