Court Opinion

ID: 6908289
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:04:16.097157+00
Date Added: 2024-06-11T16:06:27.277398
License: Public Domain

Rehearing denied October 14, 1924.
On Petition eor Rehearing.
(229 Pac. 380.)
BURNETT, J.
A very earnest petition for rehearing has arrayed the latest opinion of this court directing a judgment of nonsuit against the former opinion approving the action of the Circuit Court in sustaining a demurrer to the original complaint. The effort of the petition for rehearing seems to be to establish that between the two opinions there is irreconcilable conflict. It is enough to say on this point that the first opinion was upon demurrer to the complaint, which, admitting’ all the statements . of that pleading to be true, yet hold they did not state facts sufficient to constitute a cause of action, while in the present condition of the case the pivotal question is whether the plaintiff has succeeded in proving his charges of fraud. In the first opinion the question was one of pleading. In the second it relates to the sufficiency of the evidence.
It is freely admitted as a principle that the charter and ordinances of the city did not give it license to defraud anyone, 'but it is equally true that a municipal corporation has its rules of existence and its limitations upon powers prescribed in those public enactments of which anyone dealing with it must take notice and be governed accordingly.
As extracted from the amended complaint, the charge in substance is that the city caused plans, *380specifications and estimates to be prepared for the improvement of a street and advertised for bids thereon. In the advertisement was a table entitled “items of work and materials,” in which it was recited that the total quantity of embankment was 17,087 cubic yards. The plaintiff avers that this table contained the only data in the specifications indicating the quantity or amount of work to be performed ; that the plaintiff made his bid on that basis; that the statement contained in the table was recklessly made without knowledge of whether it was true or not, whereby the plaintiff relying upon the same was fraudulently induced to make his bid on that understanding; and that after entering upon the performance of work, his bid having been accepted, he discovered the error and found that the contract required almost twice as much embankment as the figures in the table indicated.
His allegations of fraud were controverted and the question at present to be determined is whether he succeeded in maintaining the issue on his part. His counsel persists in the contention that in the latest opinion the matter had been treated as an action upon the contract. This supposition, however, is erroneous. The plans and specifications made part of the contract were not considered as if the action was upon the contract. They were referred to in the opinion as containing the representations of the city as to what was required. They pointed out the rules by which they were to be interpreted. For instance, it was said that:
“The plans and specifications are to be interpreted as mutually supplementary and therefore any feature shown in one and not on the other shall have the same force and effect as if shown on both.”
*381The result of such a situation was to warn the plaintiff when he was referred to the plans and specifications that the figures in the table were not controlling, that all of the specifications must be read and considered together so that if in another part thereof, outside of the table, there were data independent of the table showing that the embankment should be 28,567 yards, he was bound by that part of the specifications to perform them, notwithstanding the lesser amount indicated in the table. That he was warned in advance that the quantity of embankment figures at 17,087 yards was not conclusive is supported by the fact that in the specifications upon which he made his bid, it is said:
“The quantities given are approximate only, and no claim shall be made against the City on account of any excess or deficiency, absolute or relative in the same.”
Thus warned of what was required, the defendant made his bid in writing in which he said:
“The undersigned further affirms that he fully understands the plans and specifications, and has made full local examinations, and his bid is based upon this understanding. ’ ’
We learn from the complaint that after having entered upon the performance of the contract, the plaintiff discovered that it would take in round numbers, 28,000 cubic yards of earth to complete the embankment required by the contract. In other words, 28,000 cubic yards was in truth included in the specifications which the contract undertook to fulfill. There is no pretense anywhere, either in the pleadings or the testimony, that the plans or specifications were in any way altered or changed, nor that any representation was made by the city except those *382contained therein. They remained the same throughout the whole transaction, to the completion of the work. A dilemma, therefore, confronts the plaintiff : If, on the one hand, the representation of 17,000 yards contained in the table is of controlling potency, it was the limit of his contract, and he was not compelled nor authorized to go further with the embankment than that amount. He had no right, except by pursuing the formula prescribed by the charter and ordinances of the city, to saddle further liability upon the municipality by going on and doing work not within the contract. On the other hand, if by the other parts of the plans and specifications, 28,000 cubic yards were required, they were required quite as effectively and manifestly before he ever made an offer to perform the work, as after-wards, for the advertisement quoted in his pleadings advised him specifically that the work was to be done according to the plans and specifications on file with the designated official of the city. More than that, in making his bid, he reported to the city that he had made full local examinations, with full understanding of the plans and specifications, and on that basis had made his offer.
Let us advert once more to the rule respecting a plea and proof of fraud, quoting Mr. Justice Bean, in Wheelwright v. Vanderbilt, 69 Or. 326, 328 (138 Pac. 857, 858):
“To constitute actionable fraud it must appear (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew it was false, or made it recklessly without any knowledge of its truth, and as a positive assertion; (4) that he made it with the intention that it should "be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered in*383jury. Each of these facts must be proved with reasonable certainty, and all of them must be found to exist. The absence of any one of them is fatal to recovery.”
All the data upon which the improvement was projected were on file and referred to in the advertisement for bids. The specifications likewise were on file and so mentioned. "Warned by them that the quantities given were approximate only, and no claim should be made against the city on account of any excess or deficiency, absolute or relative, the plaintiff, according to the testimony introduced by himself, made full local examinations and based his bid upon a full understanding of the plans and specifications, and those examinations. True enough, in his testimony given orally at the trial, he says in substance that his actual examination was only a casual inspection of the earth to be excavated. Plaintiff, however, cannot thus alter the effect of his written representations made to the city in connection with his bid. He does not pretend that anyone did anything to prevent him from making such examination and study of the plans and specifications as he represented in writing he had done.
Bearing in mind the rule that all these elements of fraud must be proved, without exception, we will examine some precedents relating to the element that the plaintiff acted in reliance upon the alleged fraudulent representations. Farnsworth v. Duffner, 142 U. S. 45 (35 L. Ed. 931, 12 Sup. Ct. Rep. 164, see, also, Rose’s U. S. Notes), was a suit for the rescission of a contract of purchase, and to recover the moneys paid thereon on the ground that it was induced by the false and fraudulent representations of the vendors. The court, speaking by Mr. Justice Brewer, said:
*384“In respect to such an action it has been laid down by many authorities that, where the means o£ knowledge respecting the matters falsely represented are equally open to purchaser and vendor, the former is charged with knowledge of all that by the use of such means he could have ascertained. In Slaughters’ Administrator v. Garson, 13 Wall. (U. S.) 379, 383 (20 L. Ed. 627, see, also, Rose’s U. S. Notes), this court said: ‘Where the means of knowledge are at hand and equally available to both parties, and the subject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means and opportunities, he will not be heard to say that he has been deceived by the vendor’s misrepresentations. If, having eyes, he will not see matters directly before them, where no concealment is made or attempted, he will not be entitled to favorable consideration when he complains that he has suffered from his own voluntary blindness, and been misled by overconfidence in the statements of another. And the same rule obtains when the complaining party does not rely upon the misrepresentations, but seeks from other quarters means of verification of the statements made, and acts upon the information thus obtained.’ * * In Ludington v. Renick, 7 W. Va. 273, it was held that ‘a party seeking the rescission of a contract, on the ground of misrepresentations, must establish the same by clear and irrefragable evidence; and if it appears that he has resorted to the proper means of verification, so as to show that he in fact relied upon his own inquiries, or if the means of investigation and verifications were at hand, and his attention drawn to them, relief will be denied.’ In the case of Attwood v. Small, decided by the House of Lords, and reported in 6 Cl. & F. 232, 233, it is held that ‘if a purchaser, choosing to judge for himself, does not avail himself of the knowledge or means of knowledge open to him or to his agents, he cannot be heard to say he was deceived by the vendor’s representations.’ And in 2 Pomeroy’s Equity Jurisprudence, Section 892, it is declared that a party is not justified in relying upon representations made *385to him — ‘1. When, before entering into the contract or other transaction, he actually resorts to the proper means of ascertaining the truth and verifying the statement. 2. When, having the opportunity of making such examination, he is charged with the knowledge which he necessarily would have obtained if he had prosecuted it with diligence. 3. When the representation is concerning generalities equally within the knowledge or the means of requiring knowledge possessed by both parties.’
“But if the neglect to make reasonable examinations would preclude a party from rescinding a contract on the ground of false and fraudulent representations, a fortiori is he precluded when it appears that he did make such examination, and relied on the evidences furnished by such examination, and not upon the representations.”
Again, in Southern Development Co. v. Silva, 125 U. S. 247, 259 (31 L. Ed. 678, 8 Sup. Ct. Rep. 881, 887, see, also, Rose’s U. S. Notes), in speaking of this feature of fraud, namely, that the plaintiff relied upon the alleged representations, Mr. Justice Lamar said:
“It is essential that the defendant’s representations should have been acted on by complainant, to his injury. Where the purchaser undertakes to make investigations of his own, and the vendor does nothing to prevent his investigation from being as full as he chooses to make it, the purchaser cannot afterwards allege that the vendor made misrepresentations.”
The same doctrine is advanced by Mr. Justice Bean of this court, in Reimers v. Brennan, 84 Or. 53, 59 (164 Pac. 552, 554), in this language:
“A purchaser must use reasonable care for his own protection and should not rely blindly upon statements made by a seller, and between parties dealing at arm’s-length, where no fiduciary relation exists and no device or artifice is used to prevent an investigation, it is the general rule that a purchaser *386must make use of Ms means of knowledge, and failing to do so lie cannot recover on the ground that lie was misled by the seller: 30 Cyc. 49; Allen v. McNeelan, 79 Or. 606 (156 Pac. 274); Poland v. Brownell, 131 Mass. 138 (41 Am. Rep. 215.) Where there has been an inspection by a person making an exchange of property, false representations as to the value cannot as a rule be made the basis of an action for damages.”
Suppose for illustration that the city had definitely made the figures of embankment at 17,000 cubic yards with the intention to cheat and defraud any bidders. Yet, it is plain from the authorities cited that if one proposing to enter into a contract to do the work had inspected the ground and perused the plans and specifications giving, the actual data upon which the yardage was computed, he could not recover for the fraud. Yet that is the situation presented by the plaintiff’s own testimony. He was pointed to the plans and specifications. He was warned by those very specifications that the plans and specifications were to be so interpreted that any feature shown in one and not in the other should have the same effect as if shown in both. He was plainly told that the quantities given were approximate only, and no allowance would be made for any increase. On his part he represented to the city that he had made examination of all these things and thoroughly understood them. Even if the city had made the representation with design to perpetrate a fraud on bidders, he represented himself to be a person upon whom such a fraud could have no effect and advised the city, in effect, that he had not relied upon any representations. By Ms own testimony he has failed to prove one of the essential elements laid down in Wheelwright v. Vanderbilt, supra, viz., that he relied *387upon the alleged fraudulent statement. As there stated: “The absence of any one of them is fatal to recovery.” He has shown that he did not rely upon the representation of 17,000 yards.
It is true that in the former opinion, Mr. Chief Justice McBride said that it was not “incumbent upon the contractor to make new surveys or calculations from an independent profile, if this profile and the accompanying specifications were all that were on file, in order to verify the city surveyor’s calculations.” But he did not say that the plaintiff was justified in shutting his eyes to every other provision of the plans and specifications. They all were open for his inspection. His attention was directed to them. Throughout the period of advertisement there was opportunity for him to examine and become familiar with them. According to his own written declaration, he did so. Not the least effort was made to prevent him. Dealing, as he was, at arm’s-length with the city, it was his duty to take care of his own interest. Civil engineering is not an occult craft, neither is computation of fills and excavations among the hidden mysteries of modern industry. With all the data before him that the city employed and having made himself familiar with them, he cannot complain if his contract proves to be unprofitable.
The testimony shows clearly that the approximate figures of 17,000 yards was the result of merely a mistake in addition. It is so characterized by the plaintiff himself and explained by the engineer for whose veracity the plaintiff vouched by calling him as a witness. On this point we refer to Whalen v. Tipton, 31 Or. 566 (50 Pac. 1016), which was a suit to cancel a deed conveying to the defendants a tract *388of land in exchange for another parcel on the ground that the plaintiffs were induced to make the exchange by the fraudulent representations of the defendants as to the amount then due on the mortgage on the latter tract. The data upon which the amount could be computed were open to the inspection of the plaintiffs. They had the same means of ascertaining the true amount due that the defendant had. However, the court said:
“But this is not enough to constitute fraud. It is a necessary ingredient of fraud, even in equity, that the act or omission by which the undue advantage is obtained should be willful and intentional. A mere mistake is not sufficient. 2 Pomeroy’s Equity Jurisprudence, § 873. Now, there is no evidence whatever to show that defendant’s statement as to the amount due on the mortgage was willfully or designedly made, or that it was not made in the utmost good faith, and with an honest belief that it was true. ’ ’
See, also, Banfield v. Banfield, 24 Or. 571 (34 Pac. 659), where the dispute, was about the amount due upon a bond, the factors for calculating* which were in reach of the plaintiff as well as the defendant and as a consequence the court held the plaintiff was not entitled to relief on the ground of fraud. McGovern v. McClintic-Marshall Co., 269 Fed. 911, was a case where the dispute was about the estimate of quantities of steel required in the construction of an elevated railway. After an exhaustive consideration of the case the court said:
“After entering into a solemn contract assuming obligations, where opportunity was afforded the defendants below to avail themselves of estimating to determine the tonnage required, which was equal to that of the plaintiff below and as available to them, they should not now be relieved of their obligations *389in a court of equity because of their inattention or carelessness. ’ ’
The following cases cited in the petition for rehearing have, had our consideration: Wyandotte & D. R. Ry. Co. v. King Bridge Co., 100 Fed. 197 (40 C. C. A. 325), wherein no fraud was involved. The work for which compensation was claimed was outside the contract. The same is true of County of Cook v. Harms, 108 Ill. 157. This was an action to recover the extra cost of construction of a courthonse where the original plans had been abandoned and new plans and specifications installed, involving a very much larger cost for work not at all included in the original contract. Salt Lake City v. Smith, 104 Fed. 457 (43 C. C. A. 637), was an instance where a change was made in the line of a conduit whereby, instead of running through comparatively level country, the last mile was made to traverse hills, rocks and gulches: Plum Bayou Levee Dist. v. Roach, 174 Fed. 949 (99 C. C. A. 453), involved the extra cost of construction of a levee on the Arkansas Eiver. The original plans called for construction on the dry ground along the bank of the river, but by a subsequent change the line was made to run one-half mile back from the river and through a swamp, being a substantial alteration and being a new contract. All these cases were based npon contract and not upon tort.
In the instant case, as stated, there is no pretense that there was any change in the plans or specifications from the time the transaction was initiated until the time it was concluded. The only question is: "What did the plans and specifications require? If they required only 17,000 yards of embankment that was what the plaintiff was entitled to perform *390and no more. If, on the other hand, they required 28,000 yards, he was required to perform that in accordance with the contract and bid made in pursuance thereof. The following cases are instructive on the question that there is no actionable fraud where one claiming the fraud made an independent investigation or where he had the same means of knowledge possessed by the other party to the contract: Hagee v. Grossman, 31 Ind. 223; Hess v. Young, 59 Ind. 379; Tuck v. Downing, 76 Ill. 71; Schwabacker v. Riddle, 99 Ill. 343; Insurance Co. v. Reed, 33 Ohio St. 283; Brown v. Leach, 107 Mass. 364; Poland v. Brownell, 131 Mass. 138 (41 Am. Rep. 215); Long v. Warren, 68 N. Y. 426; Chrysler v. Canaday, 90 N. Y. 272 (43 Am. Rep. 166); Mamlock v. Fairbanks, 46 Wis. 415 (1 N. W. 167, 32 Am. Rep. 716); Farrar v. Churchill, 135 U. S. 609 (34 L. Ed. 246, 10 Sup. Ct. Rep. 771, see, also, Rose’s U. S. Notes).
The concluding allegation of the complaint, is:
“That the sum expended by plaintiff for such work and labor, so occasioned by defendant’s said false representations and so performed by plaintiff for defendant City, at the order and direction of defendant’s said City Engineer and City Surveyor, is the sum of $14,235.24.”
There is no averment that this was a reasonable sum to be expended for the so-called extra work. If a recovery can be had upon such an allegation, all that would be necessary for a contractor to do when he has made an improvident agreement is to seize upon some innocent mistake, pad his pay-roll and demand that the city reimburse him at his 'own figures. In no event could the contractor recover more than the reasonable value of the alleged extra work, and if he would recover, even on a charge of *391fraud, lie must allege what is reasonable. No such issue is presented in the pleadings here.
The essence of the case is that having made an independent investigation of the plans, specifications and work to be done, or at least having reported that condition to the defendant in writing, and having ample opportunity to inform himself of the true amount of embankment, the plaintiff has failed to prove the indispensable essential that he relied on the representations of the defendant. Under the doctrine in Wheelwright v. Vanderbilt, supra, this is fatal to plaintiff’s recovery.
The petition for rehearing is denied.
Rehearing Denied. • Second Petition eor Rehearing Denied.