the measure of damages was the difference be- | tried, at which trial the facts educed at the tween the actual value of the stock and the amount paid, and not the difference between the value of the stock and what its value would have been had it been of the value represented; since, as to such stock, plaintiff had no bargain with defendants to the benefit of which he was entitled. In Bank. Appeals from Superior Court, Alameda County; J. O. Moncur, Judge. Action by A. S. Macdonald against George Roeth and George D. Gray. From the judgment rendered, defendants appeal, and plaintiff also appeals. Judgment affirmed on both appeals. Pillsbury, Madison & Sutro and A. D. Plaw, all of San Francisco, for appellant. Fitzgerald, Abbott & Beardsley, of Oakland, and W. F. Williamson, of San Francisco, for respondents. RICHARDS, Judge pro tem. The case out of which these two appeals arose was before this court upon a previous trial and appeal. Macdonald v. De Fremery et al., 168 Cal. 189, 142 Pac. 73. The judgment of the court upon the first trial of the cause was therein reversed, whereupon the cause was retried and a judgment rendered in favor of the plaintiff, from which these two appeals were taken to this court; and, the cause having been transferred to the District Court of Appeal, both appeals were therein heard together and a decision rendered wherein the judgment, in so far as it was assailed by the defendants upon their appeal, was affirmed, while as to the appeal prosecuted by the plaintiff the judgment was reversed and the cause remanded to the trial court with directions to enter judgment in plaintiff's favor for a much larger sum than the trial court had awarded him. Upon the defendants' petition for a rehearing, the cause was transferred to this court for decision. The facts of the case, in so far as they were developed at the first trial thereof, are fully and correctly set forth in our decision upon the former appeal (Macdonald v. De Fremery et al., supra) and need not be restated here; and the law relating to the state of facts as therein set forth was also fully and correctly stated in that decision and hence does not require restatement upon these appeals. This court reversed the judgment of the trial court involved in that appeal on account of the incompleteness, evasiveness, and contradictoriness of some of the material findings as well as the absence of other material findings. The findings thus criticized as found wanting upon the first trial of the cause had special reference to the nature of the deceit and of the false statements and representations .alleged to have been made use of by the defendants to induce the plaintiff's purchase of the stock of the bank in question. After certain amendments to the pleadings suggested by the terms of that decision, the cause was re former trial were again presented, and there was also introduced evidence of certain further facts bearing upon the alleged decelt and false statements and representations which, according to the plaintiff's averments, had induced the purchase by him from the defendants of 54 shares of the stock of said bank and the further purchase by him of 50 shares of a new issue of the stock thereof and which also induced the purchase by him of 270 shares of such stock from one Perine, for all of which stock he was alleged to have paid the par value of $100 per share. The trial court upon these proofs made findings in the plaintiff's favor upon the issue of deceit and of the reliance of the plaintiff upon the false statements of the defendants as to the true condition of the affairs of the bank and value of its stock in respect to his purchases of stock as to both the 104.shares thereof acquired directly from or through the defendants, and for which he paid in money and property the par value of $100 per share, and also as to the transaction whereby the plaintiff acquired 270 shares of such As to the latter transstock from Perine. action, the court found that the plaintiff had given in exchange for the said Perine stock certain real and personal property upon which at the time of such transfer he had placed a valuation of $27,000, the equivalent of the par value of said stock, but which property the court found to have had at said time an actual value of but $18,000. The court further found that the actual value of the stock of said bank at the time of both of the foregoing transactions was $35 per share. Based upon these findings of fact, the court rendered its judgment wherein it awarded the plaintiff damages as a result of the first of the foregoing transactions in the sum of $6,760, which would be the difference between what the 104 shares of the stock of said bank was actually worth at the time thereof and what the plaintiff actually paid for that stock; and which would also represent the difference between the actual value of said stock and the value which said stock would have had if the statements and representations of the defendants as to the value of said stock had been true. As to the transaction of the plaintiff in respect to the Perine stock, the trial court by its judgment awarded the plaintiff damages in the sum of $8,985, which amount represented the difference between the sum of $9,450, the actual value of the Perine stock, and the sum of $18,435, which the court had found the properties which had been given by said plaintiff to said Perine for said stock to have been actually worth. These two amounts of damage aggregated the sum of $15,745, for which judgment was given by the trial court. From this judgment these two appeals have been taken to this court, one by the defendants, urging that certain material find 40 ings of the trial court, chiefly relating to the element of the defendants' deceit, were unsupported by the evidence and hence that the judgment should be reversed; and one by the plaintiff, insisting that the judgment, while correct in so far as it was founded upon the sufficiency of the evidence, and findings showing deceit, was for an insufficient sum in respect to the plaintiff's damages suffered thereby, and that in that respect the amount of damages awarded by the trial court should be increased upon appeal. These appeals having been transferred to the District Court of Appeal of the First District for hearing and decision, that tribunal affirmed the judgment upon the defendant's appeal, but upon the plaintiff's appeal determined that he was entitled to have the amount of his judgment for damages increased from $15,745 to $24,310, and so concluding returned the case to the trial court with instructions to increase the amount of the judgment accordingly. In its decision the District Court of Appeal sustained the plaintiff's contention as to the sufficiency of the plaintiff's evidence as supporting the findings and judgment showing deceit. With that portion of its decision which deals with that phase of these appeals this court is in accord, and it hereby adopts that portion of the decision of the said court touching that subject, which reads as follows: "Two material findings-both challenged as unsupported by the evidence-are the basis of the judgment in favor of plaintiff from which this appeal is prosecuted. They are that defendants represented to plaintiff that the stock of the bank when the plaintiff bought it was worth $100 per share, and that the report of the bank's condition made to the 'Comptroller on May 14, 1908,' was a true statement of the bank's condition. The published summary of this report was handed to the plaintiff by the defendants in front of the bank when they were endeavoring to induce him to invest in its stock. It transpired at this trial-as it apparently did not at the first trial-that the report so handed to plaintiff was not the full report made to the comptroller, but only a published summary thereof. This summary showed the amounts at which loans, discounts, bonds, securities, etc., were carried on the bank's books, but did not disclose the bad debts or suspended and overdue paper, nor was the summary required to do so. The report was made on the blanks furnished by the comptroller; and if the whole report had been shown Macdonald he would have found listed therein bad debts and suspended and overdue paper amounting to $194,663.12. When the published summary alone was shown him, he was told that it showed the real condition of the bank at the date of the report, and that the bank's condition had not been changed since that report had been presented. He was also told that this summary was the only report that the defendants had of the bank. They actually had at the time in the bank a copy of the entire report made to the comptroller and the Knight report referred to in the Supreme Court's opinion, and also Gray's estimate of the value of the bank's assets. The Knight report and this estimate showed that the published summary did not indicate the bank's real condition. [1] "In this state of the case, the appellants contend that they practiced no deceit upon Macdonald by so showing him the summary of this report, because the summary under the law was not required to show anything except the value of the bank's assets as carried on the books of the bank. "With this contention, under the facts of The trial this case, we are unable to agree. court was justified in finding that, when the summary was presented to Macdonald with the statement that it was the only report of the condition of the bank which the defendants had, he was justified in believing that the fragmentary summary, although strictly legal so far as its publication was concerned, was a statement of the real condition of the bank and not a statement of the showing made by its books. They knew perfectly that this summary did not represent the real financial condition of this bank; and they also knew that Macdonald understood them to represent that the actual value of the bank's stock was $100 a share, and that the actual value of its assets was that shown by the summary. The reliance which the plaintiff was entitled to place upon this report, then, was a reliance that the report was a true statement of the bank's financial condition, and not a mere transcript of the condition of the bank as shown upon its books.' This statement of the Supreme Court in the reported case is still applicable to this case, even in view of the additional facts developed at the second trial, as is also the following statement: 'Deceit may be negative as well as affirmative. It may consist in the suppression of that which it is one's duty to declare as well as by the declaration of that which is false. If it be so, that defendants did not believe and could not have believed that the report contained a true statement of the bank's financial condition, their failure to disclose this fact to the plaintiff in handing him the report forms the foundation for an action for deceit under the principle above stated. Civ. Code, § 1710.' "It seems to us that this statement applies with greater force in view of the fact that had the entire report, which was a few feet away in the bank, been shown Macdonald instead of the published summary the actual financial condition of the institution would have been disclosed to him, or he would at least have been placed upon notice as to its actual financial condition. "We are satisfied that the evidence sustains the finding as to the misrepresentation by the defendants to the plaintiff of the true condition of the bank; and also as to the fact that they represented the stock to be worth $100 a share when it was worth only about $35 per share. "As to the question whether the latter representation was one of fact or opinion, we think that point settled by the Supreme Court in its opinion referred to." The point of departure between the views of this court and those of the District Court of Appeal expressed in that portion of its opinion which is not above quoted is as to the proper rule for the admeasurement of the plaintiff's damages to be applied to each of the two transactions out of which the plaintiff's right to damages arose. As to the transaction directly with the defendants for the purchase by plaintiff of the 54 shares of their stock in said bank and also as to the acquisition by him of 50 additional shares of the new issue of stock therein, it is not nec essary to draw the distinction which is drawn in the case of Hines v. Brode, 168 Cal. 507, 143 Pac. 729, between the rule of damages in this class of cases which has been adopted in this state and that which obtains in the federal courts and in certain other state jurisdictions, for whichever rule was adopted as applicable to that branch of this case the result would be the same, since under either rule the plaintiff would be entitled to a recovery in damages of the difference between what the stock was actually worth and that which it would have been worth if the defendants' representations had been true, since the value which the defendants represented said stock to have and the amount which he paid for it were identical. In the case of Hines v. Brode, supra, this court took pains to state that the rule of damages in actions founded upon deceit which had been theretofore adopted in this state, and by which a wronged plaintiff would be entitled to recover the difference between the actual value of the purchased property and its value had the property been as represented, and that the measure of such recovery was not affected by the price actually paid, "is the extreme rule and one that should only be applied in clear cases and upon just terms." As to the first transaction, therefore, upon which the plaintiff predicates his right of recovery, viz., the transaction directly with the defendants for the purchase from or through them of the 54 shares of their stock and of the 50 shares of the new issue of the stock of said bank, we are of the opinion that, measured by either rule of damages, the judgment of the trial court was correct in affixing the sum of $6,760 as the proper amount of the plaintiff's recovery on account of that transaction. [2] With respect to the transaction involving the purchase by the plaintiff of the Perine stock, the District Court of Appeal undertook to apply also to that transaction the rule of damages reiterated in the case of Hines v. Brode, supra, and in the earlier cases from which it was taken. In so doing we think the District Court of Appeal was in error, and that its action in so doing had the effect of extending said rule beyond the limits to which, as above shown, it was expressly meant to be confined. In the case of Hines v. Brode, supra, and in certain of the earlier cases referred to therein, the action involved the immediate transaction between the parties with direct inducement to which the false statements and representations were made, and the court in such cases held that the plaintiff was entitled to the benefit of his bargain, and hence should recover the difference between what the purchased property was actually worth and what it would have been worth had the false representations as to its value been true, regardless of the price paid. But in the case at bar and with respect to the purchase by plaintiff of the Perine stock the state of facts which would have justified the application of this rule of damages did not exist. The transaction for the purchase of the Perine stock was not one to which the defendants directly or indirectly were parties. They had no knowledge nor any connection as parties with the plaintiff's transaction with Perine, nor does the evidence anywhere disclose, nor do the findings of the court show, that whatever false representations were made by them to the plaintiff were made with any direct intent to induce the purchase by the plaintiff of the Perine stock. As to these defendants, therefore, in respect to this particular transaction, he had no bargain to the benefit of which he was entitled. It is true that in respect to the reports which, under section 5211 of the National Bank Act, are to be made periodically by national banks to the Comptroller of the Currency, it has been held that such reports as to the financial condition of such banks are not made solely for the information of the Comptroller or of the stockholders and depositors of the bank, but are intended also to afford public information to all persons having or contemplating business transactions into which the condition of the bank enters as a material fact (Macdonald v. De Fremery, supra; Stuart v. Staplehurst, 57 Neb. 569, 78 N. W. 298; Gerner v. Yates, 61 Neb. 100, 84 N. W. 596; Hindman v. First Nat. Bank, 112 Fed. 931, 50 C. C. A. 623, 57 L. R. A. 108); and consistent with this holding it has been further held that the directors or other officers of such banks who join in the making of reports of this character by preparing or attesting the same, are liable for any material falsity which they may contain to persons who, in reliance upon such reports, are induced to deposit funds in the bank (Jones Nat. Bank v. Yates, 240 U. S. 541, 36 Sup. Ct. 429, 60 L. Ed. 788), or who purchase its stock (Gerner v. Mosher, 58 Neb. 135, 78 N. W. 384, 46 L. R. A. 244), or who lend money upon such stock as security (Merchants' Nat. Bank v. Thoms, 11 Ohio Dec. [Rep.] 632). In all of the foregoing cases, however, and in many others in which damages arising out of the falsity of the statements contained in such official reports to the Comptroller of Currency were sought, both the federal and the state courts elsewhere have uniformly held that the rule of damages to be applied to this class of cases is one by which the measure of the plaintiff's damage is the difference between the actual value of the stock and the amount actually paid by him therefore in reliance upon the representation found to be false. In a transaction such as that involved in this phase of the instant case, viz., the purchase by plaintiff of the Perine stock, we are of the opinion that the rule of damages last above stated is the proper and just rule to be applied to that transaction, rather than the more extreme rule adopted in Hines v. Brode, supra, as applicable to the facts of that particular case. The trial court applied the correct rule to each of the transactions out of which the plaintiff's claim of damages arose and there by reached the proper amount which the | 8. MORTGAGES 491-FORECLOSURE OF VENplaintiff as to each cause of action was enDEES' RIGHTS. titled to recover. All payments under contracts of sale of As to both appeals, therefore, the judg- interlocutory decree, giving vendees 90 days in lots covered by mortgage being due at time of ment is affirmed. We concur: ANGELLOTTI, C. J.; SLOSS, J.; WILBUR, J.; MELVIN, J. which to make payment, and receive deeds for their respective lots, making decree absolute at end of that time against those not paying is proper. In Bank. Appeal from Superior Court, San Mateo County; Henry C. Gesford, Judge. Mortgage foreclosure action by J. F. Wien WIENKE et ux. v. SMITH et al. (ASH et al., ke and wife against C. B. Smith and others. Interveners). (S. F. 7635.) (Supreme Court of California. Nov. 4, 1918.) 1. ESTOPPEL 110-WAIVER-NECESSITY OF PLEADING. Waiver is an affirmative defense requiring the facts on which it claimed to be set up in the answer, and merely making it a ground of motion for nonsuit is not enough. 2. MORTGAGES 408-DEFAULT IN INSTALLMENT-FORECLOSURE FOR ENTIRE AMOUNTWAIVER OF RIGHT-ACCEPTANCE OF PORTION. Acceptance, after maturity of an installment of mortgage debt, of a portion thereof, works no waiver of right given by mortgage to foreclose for entire amount on default in installment; the payments being pursuant to agreements collateral to the mortgage, requiring the mortgagors to turn over to the mortgagee all payments on account of sales of lots, and the mortgagee to accept them, and on pay ment in full for a lot to release it, and such agreements providing that they shall not affect the mortgage. 3. ESTOPPEL 52-"WAIVER." "Waiver" always rests on intent, and is the intentional relinquishment of a known right after knowledge of the facts. [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Waiver.] 4. MORTGAGES 414-FORECLOSURE-CONDITION PRECEDENT NOTICE-ACCELERATING DUE DATE. Under provision of mortgage and secured note that on any default in payment of an installment the whole sum secured shall become due at mortgagee's option, prior notice of election is not a prerequisite to commencement of foreclosure suit. 5. MORTGAGES 581(2) FORECLOSURE-ATTORNEY'S FEES-DEMAND OR NOTICE BEFORE SUIT. Under provision of mortgage for counsel fee of certain per cent. of debt due, if foreclosure suit be brought any time after default in payment of any installment, demand or notice before suit after default in installment is not necessary to liability for attorney's fees, which arises coincidentally with right to foreclose. 6. MORTGAGES 581(7) FORECLOSURE JUDGMENT FOR COUNSEL FEES. The mortgage providing that mortgagors and mortgaged property are hereby made liable for counsel fees, there is a right, not merely to personal judgment, but to foreclosure therefor. FORECLOSURE 415(1) 7. MORTGAGES CONDITION PRECEDENT-COLLATERAL AGREE From judgment of foreclosure and an order denying a new trial, the named defendant and another, and William H. Ash and others, Affirmed. interveners, appeal. J. E. Pemberton, Gavin McNab, and R. P. Henshall, all of San Francisco, for appel lants. J. N. Young, of Oakland, for appellants interveners. Daniel A. Ryan, of San Francisco, Ross & Ross, of Redwood City, and J. J. Lermen, of San Francisco, for respondents. PER CURIAM. The defendants C. B. and Julia Smith, and a number of persons who appeared as interveners during the pendency of the action, prosecute appeals from the judgment and from an order denying a new trial. The complaint stated a cause of action to foreclose a mortgage upon lands described therein, given to secure a debt of $43,655.25, evidenced by a note executed by C. B. Smith and George O. Rich. The appellant Julia A. Smith is the wife of her codefendant C. B. Smith and is not otherwise interested in the action. The debt was payable in installments: $5,000 on May 1, 1911; $5,000 on March 1, 1912; $10,000 on March 1, 1913; and $23,655.25 on or before March 1, 1916. The note provided that— "Upon any default being made in the payment of any installment, or in the payment of any interest, the whole amount of the principal sum then unpaid shall become due at the option of the holder hereof." The mortgage contained a similar provision. The first installment, due May 1, 1911, was paid. The action was begun on April 24, 1912. The complaint alleges that $3,112.15 had been paid on the $5,000 due March 1, 1912, and that the balance of that installment remained unpaid. The prayer was for the recovery of judgment for the entire amount of the promissory note remaining unpaid, and for the foreclosure and sale of the property mortgaged. The final judgment was that the plaintiffs recover of Smith and Rich $43.685.28, and for the foreclosure and sale of the property then remaining subject to the mortgage, for the purpose of paying said sum and costs. In March, 1906, Wienke and wife, being We the owners of the land in controversy, made | lease from the lien of the mortgage, upon a contract with C. B. Smith, providing that payment of specified sums, of the various the land should be subdivided into lots, and lots embraced in the mortgaged tract. should be sold by Smith, who, after deduct- shall refer to this instrument as the "reing commissions, should pay the proceeds lease agreement." to Wienke and wife, until they had received The answer of the defendants C. B. and $30,000, or that Smith might pay them $30,- Julia Smith does not deny-on the contrary, 000 at any time within five years, and that it expressly admits-the default alleged in upon the receipt of said sum Wienke and the complaint. It sets up certain affirmative wife should execute a deed to Smith for an matter designed to show that payment of the undivided one-half of the property remaining installment due on March 1, 1912, was preunsold. Sales were made by Smith under vented by the acts of Wienke. The findings this contract from time to time, the price of the court are against this defense, and being made payable in installments, and the the appellants have not in their briefs quesproceeds as collected were paid to Wienke. tioned the sufficiency of the evidence to susOn January 5, 1911, said contract was can-tain the findings in this regard. There is no celed. Rich became interested with Smith, plea that the plaintiffs waived the right given and several instruments, including the note to them by the terms of the note and mortand mortgage herein sued upon, were exe-gage to declare the entire sum due for decuted for the settlement of the transactions fault in the payment of any installment. had. The other instruments were as follows: Nevertheless, it is contended that upon the (1) A deed from Wienke and wife, conveying facts shown in evidence the court below to Smith and Rich all the interest of the should have held that the plaintiffs had waiygrantors in the property described in the ed their right to foreclose for the entire sum contract of March, 1906; (2) an agreement named in the note. The evidence is substanwhereby Smith and Rich assigned and trans- tially without dispute. The payments made ferred to the Wienkes all of the outstand- on the mortgage debt consisted of collections ing contracts for the sale of parcels of the made by Smith and Rich under the outstandland, as additional security for the pay-ing contracts for sales of lots, and turned ment of the mortgage debt. This agreement over to the Wienkes in accordance with the (described in the record as the "assignment") provisions of the "assignment." Some of provided that Smith and Rich should collect these payments were made by the lot purthe installments due under the contracts of chasers direct to Wienke, instead of passing purchase, and pay the amount thereof over through the hands of Smith and Rich. The to the Wienkes monthly; the sums so col- entire first installment of $5,000, due May 1, lected and turned over to be applied as pay- 1911, was paid. Of the $3,112.15 paid on the ments on the note and mortgage. It provid- installment due March 1, 1912, the greater ed, further, that nothing therein contained part had been paid prior to the date upon should in any way interfere with the terms which the installment fell due. Between and conditions of the mortgage, and that, March 1, 1911, and April 24, 1912, the day in the event of any suit being brought upon the action was begun, sums amounting to the note to foreclose the mortgage, nothing several hundred dollars were paid to the contained in the agreement "or arising or plaintiffs pursuant to the contracts of purresulting therefrom shall be any defense chase and the "assignment." A portion of whatsoever to any action by said parties of these sums was properly applicable by the the second part [Wienke and wife] to fore- plaintiffs to their reimbursement for taxes close said mortgage or said mortgagors' right which they had paid in October, 1911. There of redemption. It is further stipulated and still remained in their hands, however, apagreed that in case of such action this con- plicable to the payment of the principal of tract, except as otherwise expressly pro- the note and mortgage, out of the moneys revided herein, shall be considered only for the ceived after March 1, 1912, and before the purpose of ascertaining how much money commencement of the action, a small sum. said parties of the second part received there- The respondents maintain that it amounted by, and in ascertaining the amount due said to $47.50. The department opinion, heretoparties of the second part upon said promis- fore filed herein, fixes it at $217.50. It is sory note." Only one further clause of this not important, for the purposes of the preswriting need here be mentioned, namely, one ent discussion, to determine which of these requiring Smith and Rich to pay all taxes figures is correct. The contention of the on the land, and providing that, if they appellants Smith is that by accepting, after should fail so to do, Wienke and wife might the maturity of the installment payable pay the same and deduct the amount so March 1, 1912, a portion of the sum then due, paid from the first money afterwards receiv- the plaintiffs waived their right to declare ed by them under the outstanding contracts the entire sum of the note due for a default of sale, and that to that extent such pay- in the payment of such installment. They ments should not be applied on the mortgage rely upon the rule declared in Boone v. Temdebt. (3) On the same day, January 5, pleman, 158 Cal. 290, 295, 110 Pac. 947, 139 1911, the Wienkes made a written agreement Am. St. Rep. 126, and similar cases, where with Smith and Rich, providing for the re-it was held that under a contract of sale |