Court Opinion

ID: 6678785
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:18:41.529122+00
Date Added: 2024-06-11T16:00:46.888951
License: Public Domain

The following opinion was delivered by
Mr. Chiee Justice McIver.
This was an action to foreclose a mortgage on real estate, given to secure the payment of the amount due on a note for the balance of the purchase money of the mortgaged premises. The defendants in their answer admitted the allegations in the complaint as to the execution of the note and mortgage, and that no part thereof had been paid; but they set up in their answer a counter-claim for damages, alleged to have been sustained by them by reason of certain misrepresentations alleged to have been made by the agents of the plaintiff, as to the condition of the said property. It seems that the plaintiff, having removed from the land in question, situated near the city of Greenville S. C., where he had formerly resided, to the State of Florida, placed this property in the *468hands of one Chapin, a real estate broker, with instructions to sell the same. With a view to effect this purpose, Chapin inserted in several newspapers, amongst others the Charleston News and Courier, an advertisement offering the land for sale at the price of $2,000, in which there was a glowing description of the advantages of the place, which advertisement concluded in these words: “Apply to S. B. Beasley on the premises, or to Geo. H. Chapin & Co., 257 Washington st., Boston;” the said S. B- Beasley, as it appears in the testimony, being a son of plaintiff, and the said Chapin, though' doing business in Boston, residing for a part of the year in the city of Greenville, South Carolina. This advertisement having attracted the attention of David S. Cuttino, a resident of the city of Charleston, the husband of the defendant, Josephine, and the nephew, by marriage, of the defendant, Swi.nton, who was a resident of the town of Beaufort, South Cai'olina, and he, knowing that his wife and her uncle desired to purchase property of the character mentioned in the advertisement, opened a correspondence with a friend of long standing, Julius C. Smith, a resident of the city of Greenville, requesting information as to the property offered for sale. The first letter in this correspondence, as printed in the “Case,” bears date 20th of June, 1895, which is manifest^ a misprint for 1893, as the reply to it bears date 23d June, 1893. The result of this correspondence was, that David S. Cuttino, as the agent of the defendant, through his agent, the said Julius C. Smith, entered into a contract for the purchase of the property at the price of $2,000, and the contract appears to have been carried out on the 1st of July, 1893, by the payment of one-half of the purchase money in cash, and the execution of the note and mortgage above referred to, for the other half, and the execution of a deed from plaintiff to the defendants for the said property. On the 17th of August, 1893, the defendants took possession of the property, and, finding that the property did not come up to their expectations, they began to make complaints, and other correspondence ensued *469between the parties, conducted by Messrs. Shuman & Dean, as attorneys for defendants, which finally culminated in this action.
The master, to whom it was referred to take and report the testimony, together with his findings of fact and conclusions of law, made his report, in which he disallowed the counter-claim set up by defendants, and found that the plaintiff was entitled to judgment of foreclosure for the amount which he found to be due on the note on the 1st of July, 1895. To this report the defendants excepted, and the case was heard by his Honor, Judge Aldrich, upon the report and exceptions, who rendered judgment overruling the report of the master, allowing defendants’ counter-claim to the amount of $1,227, from which he deducted the face of the note, $1,000, and rendered judgment in favor of the defendants against the plaintiff for the excess, to wit: for $227. From this judgment plaintiff appeals, upon the several grounds set out in the record. For a full understanding of the facts of the case and the questions involved, it will be necessary for the Reporter to embrace in his report of the case the correspondence between the parties above referred to, both by mail and telegraph, the report of the master, the decree of the Circuit Judge, and the exceptions for the purposes of this appeal, as the foregoing statement is intended merely as a brief outline of the general history of the controversy between these parties.
The Circuit Judge seems to have rested, his conclusions upon the following propositions: That the advertisement was intended as a representation of the condition- of the property; that such representation was false; that defendants acted upon such false representations; that such false representations were confirmed by the report of the said Smith, who, by his agreement to divide commissions with Chapin, the agent originally deputed by plaintiff to sell the property, became the agent of plaintiff, who thereby became responsible for such false representations.
*4701 *469It is obvious that the first inquiry is whether the advertise*470ment was intended as a representation of facts, as to condition of the property upon which persons were invited to buy; and, next, whether the defendants in this case acted upon the representations contained in the advertisement. Now, as to the intent of the advertisement, it seems to us very doubtful, to say the least of it, whether it was intended or expected that purchasers would buy, relying- on the statements as to the condition of the property contained in the advertisement; for, to say nothing- of the fact that common sense and the most ordinary prudence would negative the idea that persons could be expected to buy property, easily susceptible of examination, without making such examination for themselves or having it made by others upon whom they could rely. The terms of the advertisement itself, in its concluding words, indicated that it was not expected that the persons wishing to buy would rely upon the representations made in the advertisement, for such persons were invited to apply to S. B. Beasley, on the premises, or to Chapin, at his office; and the testimony in the “Case” shows that.at least one person wishing to buy— a Mr. Ravenel, from Charleston — did apply to S. R. Beasley, who, it seems, was a son of plaintiff and left on the premises in charge of the propert)^ and was shown over the place by said Beasley, and expressed himself as pleased with the property. But whether the plaintiff, or his agent, Chapin, who inserted the advertisement in the newspapers, intended it as a representation of facts as to the condition of the property upon which persons wishing to buy were expected to rely, becomes immaterial in view of the fact, which we think is most abundantly established, that neither the defendants nor their agent, David S. Cuttino, did rely upon the representations contained in the advertisement, for the very first step which Cuttino took was to consult his friend Smith, a prominent business man of high reputation, living in Greenville, near by the property offered for sale, as to its condition and value; and it is a very significant circumstance, in this connection, that Cuttino, in *471his letter to Smith, does not ask him whether the property comes up to the representations made of it in the advertisement, which he enclosed, but simply asks for information about the property, “Give me your candid opinion as to price, and if you think any money can be made on it.” To this letter Smith promptly replied by postal card, saying he wanted to make some inquiries, and that he would write as soon as he could get the information, concluding in these words: “Hold tip until I do.” These concluding words show very plainly that Smith did not suppose that Cuttino would act upon the representations contained in the advertisement, but expected him to wait — “hold up”- — -until he obtained the information which he desired. Accordingly, on the very next day, Smith wrote Cuttino fully upon the subject; and it is observable that there is nothing- whatever said in that letter as to whether the property came up to the representations made in the advertisement, and, on the contrary, Smith, in that letter, gives Cuttino the information which he had obtained in reference to the property, and expresses his opinion as to its value. In the postscript to that letter we find these words: “Come up, and I will take you out;” showing that Smith was willing and anxious that Cuttino shonld come up and examine the property for himself. Upon receipt of this letter by Cuttino, Smith was instructed, by telegraph, to buy the property at once — “close promptly” — and, accordingly, the agreement for the purchase was entered into. It seems to us, therefore, that there is no foundation for the conclusion that defendants, in buying the property, relied upon the representations contained in the advertisement; birt, on the contrary, they relied solely upon the information and advice which they sought and received from their agent, Smith; and the testimony tends to show that the defendants so regarded it, for when they took possession of the property and found themselves disappointed in its condition, they, at first, proposed to hold Smith liable for the misrepresentations which they alleged he had made to them.
*4722 The next inquiry is' as to the effect of the fact that Smith, before writing the letter to Cuttino, above referred to, had made an arrangement with Chapin to share with him commissions which plaintiff had agreed to pay Chapin for selling the property. While we agree with the Circuit Judge that the law regards with reprobation such conduct on the part of an agent, because of its tending to tempt him to betray his trust, yet we are not exactly prepared to endorse the proposition that such an arrangement made Smith the agent of the plaintiff, to such an extent as would render the plaintiff liable to the defendants for any false representations made by Smith (if, indeed, he made any) to the defendants, whereby they sustained damages. But in the view which we take of the testimony we do not think it necessary to express ourselves authoritatively as to that proposition. For we do not think that the testimony shows that Smith made anj' false representations to the defendants or their agent, David S. Cuttino. If, as we have seen, Smith never confirmed, or was asked to confirm, the representation made in the advertisement as to the condition of the property, then we must look alone to the letter of Smith to Cuttino, bearing date 24th of June, 1893, for that appears to be the only representation which he ever made to Cuttino as to the condition of the property. Now we do not find any testimony showing that any statement made in that letter was false. On the contrary, all the testimony was directed to showing that the representations made in the advertisement were false. Whether the fact that Smith made this arrangement with Chapin to divide the commissions would not, of itself, justify the defendants in repudiating the act of their agent, Smith, in making the purchase of the property, and demanding a rescission of such contract, is another question, upon which we are not called upon to express any opinion, as that question cannot arise under the present action, which is not an action for rescission of the contract but simply an action, in the form of a counter-claim, for damages. But even if it should be conceded that the defendants were entitled to re*473cover any damages at all, it seems to us that the Circuit Judge erred in the rule which he applied for the measure of such damages. The true rule in cases like this is the difference between the value of the property if it had been in the condition in which it was represented to be, and its value in the condition in which it actually was. All experience shows that the value of real property is not enhanced to the extent of the cost of the improvements which may be put upon it; and the testimony in this case affords a striking illustration of the truth of this proposition. The testimony shows that the plaintiff had put improvements upon the property at a cost exceeding its market value as ascertained by this sale. To apply the measure of damages adopted by the Circuit Judge would in most cases, and certainly does in this case, work manifest injustice; for the result is that the defendants obtained property which the master found to be well worth the sum of $2,000, and only pay for the same the sum of $773.
The judgment of this Court is, that the judgment of the Circuit Court be reversed, and that the case be remanded to that Court for such further proceedings as may be necessary to carry out the views herein announced.