Derry v. Peek

A company prospectus predicted it could use steam power throughout its train operations based on a new law, inducing Peek (plaintiff) to buy shares, but the Board of Trade actually permitted steam power only on certain track portions, unbeknownst to anyone at the time, and the company subsequently folded; Peek sued the company's chairman Derry and other directors (defendants) for fraudulent misrepresentation, and although the trial court dismissed the claim based on the directors' honest-belief testimony, the court of appeal reversed, finding no reasonable grounds for that belief.