Court Opinion

ID: 6901671
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:55:34.903054+00
Date Added: 2024-06-11T16:06:11.471342
License: Public Domain

Mr. Justice McBride
delivered the opinion of the court.
For the sake of brevity, we have given only an outline of the pleadings in this case, and, as the decision depends largely upon questions of fact, a discussion in detail of the evidence would not be of any permanent value or of any interest to any one outside of the interested parties. This case was tried before the judge below in open court, and his opportunity of estimating the value of the evidence of the various witnesses was superior to ours, and while, upon our own examination of the evidence, we should feel impelled to take the same view of the facts that he reached, yet his opinion, formed from actual hearing of the testimony, is not without weight.
1. We think plaintiff has established these facts: (1) That the land in controversy was not, at the time of the execution of the mortgage, worth more than $3,200; (2) that defendants knew this to be the fact; (3) that plaintiff was ignorant of its true value; (4) that May deliberately deceived plaintiff as to its value, by representing that Mrs. Hindman, who had formerly owned it, wished to repurchase it for $8,000 and to pay $3,000 cash and give a mortgage for the balance; (5) that the deed from the Hot Springs Company to Mrs. Hind-man for the alleged land was in pursuance of a conspiracy to induce plaintiff to advance the money on the *549mortgage and to avoid the responsibility of giving a mortgage upon a direct loan from plaintiff to the Hot Springs Company; (6) that' the transaction between defendant corporation and Mrs. Hindman, in giving her a conveyance and taking the notes and mortgage, was solely for the purpose of enabling the Hot Springs Company to secure $4,500 for its own purposes; (7) that plaintiff’s estimate of the value of the notes and mortgage was based largely upon the assumption that Mrs. Hind-man, who was familiar with the land and its capabilities, was apparently willing to pay $3,000 in cash and give a mortgage for $5,000 in order to secure it; (8) that if plaintiff had known that she did not intend to make the purchase in good' faith and was not, in fact, paying anything, but was merely acting as a decoy to enable the company to induce plaintiff to advance $4,500 to be used for the benefit of the corporation, he would not have purchased the notes and mortgage.
2. With this view of the facts, we are of the opinion that the decision of the circuit court should be affirmed. It is true that plaintiff, at the request of Dr. May, drove with him to the land and looked it over; but he testifies that this was the first time he ever visited it, and that he told May, at the time, that he could not tell from the inspection made whether it was worth $10 or $50 an acre. He was a mining man, not a farmer or stock raiser, and it is evident that he was relying upon the supposed fact that persons familiar with the property were willing to risk $3,000 as a first payment in addition to giving a mortgage on the property. This pretended payment was, ho doubt, an evidence of the good faith of the purchaser and an indication that the mortgage notes would be paid at maturity. These false statements of defendants were in respect to a material fact bearing upon the probable value of the security which plaintiff was asked to purchase. We are satisfied that the whole transaction was *550brought about as the result of a conspiracy between Dr. May and Mrs. Hindman, who was a stockholder in the defendant corporation, to fraudulently induce plaintiff to advance $4,500 for its sole benefit. Having received that benefit, equity ought to treat the transaction as a loan to the defendant corporation, the real recipient of the money.
3. Nor do we think that plaintiff was bound to return the notes and mortgage and reply upon an action for deceit. To have done this would have probably jeopardized his chance of obtaining any relief whatever. This is not a case of recission of a contract on account of the fact that the mortgage is void. It is valid and the notes are valid; but the security is inadequate, and by reason of such inadequacy, and the fraudulent acts of defendant, plaintiff has been falsely induced to advance to the defendant corporation, and for its benefit, more money than the security will repay. While, upon the fact of it, it appears to be a mortgage, primarily to secure a debt from Mrs. Hindman to defendant corporation, it is, in fact, a mortgage procured by defendant corporation upon its own property for the purpose of obtaining money for its own benefit. Equity will look beyond the devices used to cover the real nature of the transaction and treat it as it really is.
The decree of the lower court is affirmed.
Affirmed.