Court Opinion

ID: 7995362
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:41:28.842935+00
Date Added: 2024-06-11T16:35:31.624948
License: Public Domain

Hall, J.
(dissenting).
Feeling that the appellants have deliberately and designedly perpetrated a colossal fraud upon appellee, as found by the chancellor, I respectfully dissent from the conclusion reached by a majority of the Court.
Appellee’s option to purchase is as follows: “It is agreed and understood that if, during the life of this contract, the Lessor desires to sell the aforesaid property, the Lessee shall have the right to purchase prior to any sale to any other party, and such rights shall be at the same price at which the Lessor may receive a bona fide offer, any attempt to sell to any other party without an offer to the Lessee as herein provided shall be null and void and of no effect. The Lessee shall, within fifteen days after the giving of written notice of the desire of the Lessor to sell said property, advise the *372Lessor in writing whether or not he desires to accept said property and to exercise his right to purchase.”
This clause provided that appellee would be entitled to purchase this property “at the same price at which the Lessor (appellant Mrs. Hines) may receive a bona fide offer.” Nothing was said about terms. The majority opinion brushes aside without discussion whether the word “price” included by necessary implication that appellee should also have the same terms as some other person might offer. In my opinion, “the same price” necessarily carries an implication that the appellee should have the same terms as some other prospective purchaser. In Jurgensen v. Morris, 194 App. Div. 92, 185 N. Y. S. 386, 387, the Supreme Court of New York, in construing a similar option said: “.I think that the covenant was based upon a sufficient consideration, namely, the covenants on the part of the tenant^ and that it obligated the defendants, if they wished to sell to another person during the term, to give the plaintiff the opportunity to take the property upon the same terms; in other words, that it required the defendants, after receiving the Keiser offer, to offer the property to plaintiff upon the same terms.”
In Hudson Amusement Company v. Smith, Ohio Com. Pl., 17 Ohio Supp; 123; Id. Ohio App., 65 N. E. (2d) 881, 882, there was á lease contract on a theatre building, with an option as follows: “In the event Lessor decides to sell said Theater, and the building of which said Theater is a part, or receives an offer to sell said premises he shall notify Lessees in writing and Lessees shall have the first right to purchase said premises at the price fixed by Lessor, if they so elect. However, Lessees shall make such election within thirty days after they receive such written notice. ’ ’ The Ohio court unreservedly held that the lessees were entitled to receive the same terms as those offered by another prospective purchaser and that a notice to the lessees which failed to disclose those *373terms and which, exacted more difficult terms of the lessees was, in effect, no notice at all.
The majority opinion does not question the fact that appellee was entitled to the same terms of sale as were granted to Waldrup. Now, if he was entitled to those terms, he was also entitled to have them set out in the notice which was given to him on September 9, 1949. That notice is as follows:
“Carlton & Henderson
Attorneys at Law
Sumner, Miss.
“September 9, 1949
“Mr. J. H. Hambrick
“Sumner, Mississippi
“Dear Mr. Hambrick:
“Pursuant to the provisions of our lease contract dated the first day of January, 1949, of record in Deed Book 89, at page 361, of the records in the office of the Clerk of the Chancery Court of the Second Judicial District of Tallahatchie County, Mississippi, at Sumner, notice is hereby given that I have received a bona fide offer to purchase the property described in said lease at and for the sum of $109,000.00 and that I desire to sell the same at and for such price.
“You are requested, in compliance with the provisions of said lease, to give notice in writing to my attorneys, Carlton & Henderson, Sumner, Mississippi, within fifteen days of the date hereof of your desire to accept or reject said property and to exercise your right to purchase the same at and for said sum of money.
“Pursuant, further, to the terms of the aforesaid lease, this notice shall act as, and hereby is, termination of the aforesaid lease contract as of December 31, 1949.
“In view of the fact that the property will be sold, this is your instruction to use no further labor or material in the repair of the houses and other building on the premises.
*374“It will be appreciated if you are in a position to give prompt notice of your desires in tbe matter without waiting the passage of the full fifteen day period provided for by said lease.
“Very truly yours,
“/s/ Mrs. Charlotte Hines
“Mrs. Charlotte Hines.
“This does not include
‘Lost 40’ on which the price is $4,000.00.”
Let it be observed that this notice advised appellee that Mrs. Hines had received a bona fide offer of $109,000 for the property and requested him to give notice to her attorneys, Carlton & Henderson, within fifteen days whether he desired to exercise his right “to purchase the same at and for said sum of money”. He was informed that it would take cash money if he wanted to exercise his option. He was not told that Waldrup’s offer was on terms of $10,000 down and $99,000 in deferred payments over a period of ten years. In fact, he was not told of any terms and was given to understand- that he must produce $109,000' in money if he purchased the land. For most people that is quite a sizeable sum. The- plain reason for the provision in the option which granted appellee fifteen days in which to determine whether he might desire to purchase was in order that he might have at least that much opportunity to' arrange to raise whatever money was required of him. Mrs. Hines lived in Memphis, Tennessee. She came down to Sumner, Mississippi, and executed a detailed contract with Waldrup1 and then gave appellee this notice which informed him that he must deal with her attorneys; she did not want to- be contacted and returned to Memphis and remained out of the county and out of the state so that appellee could not contact her, and demanded that his dealings be with her attorneys. The chancellor was certainly justified in believing appellee’s testimony, which is as follows:
*375‘ ‘ Q. At the time the letter was delivered to you under date of September 10th, 1949, executed by Mrs. Charlotte Hines, did you have any conversation at all in regard to the sale of this property with one C. Sidney Carlton? A. I did.
“Q. Tell that conversation. A. I asked him would she give me any terms on it, or give any terms.
“Q. "What was his response to that question? A. He says it was all cash.
“The Court: All cash? A. Yes, sir.
“Q. After that date did you have any conversation in regard to the sale of this property with Mrs. Charlotte Hines? A. No.
“Q:. After this particular day did you ever have any conversation in regard to* the sale of this property by accepting your option under your lease contract with Mrs. Charlotte Hines, with her attorneys C. Sidney Carlton or B. H. Henderson? A. I did.
“Q. With which attorney? A. Carlton.
‘ ‘ Q. What did Carlton tell you?' A. I asked him about the terms, and did she give him any terms.
“Q. To clear up this matter — excuse me for interrupting — but do you remember the date that you had the second conversation with Mr. Carlton? A. Wednesday the 14th, I believe it was.
“Q. Do you remember the date that you received the letter, what day of the week September 10th was on? A. Saturday.
“Q. Was this the Wednesday following that Saturday? A. Yes, sir.
“Q‘. What was that conversation by Carlton? A. I just asked him would she give me any terms on that place out there, and he told me that we had an understanding as to the terms, what they would be, when we made the trade — the lease contract for the place.
‘ ‘ Q. Did he reiterate the terms ? Did he tell you what those terms were? A. No. He said she told you it *376would be cash, and there wasn’t anything said about the terms at that time.
“Q. Is that all the conversation? A. He told me that he would call Smith Murphy and get him to call her and find out. . . .
“Q. After your conversation on September 14th with C. Sidney Carlton, did you have another conversation with Mr. Carlton or Mr. Henderson relative to the purchase, or exercising yo.ur option to purchase the land from Mrs. Charlotte Hines? A. I left out of his office and went down on the streets and met Henderson.
‘ ‘ Q'. Did Henderson say anything to you in reference to your exercising your option to so purchase said lands? A. I asked would she give any terms, and he said she told him the day before it would be all cash. . , .
“Q. Thereafter did you have any conversation with either of the attorneys? A. Yes.
“Q. Do you know what that date was? A. It was on Monday following this Wednesday.
“Q. That was Monday following Wednesday? A. Yes.
“Q. Who did you have a conversation then with? A. Carlton.
“Q. Where was that conversation held? A. In that barber shop.
“Q. Was it held in the presence of anyone else? A. Yes.
“Q. In the presence of whom? A. William Tindall.
“Q. What did Mr. Carlton tell you at that time? A. He told me he had a talk with the lady himself, and she was offering to knock off, — that is, to put $7,500.00 in escrow, and fifteen days $2,500.00, and sixty days the balance of $32,700.00, and give me five years to pay the balance. That is as far as she could go.
“Q. Were you ever offered any other offer than that offer just mentioned? A. No.
*3771 ‘ Q. After that date did you have a conversation with either C. Sidney Carlton or R. H. Henderson in regard to the sale of this Hines property? A. I don’t think so.
‘ ‘ Q. On September 24th you executed a release, a copy of which is filed in this ease designated Exhibit D. Did you have a conversation that day with Mr. Henderson or Mr. Carlton?' A. No.
“Q;. You went to their office and executed this release? A. Yes. Well, the only thing I had Mr. Henderson came down there and told me he wanted me to come up there and get that thing over with.
“Q. Mr. Henderson told you he wanted you — what date was that? A. Saturday.
“Q. Where was that conversation? A. It was on the street in front of the bank.
“Q. He says come on up there and get that thing over with? A. Yes.
“Q’. What else did he say? A. He didn’t want to have a lawsuit over it.
“Q'. He said he did not want to have a lawsuit over it. Mr. Hambrick, have you at all times been financially able, ready and willing to accept your rights to purchase this property under the same terms as mentioned in the contract between R. I. Waldrup and Mrs. Charlotte Hines? A. I have.
“Q. Were you ever given that offer to so purchase those lands? A. I was not.
“Mr. Carlton: The records show we admit that. The answer admits that.
“Q. Why did you sign the release relinquishing your rights to accept this property?
“Mr. Carlton: If the Court please, the contract is the best evidence of that, and the instructions are recited therein.
“The Court: Overrule the objection.
“A. Well, I figured too short a term for the balance.
“Q. You mean to say you was not able to pay that $32,000.00. I would like for you to tell the Judge just *378why you signed that release? Or, I might ask you this question: At the time Mr. Carlton was telling’ you about the terms of sale, did you believe that Mr. Carlton was telling’ the truth? A. Yes.
“Q. Did you rely on his statements at the time you executed this release? A. Yes.
“Q. "Would you have executed that release if the same terms had been offered to you as were offered to R. I. Waldrup?' A. No.”
Mr. Carlton testified and detailed the negotiations between Carlton and Hambrick, as follows:
‘ ‘ Q. They were dictated by you as attorney for Mrs. Hines? A. Well, I couldn’t say I dictated every word of the instruments.
“Qi. Were they drawn by your law firm? A. They were all drawn in my office. The fact of the matter is I did most of the draftsmanship. I did all of it with possibly some suggestions from Mr. Henderson as to the exact wording'. And as far as Exhibit D is concerned, I dictated that in the center of our three offices, with Mr. Breland standing by, and Mr. Henderson sitting at the typewriter, and as we went in, all three of us discussed the instrument. On the second page, the first paragraph, my first dictation was rather jumbled and Mr. Breland and Mr. Henderson re-worded that paragraph.
“Q. What instrument? A. The release. I personally either drew or supervised the drawing of all those instruments, that is, the instrument executed between Hines and Waldrup, being executed on September 9th and not filed for record until a month later, or more, October 24th.
“Q. During that time that instrument was in your office? A. Yes, Mr. Kellum, that instrument was in my office, and should have been filed some days earlier, but we just waited.
“Q. Mr. Carlton, at the time you had your conversation and told Mr. Hambrick about the offers of lease being on a five year basis, you had full knowledge of this *379instrument which had theretofore been executed by defendant?' A. I knew at all times.
‘ Q. Did you or not have full knowledge of the terms of sale between the defendant Hines and Waldrup at the time you were making the statement to Mr. Ham-brick that the terms would be a five year period? A. Mr. Kellum, I never—
“Mr. Kellum: Your Honor, I want an answer.
“The Court: You answer yes or no, and then make whatever explanation you want.
"A. I can answer yes to all except the last part of the question.
“Q. At the time you were making your statements to Mr. Hambrick in regard to the facts that terms to him would not exceed a five year basis, did you or not have full knowledge as to the terms that were granted by Mrs. Hines to defendant Waldrup? A. Yes, sir. . . .
" A. Mrs. Hines and Mr. Waldrup executed on September 9th Exhibit E to the original bill of complaint, which I prepared myself. On September 9th I prepared for signature of Mrs. Hines Exhibit C to the bill of complainant, which is the letter identified, but this option would be at $109,000.00 as per the lease contract. Mr. Ham-brick executed an acknowledgment of receipt of that in my office on that date. He asked me, as he testified on 'direct examination, would she give any terms. Her authority in the matter did not include the giving of any terms to Mr. Hambrick, and I so advised him, that as far as I was authorized to speak, he would have to pay cash, but if he desired to make an offer to Mrs. Hines different from that, I would be glad to submit it to her. The next conversation which we had I believe was on Wednesday following the 9th, the 10th. That would have been the 14th. Mr. Hambrick again asked me would Mrs. Hines give him any terms. I told him I would be glad to talk to Mrs. Hines and see whether she would give bim any terms; that she had not given me any authority to give any terms because we didn’t consider he was en*380titled to any terms, that the price to him was $109,000.00, but we would be glad to try to work out something so he could have the place. It made no difference to us. Mrs. Hines had the place and she wanted to sell it.”
It is shown in the record without dispute that neither of appellants nor their attorney ever advised appellee of the terms of the Waldrup contract. Mr. Carlton took the position that this was confidential information which he could not disclose without the consent of his client, Mrs. Hines, and the contract was deliberately withheld from public record until October 24, 1949. Mr. Carlton testified that it should have been recorded earlier “but we just waited.” Thus it appears that appellee was entitled to fifteen days time in which to determine whether he would exercise his option and purchase the property upon the terms which Waldrup had offered; those terms were withheld from him and, while the sands were swiftly running out of appellee’s fifteen-day hour glass, he was stalled along by Mrs. Hines’ attorney, with whom he had been directed to deal,'with a contention that he had no authority to disclose the terms of the Waldrup contract and no authority to make any deal except upon a cash basis, but which position was generously changed later to an offer of $32,500 cash with balance in deferred payments over a period of five years, as against the Waldrup terms of $10,000 cash and balance in ten years. While all this negotiation was in progress and while appellee was without information as to the Waldrup terms, he was led up to September 24, 1949, when the last sand in his glass had run out and the jaws of the vise were clamped upon him. Had the truth of the Waldrup terms been disclosed to him, he could have easily met them for the record shows that he not only paid Mrs. Hines every dime that he owed her but he also deposited in court the sum of $10,000 in cash on the day he filed this suit, which was all that was needed to meet the Waldrup terms. vThe fraud which was perpetrated on appellee commenced on September 9, 1949, and was active throughout the *381entire negotiations between the parties. The chancellor heard all the evidence and observed all the witnesses. He held that Mrs. Hines was duty bound to disclose to appellee the terms of the Waldrop contract, that the case “is shot through with fraud,” and that all dealings by her were “unfair, particularly the dealings since September 9th up to the filing and signing of the instrument in which she undertakes to . . . get a release from any of her obligations to him under her original contract, which is null and void and a fraud upon the face of this testimony.” I have no quarrel with the principle of law, and the only principle on which authorities are cited in the majority opinion that “Where the person defrauded after having knowledge of the fraud enters into a new contract concerning the same subject matter ... he will ordinarily be regarded as having waived the fraud in the original transaction”, but in my opinion this principle is not here applicable because it is undisputed that at the time of signing the contract of release appellee did not have knowledge of the fraud which had been perpetrated upon him.
The majority opinion seems to travel upon the theory that fraud cannot arise except by some willful misrepresentation and that it cannot arise from mere silence, but no law to that effect is cited, nor, indeed, can any be cited. As particularly applicable to the situation in this case, I call attention to two quotations from 23 Am. Jur. on the subject of Fraud and Deceit:
“Section 78. Duty to Speak. — The principle is basic in the law of fraud as it relates to nondisclosure that a charge of fraud is maintainable where a party who knows material facts is under a duty, under the circumstances, to speak and disclose his information, but remains silent. Situations evoking the duty of disclosure may arise in various ways in different cases. Generally speaking, however, in the conduct of various transactions between persons involving business dealings, commercial negotiations, or other relationships relating to property, *382contracts, and miscellaneous rights, there are times and occasions when the law imposes upon a party a duty to speak rather than to remain silent in respect of certain facts within his knowledge and thus to disclose information, in order that the party with whom he is dealing may be placed on an equal footing with him. In such a case a failure to speak amounts to a suppression of a fact which should have been disclosed and is a fraud. As a matter of fact, in such circumstances a failure to state a fact is actually equivalent to a fraudulent concealment and amounts to fraud just as much as an affirmative falsehood.”
‘ ‘ Section 80. Superior Knowledge or Means of Knowledge. — Knowledge that the other party to a contemplated transaction is acting under a mistaken belief as to certain facts is a factor in determining that a duty of disclosure is owing. There is much authority to the effect that if one party to a contract or transaction has superior knowledge, or knowledge which is not within the fair and reasonable reach of the other party and which he could not discover by the exercise of reasonable diligence, or means of knowledge which are not open to both parties alike, he is under a legal obligation to speak, and his silence constitutes fraud, especially when the other party relies upon him to communicate to him the true state of facts to enable him to judge of the expediency of the bargain.”
These authorities are quite fitting here. Mrs. Hines and her attorneys were under duty to speak and disclose to appellee the Waldrup terms; they had the information and they knew that appellee neither had it nor had the means of obtaining it and yet they not only remained silent but deliberately withheld the Waldrup contract from record so that appellee could not obtain it. By suppressing the truth they perpetrated upon appellee just as unconscionable a fraud as they could have by an affirmative falsehood, and by the very authority which *383the majority opinion cites, appellee did not waive this frand because when the hot iron was applied to him and he executed the release he did not have knowledge of the fraud which had been and was then being perpetrated upon him. In my opinion the decree is abundantly supported both by the evidence and by the applicable law.