Watts v. Cummins

The opinion of the court was delivered, May 27th 1868, by Agnew, J. It is always esteemed unfair to select a single sentence or two in a charge and insist on it. as error, without reference to other portions, which explain its meaning or exhibit its bearing. We must also look at the state of the case before the jury to determine its effect. The portion of the charge assigned for error in this case, unexplained by its context, and the subject of contest, would appear to be inconsistent with the subsequent answers to the defendant’s points. The payees of the note in suit were the owners of a tract of 350 acres of land in the Yenango county oil region, and undertook to raise a company for its development. Messrs. Campbell and Bates were employed to raise it. Campbell procured the defendant’s subscription for the share for which this note was subsequently given. It was conceded by both sides that the subscription was conditional, and not binding until the defendant gave his note at the organization of the company. The defence to the payment of the note rested on the ground of misrepresentation, as to the land being oil territory, and as to the value of the timber and coal upon it. There was much evidence that at the meeting to organize the company the character of the land was fully discussed. Woods, one of the owners, informed the persons present, among whom was Watts, the defendant, that the wood and coal were only valuable so far as they might assist in developing the territory for oil, and if oil were not found the land would be of no value; and also that the subscribers, if dissatisfied, might withdraw and refuse to give their notes. There was evidence also that explanations were made of the actual surroundings of the property as to adjacent oil-wells, and that no confidence was to be placed in the offers of “oilsmellers,” as they were termed — persons pretending to discover oil by means of the divining rod. The defendant himself called on Dr. Mitchell, who had been on the land, to state his knowledge of it, which he did. Bates, one of the alleged agents in raising the company, said publicly in the meeting, that if they did not get oil he would not give two cents for the investment. The effect of all this evidence, if believed by the jury, and its weight appears to be preponderating, was to strip the case of all misrepresenta [89] tion of mere matters of fact, leaving the question of its being good “oil territory” to rest upon opinion, and the representations made upon this point to be mere expressions of belief. But the defendant, still relying on his defence founded on alleged misrepresentation of the tract in reference to its timber, coal and surroundings, went to the jury, therefore, upon two aspects of the case; one upon the representation that it was good oil territory, and the other on the representation as to the timber, coal and adjacent oil-wells. Hence the plaintiffs’ counsel conceded, and the court affirmed, all the positions contained in the defendant’s seven points, covering the entire ground of the representations made in reference to the visible character and circumstances of the land. The adoption of these points left nothing undisposed of relating to representations of the agents or owners of the mere facts of the case. But the existence of oil within the bowels of the tract was unknown to all parties and was ascertainable only by actual development, an expensive and tedious process. It was a subject of mere speculation and risk. It was not pretended that Campbell, the agent whose misrepresentations were the ground of defence, asserted the existence of oil as a fact known to him, but that he said it was “ oil territory” — land lying within the oil region which from its circumstances would be likely to produce oil. This it is plain could be no more than an opinion, and yet it is well known that such probabilities have been the subjects of much dealing, commanding almost fabulous prices; while no one has thought himself defrauded in case of ill success, who was not imposed upon by the misrepresentation of actual facts affecting the sale. That this opinion as to the character of the land as oil territory was the true subject of the portion of the charge assigned for error and was so understood by the jury, is made obvious by the current of the case and is likewise shown by the remarks of the judge immediately preceding it. He refers to the testimony of Campbell (himself the witness who proved them) that the representations he made were honest and true — also to the great number of witnesses testifying to the character of the land as oil territory, and that all so believed who knew it. He remarks upon the credulity of men when influenced by a passion for speculation, and then begins the excepted portion by saying, “If Mr. Watts, the defendant, was seized with the oil fever like multitudes of others.” Now clearly all this characterized the representations meant by the judge when he continued the sentence- by saying, “ and was induced to subscribe by representations that Douglas Campbell (assuming him to be the agent of the owners of the land) believed to be true, a persuasion that was shared by the best informed men that visited and examined the territory, he cannot allege that he was deceived and defrauded by such repre [90] sentations.” Evidently the judge referred to those representations of belief as to this land being oil territory which the agent had expressed in common with others, and this rescues the charge from the allegation of inconsistency between this portion and the answers to the defendant’s points; which were left to stand as the instruction of the court as to all misrepresentations of fact, whether relating to the wood, coal, proximity of flowing wells or other circumstances. It remains to consider whether this portion of the charge as thus understood was erroneous. It is alleged to be contrary to the doctrine of Miles v. Stevens, 3 Barr 21; Fisher v. Worrall, 5 W. & S. 478; Geiger v. Cook, 3 W. & S. 270, and other cases. Black, C. J., in Pennock v. Tilford, 5 Harris 459, said that the court was not prepared to reaffirm Miles v. Stevens in the length and breadth of all the doctrines there laid down. It is not necessary however to criticize that case. One branch of it is put upon the fact that under the instruction of the court, the jury found actual misrepresentation as to the alleged harbor at the mouth of Elk creek. The second branch is founded upon the mutual mistake of both parties, as to facts not problematical or of mere risk, but which both parties believed to be certain to take place — to wit, that Congress would appropriate money to improve the harbor, and that the state legislature would extend the canal to that point; and that this expectation failed to be realized. That case was dissimilar to the present. Both parties there proceeded upon the certainty of the fact that the mouth of Elk creek would be made a good harbor and be the termination of a great public work, thus rendering the adjacent land eligible as the site of a large city. The case is put on this expectation as the basis of the contract, and not on the basis of taking the risk, or a chance of success in a matter merely problematical. So in Fisher v. Worrall there was a statement of the actual existence of the iron ore on the vendor’s tract and of its quality. And in all the cases cited or examined, it is the misrepresentation of a fact or mutual misapprehension as to something believed to be true which was the ground of equitable relief. Hence it is said that he who would avail himself of his own misrepresentation, even where it is unintentional, is as much open to an imputation of fraud, as if its falsity had been known to him: Tyson v. Passmore, 2 Barr 124; Fisher v. Worrall, 5 W. & S. 483. And where parties have presupposed facts or rights to exist as the basis of their proceeding, which did not, such contracts made in mutual mistake will be relieved against: Bishop v. Reed, 3 W. & S. 265. But in these cases the principle which pervades them is, that the party setting up the misrepresentation had been misled by it to his hurt. He has trusted to the truth of the other in a material matter, where he has not had the opportunity of satisfy [91] ing himself of its reality, or has been prevented from taking the steps necessary to verify the assertion. But this is not the nature of the transaction before us, taking it for granted as established by the verdict, that there was no misrepresentation of any material fact. The existence of oil in the tract was unknown to both parties; and its being there, as was well known to each, could only be ascertained by an expensive and laborious experiment. This development was a part of the purpose of raising the company. Had Campbell expressed the strongest belief of the existence of oil in the tract as an absolute certainty, still the defendant knew it was but a matter of mere belief, and uncertain. It was opinion only, no matter how confidently expressed. It is plain he had no right to rely upon it as an assured fact, but must still experiment to find it out. , How then could he have relied on the statements of Campbell, so as to be misled to his injury ? He knew as well as the vendors that they were bargaining about a matter altogether problematical, of which he must necessarily take the risk, unless he had guarded against it by a covenant. But the demand for a covenant in risks of this nature would break off the bargain in most cases. The parties dealt together with open eyes, and on the footing that the subject of the risk was not only unknown, but then inaccessible to both. To say, therefore, that such a bargain when otherwise fair, is fraudulent or so inequitable that it ought to be rescinded, would be to announce a principle that would cut off all contracts upon subjects that cannot be rendered certain before the bargain is closed. There may be contracts made upon subjects so wholly groundless that they are evidently caused by delusion or imposition, but this cannot be said to be the case in reference to the purchase of oil lands upon which millions have been made as well as lost. The attitude of the defendant is not that of one resisting a bill for specific performance. The plaintiff here rests on his legal right to recover upon the note, while the defendant defends on the ground of a failure of consideration. He therefore asks the interposition of equity to restrain the plaintiff from an inequitable use of his legal title. In such a case he must show such facts as entitle him to rescind on the ground of either mistake or fraud. This disposes, in effect, of all of the assignments of error. The judgment is therefore affirmed. Thompson, O. J., dissented.