Court Opinion

ID: 6906895
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:01:52.015868+00
Date Added: 2024-06-11T16:06:23.157428
License: Public Domain

Petition for Rehearing.
(186 Pac. 581.)
On petition for a rehearing. Denied.
Mr. Ernest C. Smith, for the Petition.

Messrs. Brona/ugh & Carter, contra.

BURNETT, J.
5, 6. Since the rendition of the opin- ' ion in this case the defendants have filed a petition for a general rehearing of the case. They urge' that when early in the negotiations they made the representation about the rentability of the property they themselves had no knowledge of the ordinance forbidding the use of the building simultaneously as an apartment house and as a garage. On this basis, they contend that the element of knowledge on their part of its falsity was wanting and hence that fraud was not to be predicated of the statement, although it afterwards came to their knowledge during’ the progress of the trade that their utterance in that respect was in fact untrue. One of the elements respecting a fraudulent statement is that the one making it must either know that it is false, or make it recklessly without any knowledge of its truth, and as a positive assertion: 20 Cyc. 13. On this point, the same text, at page 27, says:
“It is not always necessary that the speaker should actually know that his representation is false. If the statement is of a matter susceptible of accurate knowledge and he makes it recklessly, without any knowledge of its truth or falsity, and in the form of a positive assertion calculated to convey the impression that he knows it to be true, the representation is equally fraud*21ulent. The rule just stated applies, although the speaker honestly believes that the fact which he represents as existing actually does exist. In such a case it is apparent that he cannot believe in the truth of the statement he makes — that he knows the fact to exist— and the fraud consists in passing on his opinion or belief in the guise of positive knowledge. Consequently the speaker is not relieved from liability, although in making the assertion he relies upon trustworthy information. ’ ’
Here, the truth of the statements of the defendants was capable of exact verification or refutation. In fact, the representations were untrue and in morals and good conscience, which are the substance of equity, it was the duty of the defendants, having opened their mouths to speak on the subject of the availability of the property as a renting proposition, to disclose what knowledge came to the defendants afterwards about the error of their representation, while yet the negotiations were in progress. It would be quite another matter if they had not undertaken to give any information on that subject. It is one thing to conceal, and quite another merely to remain silent; and concealment may rest upon partial statement and partial.silence.
The case of Frederick v. Sherman, 89 Or. 187 (173 Pac. 575), cited in support of the petition for rehearing, was an instance where the defendants actually had a patent right which they were seeking to sell to the plaintiffs. They made no representations about the solvency of the firm from which they acquired the right. They were not called upon to make any disclosure on that subject. In very truth, after the plaintiffs purchased the right they carried on business for some months before the common grantor failed. The opinion of Mr. Justice Benson points out clearly that the parties dealt at arm’s-length and that since no *22statement on the matter of solvency of the defendants’ grantor was made, there was no fraud. In Caples v. Steel, 7 Or. 492, the latter sought to escape from a contract which he had made to sell realty to Capíes, because the latter had not disclosed to him the probable fact that there was a coal mine on the premises, of which the owner himself was ignorant. But the court held that Capíes was not called upon to make any statement respecting the probability of finding coal in paying quantities on the land, and that, merely having remained silent on the subject, he was not guilty of fraud. Shute v. Johnson, 25 Or. 59 (34 Pac. 966), was decided upon the principle that the defendant was the confidential agent of the plaintiff when he made representations concerning the value of property which he sought to transfer to the plaintiff, and on account of this fiduciary relation his statements about value were material and, being extravagant, were fraudulent. The opinion in the instant case is not based upon any statements as to the value of the property which the plaintiffs acquired by the exchange. Shute v. Johnson is therefore not apropos in the present investigation. The principle is that if a party is so reckless as to make a statement which in fact is untrue and while the negotiations are in progress he discovers it is untrue, it is his duty to state the whole truth. The defendants’ petition for a rehearing must therefore be denied.
The plaintiffs have filed a petition calling for a modification of the decree herein, so that it shall specifically award to them the chattels involved in the attempted exchange of properties between the parties. Answering this petition, it is suggested by the defendants for the first time, so far as disclosed by the record before *23us, that a receiver had been appointed to tak§ charge of the property pendente lite.
The complaint alleged that the plaintiffs had retained possession not only of the realty which they formerly owned but also of the personal property then on the premises and which was included in the exchange sought to be impeached, and that the plaintiffs had given notice of rescission of the contract on the ground of the fraud alleged to have been practiced upon them by the defendants. The custody of all the property by the plaintiffs was admitted by the answer. That pleading averred that the plaintiffs were insolvent; that a receiver should be appointed 'to take charge of the property, and that an injunction should be issued to prevent alienation thereof by the plaintiffs. No order appears in the abstract enjoining the sale of the property or appointing a receiver, and the only information we have about the existence of such an officer is a suggestion made in the defendants’ answer to the plaintiffs ’ petition for a modification of our former decree. The effect of our former holding was to declare void the contract which the parties entered into, with the result that each was to be restored to his own. On the record put before us, stating as it did that the plaintiffs were still in possession of the personalty, there was no occasion expressly to declare them to be the owners thereof.
The statement of counsel for the defendants that the Circuit Court actually appointed a receiver is not controverted. For the purposes of this opinion, therefore, we assume that one was chosen and that he most likely incurred some expenses relating to the property. We have no data whereby we can settle his accounts. That is a matter properly judicable before the Circuit Court which appointed him.
*24Our former decree will be modified by adding thereto the declaration that the plaintiffs are the owners of the personal property to which they formerly held the title, and that each party shall return to the other all the personal property received from that other in the exchange or account for the value thereof in the settlement to be made by the Circuit Court. The cause will be remanded with directions to that court to settle the (accounts of the receiver and the matter of the personal property. Henderson v. Tillamook Hotel Co., 87 Or. 71 (169 Pac. 519), may be read with profit respecting the principles upon which the receivership should be adjusted. Reversed. Decree Rendered.
Rehearing Denied.
McBride, C. J., and Benson and Harris, JJ., concur.