Coffee v. Newsom

By the Court Warner, J. delivering the opinion. The complainants seek to be relieved from their contract on . the ground of fraud. The record shows that the defendants testator made gross and fraudulent representations to the complainants, who contracted on the faith of such representations, as it regarded the quality of the land purchased, the location, the number of acres, and the title thereto. The fraud in the sale of the settlement of land by the vendor, is distinctly charged in the bill, and as distinctly admitted by the demurrer thereto. Taking the allegations in complainants’ bill to be true, a case of more confiding confidence on the one hand, and reckless misrepresentation and fraud on the other, is rarely exhibited in our courts of justice. If.courts of equity are incapable of affording relief under such a statement of facts, then indeed may the name of Justice be considered as a “ sounding brass, and a tinkling cymbal.” [459] The Court below refused the relief sought by the complainants, and dismissed their bill, on the ground, that they had not been evicted from the possession of the premisesnor had they in their bill offered to abandon the possession of the land, or pay for the occupation thereof. The prayer of the complainants is in the alternative : first, for a rescission of the contract, if in the opinion of the court they should be entitled thereto, and if not, then that an account might be taken of the damages sustained by them on account of the fraudulent conduct and representations of defendant’s testator, and the same deducted from the amount of the notes given for the purchase money ; and also the general prayer for relief. The fraudulent representations were made to the complainants who were dealing upon the faith of them, and who were misled and deceived by the defendant’s testator, in relation to the settlement of land in several important particulars. It is a general rule, that fraud vitiates all contracts. 1 Stonj [1.] Eq. 200, 201, 202, 419, 420; Smith vs. Richards, 13 Peters R. 26 ; Camp vs. Camp, 2 Alabama R. new series, 632 ; Bacon vs. Bronson, 7 John. Ch. R. 201. In the case last cited the learned chancellor states it as a principle of universal law, that “ fraud and damage coupled together, will entitle the injured party to relief in any court of justice.” To what relief were the complainants entitled, according to the case made by their bill % Are they entitled to a rescission of the contract in toto, or to an account and compensation for damages, to be deducted from the amounts of the notes given for the purchase money 1 The defendant’s testator represented to the complainants that [2.] he was the owner of, and had title to, several of the lots of land which he contracted to convey as part of the settlement, and that the same were at his residence in the county of Randolph; when in truth, and in fact, he was not such owner, nor did he have such title, which representation he hnew to he false at the time of malting the same. After examining the authorities upon this subject, Chancellor Kent states the rule with his usual accuracy and precision, which we adopt as a sound exposition of this branch of the law. “ The good sense and equity of the law on this subject is, that if tho defect of title, whether of lands or chattels, be so great as to render the thing sold unfit for the use intended, and not within the inducement to the purchase, the purchaser ought not to be [460] held to the contract, but be left at liberty to rescind it altogether.” 2 Kent Com. 475; Stoddart vs. Smith, 5 Binney R. 355; Boyce’s Exrs. vs. Grundy, 3 Peters R. 210. Let this case now be subjected to the test of this rule, and we think it will at once be seen to be clearly within it. The complainants charge, “ that it was not in the power of defendant’s testator during his lifetime, and is not and will not be in the power of his executor since his death, to make or secure to them legal or sufficient titles to the said settlement of lands; that the lots and parcels of land to which the said executor has been, still is, and toill be, unable to make to complainants good and sufficient titles, are of essential importance and value to said settlement, and the loss of which will so completely dismember the settlement and body of land so contracted for, as to render the residue thereof of comparatively little value, and defeat the object and expectation of the complainants in making said contract and purchase.” The lots of land to which the defendant cannot make title, so completely dismember the settlement contracted for by the complainants, as to render the residue thereof of comparatively little value, and defeats the objects and expectations of the vendees in making the purchase; the main inducement to the making the contract on their part having failed, they are, in our judgment, entitled to a rescission of the contract, unless there is some legal obstacle to prevent the Court making such a decree. [3.] It is contended that the Court cannot decree a rescission of the contract until there has been an emotion from the possession of the premises, or an abandonment of the possession, or an offer to abandon speh possession. All these grounds are embraced in one, and will be all considered at the same time. Can the complainants have a rescission of the contract so long as they remain in possession of the premises'? Whatever doubt might exist as -regards this question, were the parties in a court of law defending the collection of the notes given for the purchase money, we think the vendees may be relieved in a court of equity. While a court of law would be incompetent to impose terms on the party asking a rescission of the contract, a court of equity assumes and exercises a much broader jurisdiction. Such is the flexibility of courts of equity in adapting their decrees to the actual condition of the parties, that its pervading excellence, in the language of Mr. Justice Story, is, “that it varies its adjustments and proportions so as to meet the very [461] form and pressure of each particular case in all its complex habitudes.’’ 1 Story Eq. 420. The complainants went into the possession of the premises relying on the faith of the representations made by the defendant’s testator; they were ignorant of the fraud practised on them until sometime after they had entered on the premises; there is no fault to be imputed to them, they are the victims of a most unscrupulous fraud, and seek to be relieved from it, and courts of equity will relieve the purchaser in cases of fraud before eviction. Edwards vs. McLeary, 1 Cooper Eq. R. 308; same case on appeal, 2 Swanston R. 303; Abbott vs. Allen, 2 John. Ch. R. 519; Young vs. Harris, admr. et al. 2 Ala. R. new series, 108; Whitworth vs. Stuckey, 1 Richardson Eq. R. 408. In Abbott vs. Allen, the chancellor says: “ If there be no fraud in the* case, the purchaser must resort to his covenants if he apprehends a failure or defect of title, and wishes relief before eviction.” Cases offraud were clearly recognised as an exception to the rule established by the court in Bumpus vs. Platner, 1 John. Ch. R. 213, and in the case of Abbott vs. Allen. In the latter case relief was denied on the ground that there was no fraud charged in the bill. In Young vs. Harris, admr. Ormond Judge, delivering the opinion of the court, says, “ the argument of the counsel for the defendant in error is, that the plaintiff in error is not entitled to a decree rescinding the contract, because he has not been evicted, nor abandoned the possession of the land. The decisions of this Court are uniform on this subject when the question has arisen at law, that the vendee, while he retains the possession, cannot refuse to pay the purchase money; otherwise it might happen that he would get the land without paying for it, as a court of law could exact no condition from him as the price of affording its aid. But in a court of chancery, where the rights of the parties can be accurately adjusted, no reason is perceived why the vendee, who has been induced by the fraudulent representations of the vendor to invest his money in the purchase of land, should be required as a prerequisite to relief in equity, to relinquish the possession of the land, and with it it may be his only hope of reimbursing himself. This point has not before been presented in this court; but we hesitate not to say, that where one, by the fraudulent silence, or fraudulent representations of another, in relation to material facts concerning the title of land, the falsehood of which he had not the means of ascertaining, and could not have ascertained by reasonable diligence, is induced to [462] invest his money in the purchase of land, or has made, on the faith of such purchase, valuable and lasting improvements, he can have relief in chancery before an eviction, and without an abandonment of the possession.” In Whitworth vs. Stuckey, Chancellor Harper delivering the opinion of the court, says : “ I do not find that a contract of sale has ever been relieved against, on the ground of an outstanding title while the vendee continues in possession, unless on the score of fraud'' At page 410 he remarks, “I have said, that any contract may be rescinded on the score of fraud; and such is the case of Edwards vs. McLeary.” And we will only add, such is the case now before us for adjudication. It is urged in support of the decision of the Court below, that the complainants do not offer to pay for the occupation of the premises. Admitting a court of equity was not competent to adjust the rights of all the parties, in decreeing a rescission of the contract and placing them in statu quo, which we do not for a moment suppose, yet in this case, it is a sufficient answer to say, that it nowhere appears on the face of complainants’ bill, that the occupation of the premises was worth any thing, or that the complainants have in any manner been benefited thereby. Sugden Law of Vendors, 9. The bill simply states, that the complainants relying on the representations of defendant’s testator, went into the possession of the premises; whether such possession has been beneficial or prejudicial to the complainants, whether they have made valuable and lasting improvements on the premises, or whether there was open land which they have profitably cultivated, does not appear; and certainly until it is shown affirmatively that some amount of money was due from complainants to the defendant for the use and occupation of the premises, they cannot he required to offer payment thereof, as a pre-requisite to relief against an undisguised and admitted fraud. Our judgment is predicated on the case as made by the bill and demurrer, and we are all of the opinion that the Court below erred in sustaining the demurrer and dismissing the complainants’ bill. Let the judgment of the Court below be reversed, and the cause reinstated.