Court Opinion

ID: 6965111
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:28.290888+00
Date Added: 2024-06-11T16:08:34.885184
License: Public Domain

Mr. Justice Shope delivered the opinion of the Court: This was a bill in chancery by appellee, against appellant, Borders, to set aside and rescind a sale of property on the ground of fraud practiced by appellant upon appellee, whereby the latter was induced to part with his property in exchange for a comparatively worthless note and mortgage of a third party. About the first day of July, 1884, appellee deposited in the banking house of Borders & Boyle $2000, taking a certificate of deposit therefor, payable in six months after date, at five per cent interest per annum. A few months thereafter the firm became embarrassed, and was dissolved by the retirement of Boyle. A new firm was formed, composed of James J. Borders and the appellant, who, "for a valuable consideration, agreed to indemnify Boyle against all debts and liabilities of tlie late banking firm. Shortly after the maturity of the certificate of deposit,'appellee applied to appellant, at the bank, for payment of said certificate, who then, as the weight of proof tends to show, stated to -him that he, appellant, had a tract of land in Randolph county, worth $2800, which he had just sold and conveyed to one Crozier at that price; that Crozier had paid $700 in cash, and given his promissory note to him, appellant, for $2142, secured by mortgage on the land. It is also shown that he represented to appellee that the land was well worth $2800, and was ample security for the note, which would be promptly paid at its maturity. He advised appellee, as appellee testifies, to go and see Crozier, who, he represented, was well posted in respect of the land. The proofs leave but little, if any, doubt that the sale of the land to Crozier was not a sale in good faith. It appears, also, from the testimony, that appellee did call on Crozier for information, and was assured by him that he, Crozier, had in fact bought the land for $2800, and given a mortgage on the same to appellant, to secure a note of $2142. Appellant also, it seems, represented this tract of land had forty acres cleared and under cultivation, but the proof shows there were only eight or nine acres cleared on the tract. Appellant also represented to appellee, as the chancellor found from the evidence, that the firm of Borders & Boyle was so embarrassed, financially, as to endanger the loss of his money deposited with that firm; that he told appellee that he did not want to see him lose anything, and advised him to take the Crozier note and mortgage in exchange for his certificate of deposit, as the only sure means of protecting himself from loss. It is only just to say that appellant denies most of these alleged representations, or that he was guilty of deceiving appellee in respect of the value or nature of the land. Appellant knew that James J. Borders, one of the partners in the firm of Borders & Boyle, was perfectly solvent, and that the new firm, of which appellant was a member, had obligated themselves to Boyle, the outgoing partner of the firm of Borders & Boyle, to protect him- from all the liabilities of the late firm, which, of course, included appellee’s certificate. Appellee not closing at once with the terms offered, appellant wrote him, urging speedy and prompt action in the matter. He wrote: “We are settling very fast with our depositors in this way. Delay is dangerous. * * * I could have used the note offered you, (Crozier note,) and can do so yet. If you want it on the terms offered, to-wit, trade my note, for you to give me an order on Crozier for difference, which order, if not paid, shall not bind you, and you to become owner of full face of note and interest, — which terms if satisfactory, put your name on it without recourse, and send same to me, and I will send you note and mortgage endorsed in same way, mortgage duly recorded. Answer by return of mail. * * * I will take pleasure in showing you the land at any convenient time. I am too busy now, besides the ground is covered with snow, and you could not judge of the quality of the soil. I can not put this matter off — time is very precious with me now.” It is shown by the witness Stout that appellant told him he was about to sell this land to a man named Kattleman, and that if the latter cornered witness, and asked anything about the value of the land, for witness to put the price up. After Borders had sold the note to appellee, this same witness asked appellant how he came to sell the land for the price he did, and appellant replied, as is testified, that he “had got hold of a man that had more money than brains,” and also said, in reply to a remark by the witness that Crozier would never pay the note, “of course, that is the calculation.” Most of the material Representations shown by the evidence to have been made by appellant to appellee to induce the purchase of the Crozier note and mortgage are shown to have been untrue. Some of them, at least, if the evidence is to be credited, appear to have been made under circumstances strongly tending to charge appellant with knowledge of their untruthfulness, — or, at least, he occupied such a position as to lead to the presumption of his knowledge of their falsity. He admits that he knew that J. J. Borders, one of the firm of Borders & Boyle, was perfectly solvent at the time it is shown he was endeavoring to induce appellee to believe that the firm was insolvent, and that he was in danger of losing his money. He had owned the land in question some time before the pretended sale to Crozier, professed to be familiar with it, and must be held to have had notice of its value. The point is made that if the means were at hand by which appellee might have satisfied himself as to the truth or falsity of the representations, he was bound to do so, and failing to avail of such means he is not entitled to the relief sought. If appellant could make a defense based upon appellee’s credulity and faith in appellant’s representations, it could- not prevail here. It appears that appellee did try to see the land before concluding his purchase from appellant; but, it being covered with snow, it could not, as stated by appellant in his letter, be properly examined. And, moreover, appellee was assured by appellant and Crozier, to whom the land had been conveyed, that the land was of the value of $2800, and that practically one-third of it was cleared and improved. .Appellant says in his letter, as has been seen, that he will take pleasure in showing appellee the land at any convenient time; that he was too busy then, and that no proper judgment could he formed by his personal inspection of it at thát’ time. While willing to show the land at some convenient time in the future, he was unwilling to delay concluding the transaction with appellee. He wrote: “I can not put this matter off. If you do not want the note, say so, and I vgill place it elsewhére.” He wanted an answer by return mail — time was exceedingly precious to appellant then. Under such circumstances it would be in the highest degree unconscionable to permit appellant to take advantage of the fact that appellee gave credence to his word and relied upon his statements as true. In such case the party will not be relieved from the consequences of-his false representations because the person thereby injured trusted him, and parted with his property upon false representations of fact which he assumed to know to be true. Where the sale is of property at a distance, so that the purchaser has not the means at hand of ascertaining the truthfulness of the vendor’s representations, the vendee may rely upon their truth, and have redress if they are shown to have been materially false. (Smith v. Richards, 13 Pet. 26; Maggart v. Freeman, 27 Ind. 531; Harris v. McMurray, 23 id. 9; Ladd v. Pigott, 114 Ill. 647; Savage v. Stevens, 126 Mass. 207.) Here, as it appears, appellee did not have the ability to make any proper examination of the land without further time. Appellant, it would seem, was imperious in his demand that the transaction be closed at once, having first induced appellee to believe, as before stated is shown by the evidence, that he was in danger of losing his money unless he took the CroZier note and mortgage. Nor is it important that it should be affirmatively found that the untrue representations should have in fact been known to appellant to be false. It is well settled that it is immaterial whether a party misrepresenting a material fact knows it to be false, or makes the assertion of the fact without knowing it to be true, for the affirmation of what one does-not know to be true is unjustifiable, and if another act upon the faith of it, he who induced the action must suffer, and not the other. Story’s Eq. Jur. sec. 193; 2 Pomeroy’s Eq. sec. 877; Bigelow on the Law of Fraud, 410, et seq.; Cooley on Torts, (2d ed.) 582; Thompson v. Lee, 31 Ala. 292; Railroad Co. v. Ting, 63 N. Y. 653; Allen v. Hart, 72 Ill. 104; Fauntleroy v. Wilcox, 80 id. 477; Hicks v. Stevens, 121 id. 186. So it has been held, that -where the representations relate to facts which must be supposed to be within the defendant’s knowledge, proof of their falsity is a sufficient showing of his knowledge that they were false. (Cooley on Torts, 583 ; 109 Mass. 593 ; 62 N. Y. 319.) And so, a party selling property is presumed to know whether the representations he affirmatively makes in respect to it are true or false. If he knows them to be false it is a positive fraud, and if he makes them without knowing them to be true, for the purpose of inducing another to act upon them, it in equity amounts to fraud. Miner v. Midberry, 6 Wis. 295; Smith v. Richards, supra; McFarran v. Taylor, 3 Cranch, 370; Glasscock v. Minor, 11 Mo. 655. Taking the evidence on the part of appellee, supported by the letters of appellant and proof of extrinsic facts, we are unable to say that the chancellor was not justified in finding that appellee was induced to part with his certificate of deposit by the statements and representations of appellant of matters materially affecting the transaction, and which are shown to be untrue. All fraud and untrue statements, and that he made any untrue representations, are denied by appellant, and his version of the transaction is consistent with his honesty and good faith, but in the conflict we think the preponderance of the evidence is with appellee, and sustains the material allegations of the bill. The decree of the circuit court will accordingly be affirmed. Decree affirmed.