Court Opinion

ID: 6600173
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:06:57.600774+00
Date Added: 2024-06-11T15:57:59.377811
License: Public Domain

Cole, J.
The circuit court, in effect, found, as matters of fact, that the agents and officers of the railroad company made certain material false and fraudulent repre*85sentations to the plaintiff concerning the financial condition of the company, the value of its property, etc., to induce him to execute the conveyance to the company; and that the plaintiff relied upon these representations, and believed them to be true, when he conveyed his land to the company and received its capital stock in payment therefor. That these facts are fully and abundantly established by the evidence, no one can doubt, after examining the proofs in the cause. Instead of the company being out of debt, as represented by its agent and president, the corporation had incurred debts to a large amount, and such indebtedness was secured by mortgages upon a portion of its property; while its harbor and depot property, in and near the city of Kenosha, was not worth a quarter, or, at most, not more than a third, of the value the agents of the company represented it to be. The circuit judge, in his opinion filed in this case, seems to think that the representations of the agents of the company, in regard to the value of the harbor and depot property, are not in the nature of statements of fact, but were mere matters of opinion; and that, when they had correctly informed the plaintiff where the property was situated, its quantity, etc., then he could have judged of its value for himself, and had no right to rely upon the estimate of others. It is very true, the law discriminates between a mere expression of opinion and the statement of a fact upon which a party has a right to rely. But, in this case, we think, the representation in regard to the value of the harbor and depot property was something more than what is understood as an expression of opinion about the value of property. It was made by the president of the company at a public meeting, when making statements about the financial condition of the corporation, which he intended others should act upon. He was anxious to procure subscriptions to the stock of the company, and he well knew that any statements made by him about the prop*86erty and pecuniary condition of the corporation would influence the conduct of those about to take stock, and that they would not be likely to investigate the affairs of the corporation, in order to verify the truth of his representations. Besides, all these matters were peculiarly within the knowledge of the officers of the company ; while it does not appear that the plaintiff had any particular knowledge of the condition of this harbor and depot property. It seems to us entirely reasonable that the plaintiff should rely upon this representation in regard to the value of that property, as well as the other statements made by the president, and that, under the circumstances, he was fully justified in relying upon them in exchanging his land for the stock of the company.
While the circuit court found that the representations made by the. agents of the company, to the effect that the company was not in debt, and that its property was unincumbered, were untrue, and known to be so when made; still, since it appeared that such agents further stated that the company, or stockholders, and the city of Kenosha, had furnished all the means that had been expended for the construction of the road, and as the city could only subscribe for stock in the manner authorized by chapter 105, Laws of 1853, which required the company to execute a mortgage upon its road to secure the payment of any bonds which the city might issue, therefore the court held that the plaintiff was chargeable with constructive notice of the provisions of the law under which the means were furnished by the city, and that, by the use of reasonable and ordinary diligence, he could have learned of the nature and extent of the indebtedness of the company, and of the existence of all incumbrances; and that, by omitting to make inquiries as to the truth of the matters stated by the agents of the company, he was guilty of negligence, and cannot now claim the relief demanded in the com*87plaint. In answer, however, to this view of the circuit court, we say, in the language of Porter, J., as employed by him in Mead v. Bunn, 32 N. Y. 275-280: “ Every contracting party has an absolute right to rely on the express statement of an existing fact, the truth of which is known to the opposite party and unknown to him, as the basis of a mutual engagement; and he is under no obligation to investigate and verify statements, to the truth of which the other party to the contract, with full means of knowledge, has deliberately pledged his faith.” See, also, Directors, etc., Central R. R. Co. v. Kisch, 2 House of Lords Appeal Cases, 99-120. Here the agents of the company made express statements of existing facts in respect to the indebtedness of the company, and that its property was unincumbered. It is not for one whose equities in the land in controversy are no stronger than would be those of the company, to object that the plaintiff was put upon inquiry, and should not have relied upon these deliberate and express representations of the officers of the company.
Further, it is said, it is too late for the plaintiff to rescind the contract and take advantage of the fraud practiced upon him, after having delayed his action for seven years. It is a sufficient answer to this objection to say, that it appears the company reconveyed the land to the plaintiff in September, 1860. In this connection, I may allude also to another circumstance, which, it is insisted, has an important bearing upon the right of the plaintiff to have the relief he seeks. It is this: It appears that the plaintiff has sold the stock of the company which he received in payment of his land; and it does not appear that he ever offered to transfer the same to the railroad company. But it is, manifestly, not for the purchaser at the sheriff’s sale to object that this stock has not been returned to the company, and that, consequently, there could be no rescission of the contract. The company was the only party interested in having *88the stock returned; and if it saw fit to reconvey the land to the plaintiff, without the return of the stock, it is not for the purchaser at the sheriff’s sale to object.
Again, is there any ground for saying that the purchaser of the Scott judgment, and of the land at the execution sale, was an innocent purchaser in good faith, and, as such, entitled to protection against the equities of the plaintiff in the premises % It appears to us not. This judgment was obtained by Scott against the railroad company on the' 21st of May, 1859, and, on the 29th of the same month, sold and assigned to Pricture. But although, at this time, the title of record appeared to be in the company, still the plaintiff was then in possession of the premises, and has remained in possession ever since. The plaintiff likewise testified that he was present at the sale upon the execution, and forbade the sale in the presence of the sheriff and the purchaser, telling them that the deed was obtained by the company by false representations. The sheriff corroborates the plaintiff upon the point that the latter was present at the sale, and forbade the same. Under these circumstances, there is no ground for saying that Pricture purchased without notice of the plaintiff’s equities. He was affected with notice that the plaintiff was in possession of the premises, even if the sale was not actually forbidden in his presence. He, therefore, has no right to protection against equities binding upon the debtor company, of which he had notice at the time of purchase.
It follows, from these views, that the plaintiff is entitled to the relief demanded in the complaint.
By the Court. —The judgment of the circuit court is reversed, and the cause remanded, with directions to grant such relief.