Court Opinion

ID: 9807748
Source: CourtListenerOpinion
Date Created: 2023-08-31 20:15:00.892857+00
Date Added: 2024-06-11T11:53:12.470462
License: Public Domain

AlleN, J.,
dissenting: On 23 August, 1902, the plaintiff executed a deed to the defendant Seip, purporting to convey about 9,000 acres of land for $70,000, in which the covenant of warranty warranted “the premises.” The defendant paid all of the purchase price in cash, except $38,500, for which he executed four notes, secured by a mortgage on the land, the last note falling due on 25 August, 1905, and being for $10,000.
The defendant paid all of said notes except the last, and this action is for the purpose of enforcing payment of it.
The defendant resists payment because he contends that he was induced to buy the land upon the representation that 1,000 acres, which were pointed out, were embraced in the purchase, when they were in fact owned by another person.
A jury has returned a verdict, under instructions to which there is no exception, finding that the plaintiff made the representation in the sale of the land; that it was false and fraudulent; that it was relied on by the defendant; that it was calculated to deceive him and did so, and that the defendant has been damaged thereby to the amount of $10,000, with interest thereon from 23 August, 1902, and this Court sets the verdict aside upon the ground that there was no evidence to support the verdict.
I cannot concur in the conclusion reached, and think a careful reading of the evidence shows that every element entering into a fraudulent transaction was fully proven.
It must be remembered that the plaintiff instituted this action, and that he is invoking the equitable jurisdiction of the Court to enable him to foreclose a mortgage.
If the verdict of the jury is supported by evidence,, the plaintiff has falsely rejn'esented 1,000 acres of land, which he did not own, to be within the boundaries of the deed he made to the defendant; the defendant relied on the representation, which was calculated to deceive and did deceive, and the plaintiff is now asking a court of equity to foreclose a mortgage given to *372secure a note, which is made up of the purchase price of the 1,000 acres. I say it is so made up, because the rest of the purchase price has 'been paid, and the jury has, in effect, found that the 1,000 acres is worth $10,000.
If the law will permit the plaintiff to recover under such circumstances, we must reject the statement that “law is the manifestation of the conscience of the Commonwealth.”
I think, tested by the rules of the common law, or by equitable principles, the plaintiff must make good his representation.
Suppose we consider the evidence in the strongest light against the defendant, and require him to furnish evidence of fraudulent conduct upon the part of the plaintiff and actual knowledge that the representation was false.
If there is evidence of these facts, the verdict cannot be disturbed under the rules laid down in the opinion of the Court.
(1) The plaintiff was the owner of the land, and was selling it. The fair inference is that he investigated the boundaries before he bought.
(2) The land had been surveyed before he bought, and the line plainly marked. Is it not legitimate to argue that he knew these facts ?
(3) The agent of the defendant, who was examining the land, was a nonresident and had never been on the land before. He was, therefore, easily misled as to the boundary.
(4) He asked the plaintiff to furnish some one who could point out the boundaries.
(5) The plaintiff sent for Sam Jones, a negro, who was his employee and lived on the land,'and said he was familiar with the lines, and would go with them and point them out.
(6) Sam Jones and a Mr. Jackson, who was the agent of the plaintiff in making the sale, went with the agent of the defendant, and when they reached a certain ditch, both said, “We are now on the Tarault land.”
(7) They were not on the Tarault land when they reached the ditch, and there were in fact 1,000 acres between the ditch and the line of the Tarault line, belonging to another person.
(8) The defendant’s agent relied on the representation.
*373Mr. Jackson, tbe agent of the plaintiff: to make the sale, testified, among other things : •
“I live in Norfolk and am a dealer in timber and mineral lands, and in the sale of the property from Tarault to Seip I acted in the capacity of broker, and sold the same upon a percentage agreement, to be paid by Mr. Tarault. I accompanied Mr. Seip’s representatives, Messrs. Hosier and Lukens, from Norfolk, about the 5th or 6th of August, 1902. Mr. Tarault furnished us a colored man as a guide to show us the timber land. In crossing a well-marked ditch, we took it for granted that that was the line, as I so understood it. It was understood by all of us that we were on Mr. Tarault’s land after we crossed a well-marked ditch. -I do not remember who stated this ditch to be the line, whether the colored man or myself.I had been informed before that the ditch was the line. In discussing the land, we all talked of it as being Tarault’s property. I think this was Lukens’ and Hosier’s first trip to North Carolina, and the first time on that property, and I should say that they 'had no knowledge of where the line was, and no other information, except such as they got from the colored man sent by Mr. Tarault and myself-. The colored man stated that it was Mr. Tarault’s land and timber after they got across the bridge and into the timber. I am unable to say whether the colored man or myself made the statement that the ditch was the line, or very near the line, of the Tarault land, but I recall clearly that the property near the ditch or shortly beyond the ditch was represented as Mr. Tarault’s land. My recollection is very clear as to this ditch being considered the line, and we all took for granted that it was.”
(9) The agent reported to the defendant, and this was the basis of his purchase.
(10) Sam Jones was not produced as a witness by the plaintiff, and his absence was not accounted for.
(11) The plaintiff was examined as a witness and denied sending any one to point out the lines.
(12) He conveyed land inside the boundaries of the deed, which he did not own, and when sued on his warranty, tries to evade liability by saying he warranted thé “premises” and not the title.
*374No statement I have made in this enumeration can be disputed,- and I think I have seen men convicted of high crimes, involving guilty knowledge, on less.
And why should a court be astute to find a way to relieve the plaintiff? No one questions the fact that the representation was made and that it was false. The defendants’ agents swear they relied on them in making the trade, and when the trade was consummated the plaintiff received pay for 1,000 acres of land he did not own, by reason of the false representation.
In the opinion of the Court it is suggested that the defendant was negligent in not having the land surveyed, and that he ought not to be permitted to say, after the lapse of four or five years, that he was deceived.
The first suggestion is met by what is said in Walsh v. Hall, 66 N. C., 241, “The transaction was like hundreds of others in the country, which are entirely fair and honest, and we do not regard the want of a survey as laches on the part of the defendant. A large majority of the sales of land in the State are completed by the delivery of a deed copied from some previous deed, and surveys are not generally made unless there is some dispute about the boundaries. Where the grantor has been in the possession of land for a number of years, exercising acts of ownership, his positive assertion as to location may be reasonably relied upon without a survey,” and the second by the evidence.
H.. 0. Hosier, an agent of the defendant and in charge of the land, testified: “I never knew Mr. Willey claimed the land' until I got the skidder in there and began to cut the timber. Don’t remember the date,, but it was four or five years after we got the deed, and somewhere about the year 1906.”
Mr. Willey was the owner of the 1,000 acres, and this action was commenced in 1906.
Again the Court says the evidence does not show sufficiently that the representation was relied on.
II. C. Hosier testified: “When Mr. Jackson and the colored man pointed out to me' the ditch as the Tarault line, I firmly believed it was the line, and did not know anything else until Mr. Willey told us to get off. I had no other information *375about tbe line, and Mr. Tarault knew tbat I bad no other information, for this was my first trip to North Carolina. The value of the land we purchased, running to the Abbott line, was from $10,000 to $15,000 less than if we had gotten the land shown us.”
A. B. Lukens, another agent of defendant, who was on the land when the representation was made, téstifíed: “Mr. Jackson asked Mr. Tarault for some one to show us the southern boundary of the lands. Mr. Tarault sent for the negro, Sam Jones, who lived on his place. Tarault said he was familiar with those lines. "We crossed a ditch from 4 to 6 feet in width. Mr. Jackson said, ‘We are now on the Tarault property,’ and the negro gave us to understand that the ditch was Mr. Tarault’s line. We accepted that ditch as the southern boundary of that land. We reported to Mr. Seip our examination of the matter. Mr. Jackson knew that Mr. Seip would be associated with us if we found the proposition to interest us. It was understood that Mr. Seip should come down and close up the transaction, take deeds, etc. Mr. Seip took a deed on our report, and turned it over to us, and it was recorded. Mr. Tarault went with us on the cultivated land, but not on the timbered land. He wa.s greatly troubled with asthma at the time. We reported to Mr. John Seip the investigation of the land as set out in his evidence, and Mr. Seip bought upon that report, and we made the report for him upon the representation of the lands as made to us.”
The evidence of Jackson, agent of the plaintiff, which has been referred to, shows clearly that the agents of the defendant relied on the representation.
I do not question the ruling in Gatlin v. Harrell, 108 N. C., 487, which is said in the opinion to lay down the proper rule for cases of this kind, but I respectfully insist that it has no bearing on the question before us. In the Gatlin case the representation was that the land had been surveyed, and contained 115 acres, and the action was dismissed because there was no evidence that the land had not been surveyed and did not contain 115 acres; while in our case it is not denied that the representation was false.
*376If, therefore, the strict rules of the common law are to be applied, and the defendant is required to prove actual knowledge, I think he has come up to the full measure of the law.
The case is not, however, at law, but in equity, where the maxim prevails that, “He who seeks equity must do equity,” and “He who comes into equity must come with clean hands,” which is illustrative of the principle that nothing can call forth a court of equity into activity but conscience and good faith.
Mr. Pomeroy, in his work on Equity Jurisprudence, after stating that no representation is fraudulent at law, unless it is made with actual knowledge of .its falsity, or under such circumstances that the law must necessarily impute such knowledge to the party when he makes it, points out that the rule is different in equity. He says, section 885: “It is fully settled by the ablest courts, English and American, that there may be actual fraud — not merely constructive fraud — in equity, without any feature or incident of moral culpability; that the actual fraud consisting of misrepresentation is not necessarily immoral. A person making an untrue statement, without knowing or believing it to be untrue, and without any intent to deceive, may be chargeable with actual fraud in equity”; and again in section 886: “If a person makes an untrue statement, and has at the time no knowledge of its truth, and even has no belief in its truth, he is chargeable with fraud in equity as well as in law. Making a statement which the party does not believe to be true is only slightly removed in culpability from the making a statement which the party knows to be false”; and in section 887: “It is settled in equity by an overwhelming array of authority that where a person makes a statement of fact, which is actually untrue, and he has at the time no knowledge whatever of the matter, he is chargeable with fraud, and his- claim to have believed in the truth of his statement cannot be regarded as at all material. The definite assertion of something which is untrue, concerning which the party has no knowledge at all, is tantamount in its effect to the assertion of something which the party knows to be untrue”; and in section 888 : “Finally, if a statement of fact, actually untrue, is made by a person who honestly believes it to be true, but under such circumstances *377that the duty of knowing the truth rests upon him, which, if fulfilled, would have prevented him from making the statement, such misrepresentation may be fraudulent in equity, and the person answerable as for fraud; forgetfulness, ignorance, mistake, cannot avail to overcome the preexisting duty of knowing and-telling the truth”; and in section 880: “If, therefore, a representation made prior to the transaction, and directly relating to it, is of such a character that it would naturally and reasonably induce or tend to induce any ordinary person to act upon it, and enter into the contract or engage in the transaction, and is in fact followed by such action on the part of the other person, then it will be presumed that it was made for the purpose and with the design of inducing that person to do what he has done — that is, to enter into the agreement or engage in the transaction. The design will be inferred from the natural and necessary consequences.”
Justice Hoke, speaking for the Court, recognizes this doctrine in Modlin v. R. R., 145 N. C., 226, as to the effect upon the principal of the false representations of an agent, and says: “It is well established that one who intentionally and positively asserts a fact to be true of his own knowledge, when he does not know whether it is true or false, is as culpable, in case another 'is thereby misled or injured, as one who makes an assertion which he knows to be untrue”; and again, in Whitehurst v. Insurance Co., 149 N. C., 276: “And it is not always required, for the establishment of actionable fraud, that a false representation should be knowingly made. It is well recognized with us that, under certain conditions and circumstances, if a party to a bargain avers the existence of a material fact recklessly, or affirms its existence positively, when he is consciously ignorant whether it is true or false, he may be held responsible for a falsehood; and this doctrine is especially applicable when the parties to a bargain are not upon equal terms with reference to the representation, the one, for instance, .being under a duty to investigate, and in a position to know the truth, and the other relying and having reasonable ground to rely upon the statements as importing verity.”
*378Applying these principles, I think it clear that there was some evidence to be submitted to the jury.
Under the principles announced by Mr. Pomeroy, the representations are presumed to have been made with the purpose of having- them acted on, and it is not necessary to show actual knowledge of falsity.
The representations are fraudulent if made recklessly and without knowledge as to whether they are true or false, and in our case 1,000 acres were represented to belong to the plaintiff which he did not own, and the representations were made by the plaintiff, whose duty it was to know, to- a stranger.
Fraud in equity has a wider significance than it has at law, and if it cannot be proven by circumstances, the courts will be powerless to trace it or remedy its wrongs.
Mr. Bispham says, section 197: “From the earliest times down to the present day the wrongs inflicted by covin (to use the ancient term) have appealed with peculiar force to the conscience of chancellors; and probably no field of remedial law has more extended boundaries, or has yielded more substantial fruits of justice, than that which, in equity jurisprudence, is embraced under the title of fraud. . . . The courts of equity have always avoided, circumscribing the area of their jurisdiction in such cases by precise boundaries, lest some new artifice, not thought of before, might enable a wrongdoer to escape from the power of equitable redress. 'The Court,’ said Lord Chancellor Hardwicke, in Lawley v. Hooper, decided in 1745, 'very wisely hath never laid down any general rule beyond which it will not go, lest other means for avoiding the equity of the court should be found out.’ ”
There is another principle, recognized many times in this Court and in other jurisdictions, upon which I think the judgment ought to be affirmed, and that is, “that where one of two persons must suffer loss by the fraud or misconduct of a third person, he who first reposes the confidence or by his negligent conduct made it possible for the loss to occur, must bear the loss.” R. R. v. Kitchin, 91 N. C., 44; R. R. v. Barnes, 104 N. C., 27; Medlin v. Buford, 115 N. C., 272; Rollins v. Ebbs, 138 N. C., 145; Bank v. Oil Mills, 150 N. C., 722; Bowers v. Lumber Co., 152 N. C., 607.
*379In tbe Medlin case, Shepherd, C. J., says: “It is a general and just rule that when a loss- bas happened which must fall on one of two innocent persons, it shall be borne by him who is the occasion of the loss, even without any positive fault committed by him, but more especially if there has been any carelessness on his part which caused or contributed to the misfortune.”
In the Rollins case Justice Solee applies the doctrine to the law of agency, and quotes with approval from 2 Cyc., 159, that, “ ‘This rule is founded not only upon that principle of general jurisprudence which casts the loss, when one of the two equally innocent persons must suffer, upon him who has put it in the power of another to do the injury, but also upon that rule of the law of agencies which makes the principal liable for the acts of his agent, notwithstanding the private instructions of the principal have been disregarded, when he has held that the agent had a position of more enlarged authority.’ This principle finds support in well-considered adjudications in this State and elsewhere. Gwyn v. Patterson, 72 N. C., 189; R. R. v. Kitchin, 91 N. C., 39; Humphreys v. Finch, 97 N. C., 303,” and in the Bowers case, Justice Walker, after saying that whenever one of two innocent persons must suffer by the act of a third, he who has enabled such third person to occasion the loss must sustain it, quotes Lord Holt as follows: “For as somebody must be a loser by this deceit, it is more reasonable that he who employs and puts a trust and confidence in the deceiver should be the loser, than a stranger.”
Apply this principle to the facts. The plaintiff lived on the land he was selling, and the defendant knew nothing of the boundaries. The defendant’s agent asked the plaintiff to furnish some one who could point out the lines. The plaintiff selected Sam Jones and said he was familiar with the lines. Jones went with the defendant’s agent and made a false representation as to the boundary, which was relied on, causing damage. Who ought to bear the loss ? In my opinion, the law answers, the plaintiff, Tarault, who first reposed confidence in Jones, although he may have intended no wrong.