Rodee v. Seaman

WHITING, J. From .the complaint herein it -was alleged: That -plaintiffs .and defendant entered into a written contract whereby plaintiffs agreed to trade to defendant an undivided half interest in and to a large tract of agricultural lands situate in Sanborn county, S. D., for three residence properties owned 'by defendant and situate in the city of Mitchell, S. D.; that, at the time of such contract, plaintiffs were farmers residing on the tract of land they were agreeing to- trade and- were unacquainted with the character, value, condition, and use and income of the defendant’s .property, except as they were advised in relation thereto by defendant; that -defendant was an experience dealer in real estate and well acquainted -with the 'character, value, condition, and use and- income of said property, and with the value of plaintiff’s said property, as well as of other properties of the same kinds in the counties where these .properties- were situate; that plaintiff’s property was worth. $55,000 and -was subject to a mortgage incumbrance of $15,000; that defendant’s property was not worth to- exceed $12,000, as was well known by -defendant but unknown to plaintiffs; .that, .prior -to entering into such contract for exchange, the defendant, well knowing all the -above facts, and for the purpose of defrauding -plaintiffs, knowingly stated and misrepresented to them that his said property w-as worth $19,000, an-d misre-piesen-ted the amount for which each of such residence properties was then renting, ais well as -the annual taxes against and income from said property; that the falsity of all these representations was then well known to defendant; that the said representations so made to plaintiffs by defendant were believed and- relied upon by plaintiffs ; that the defendant knew that -plaintiffs were ignorant of the falsity of his said representations and knew that they relied upon them; that plaintiffs, relying upon said representations, were induced thereby to make and enter into said- -contract; that thereafter plaintiffs executed and delivered to -defendant -deeds in accordance with said contract, conveying an- undivided- one-half interest ■in and to their property, and delivered- -possession thereof to- him, and received from him conveyances of said Mitchell property; hat by reason of such false and fraudulent statements and representations, -plaintiffs sustained dam-ages- in the sum- of $7,000, no part — 189 — of which has been paid. Plaintiffs asked judgment for said $7,000 with interest. To this complaint defendant interposed an answer. When the cause was called for trial, defendant objected to any evidence being received under such complaint, contending that it did1 not allege facts sufficient to constitute a cause of action. This objection was; sustained. Plaintiffs did not seek to amend their complaint, and it was dismissed and judgment entered for defendant. Plaintiffs appealed, and the sole question presented to this -court is the correctness of the ab-o-ve rilling excluding evidence. [1] Appellants contend that in construing the sufficiency of a complaint, where objection thereto- is first made upon the offer of evidence thereunder, courts should Ibe -more liberal in sustaining such complaint than upon a demurrer. Respondent contends that the above rule “can only be invoked where such -an objection has been overruled, and the actio-n tried upon its merits, and the imperfections of the pleading cured- by proper pro o-f.” We are unable to harmonize the views of this court as -we find them announced in the cases of Whitbeck v. Sees, 10 S. D. 417, 73 N. W. 915, and Bon Homme County v. McLouth, 19 S. D. 555, 104 N. W. 256. In each -of these cases -after issue joined by answer, the trial -court, as in the case no-w before us, -sustained an objection -to introduction -of evidence, when such objection was 'based upon the ground that the complaint did not state facts sufficient to constitute a cause o-f action. In the earlier case, exactly as in the case at bar, after the trial -court had- sustained the objection to any evidence under the complaint, the plaintiff declined to amend the complaint. This court reversed such ruling and, in- -so doing, said: “Construed liberally, as it must be after issue is joined by ■answer -upon the merits, o-ur conclusion is that every -essential ingredient of a cause of action -can be fairly gathered from the averments of the complaint, and that the objection to the introduction of any evidence thereunder, because facts sufficient to -constitute a cause of acti-o-n were not alleged should- have been overruled. Robbins v. Barton, 50 Kan, 120, 31 Pac. 686; Moore v. Shields, 121 Ind. 267, 23 N. E. 89; Hazelton v. Bank, 32 Wis. 34. It is the settled practice in this jurisdiction to- indulge the greatest latitude to sustain -a co-m-plaint assailed for the first time at the trial by an objection to the introduction of' any -evidence on the ground thar — 190 — facts sufficient to constitute a cause of action are not stated. Stutsman Co. v. Mansfield, 5 Dak. 78, 37 N. W. 304; Johnson v. Burnside, 3 S. D. 230, 52 N. W. 1057; Sherwood v. City of Sioux Falls, 10 S. D. 405, 73 N. W. 913.” In the later case in sustaining the ruling of the trial count, this court said: “Plaintiff’s contention that the complaint should be most liberally construed, because it was first attacked by an objection to- the introduction of any evidence, is not tenable. That rule can only be invoked -where such an objection has been overruled, the action tried upon its merits, and the imperfections of the pleading -cured by' proper proof.” W-e are of the opinion that this court was right in the earlier case, -and- that the trial -court, in the case at bar, should have indulged in the greatest latitude to sustain the complaint herein; furthermore, even treating the obj ection to- the evidence as a demurrer to the -complaint, such -complaint should have -been construed “to- allege all the facts that can be -implied by fair and reasonable intendment from the fact expressly -stated.” Dunlap v. C. M. & St. P. Ry. Co., 144 N. W. 226. [2] The chief controversy herein centers upon the question of whether or not the representation by defendant as to- the value of his property can be the .basis of an action, for deceit. What can be gathered from the express averments of this complaint and 'from all “that can be implied by fair and- reasonable intendment from the facts- expressly stated,” when w-e indulge that latitude that -should -have been- indulged by the trial court? On-e p-ar-ty is an- expert, one fully advised as to the value of both the -city and rural properties and known to the others to- -be so -advised; -he kno-ws the others are ignorant as to- .the value of his property ; he knows they are relying upon -hi-s knowledge as to such value and will receive his- representation -as to the value of such -property as the representation of -a fact, to-wit, the real value- of the property- — in -other words he kno-ws that they are not dealing with him on equal -terms. Knowing this, and with full knowledge of the unfairness of the proposed trade, he, for the purpose of defrauding them, gives, to them-, not his opinion, not the fac-t which as an -expert he knows, b-ut he gives to them- a representation as to suc-h fa-ct, the value of the property, which representation he knows to be false. The courts', recognizing the 'well-known pronene-ss of man to — 191 — look, as though through magnifying glasses, upon that which, is his own, universally hold that ordinarily a false representation -by one as to the value of his property cannot form the basis of an action for deceit. This rule should never be held to rest upon any legal right of a person to misrepresent his own property, to do- an intentional wrong, but should be held to rest solely upon the fact that the other party has ordinarily no right to rely upon the correctness of sudh party’s judgment, when applied to- a thing in which he has a personal interest. It follows that ordinarily it is immaterial, so far as the ultimate rights of -one party to a sale or trade are concerned, whether the other party makes to him a true o>r false representation regarding the value of such other party’s property. The law demands that where two parties are dealing on equal terms, “at arm’s length,” each party rely upon his own judgment. Having no right to rely upon the representations of the other, such a party, while he may in fact suffer actual loss or damage from having relied upon such, representations, can suffer no legal injur}-. As was said by this court in Hyde v. M., D. & P. Ry. Co. et al., 29 S. D. 220, 136 N. W. 92, 40 L. R. A. (N. S.) 48: “One thing that has often led to confusion is in not distinguishing clearly 'between ‘injury’ and ‘'damage,’ and in the caieless use of .the one term where the other should have been used. A person cannot be injured unless lie has been wronged, and he cannot be -wronged unless some right is infringed. Regal damage is the loss or detriment caused by the injury, the wrong, the infringement of some right vested in one. Moreover, -one is not wrongged, though he may have suffered damages, unless he has suffered the infringement of some right vested in- him, which right is superior to the right vested in the party -causing the damage, upon whioh right such other party defends against the consequence of his own acts.” Therefore, where o-ne 'has no right to rely upon the representations of another -as to value there is no right to he infringed by the false representations- of that other. Upon the other hand, where, under the circumstances surrounding the parties, one had a right to rely upon- the representations of the other, even though those representations- 'be as to the value o.f a thing, a false representation knowingly made is an infringement of such right, from which infringement there results legal injury for which the in — 192 — jtirecl party may obtain redress in money 'damages. The sole question 'then is: “Did appellants have the legal right ‘to rely upon the representation inade by respondent? Was the making of such representation an infringement of a legal right possessed by appellants?”' The answer to this: question depends upon whether, under the facts and circumstances revealed by the complaint and ■to 'be inferred from a liberal construction of such complaint, the parties hereto were not dealing upon equal terms, and this through no inexcusable fault or neglect of appellants. While it is true that the man without special knowledge is prone to overvalue his property, yet it is likewise true that in all lines of business-, and in connection with all kinds and -classes of property, we have those •who, through special study or unusual opportunities and experience, have became possessed of unusual information regarding the value or quality of some particular piece or class of property, ■so that their judgment 'thereon is accurate, and little, if any influenced by the -fact of -personal interest therein. Upon the honest judgment of such a person, the law, based as it is u-pon human experience, gives another the right to rely even in connection with a transaction between such parties, unless both- -parties are possessed of such special knowledge. This right is given, though the party may ’have an opportunity to- see and inspect the property himself, because the law recognizes that even then the judgment of the One should be superior to -that of the other; that, under such circumstances, the statement of opinion- as to- the value of property is a statement of a material fact, -the fact that such opinion exists. It follows that whenever two parties -are so situated that the one is much better informed as to- -some material matter connected with the subject -matter of a sale or trade contemplated between such parties, and his opportunities for knowing the truth in relation thereto- are such as to warrant a prudent man in relying upon his opinion in relation thereto-, -his representation as to- such opinion, may, in a given -case, form, one of the necessary elements of fraud or deceit. Whether a given case presents facts showing the parties to be so- situated is a question within the peculiar province of the jury to determine. AVhat we have said herein is'sustained 'by the following authorities: 14 Am. and Eng. Law, 205-208; 20 Cyc. 126d; Teague v. Irwin, 127 Mass. 217; Amer. Nat. Bk. v. Hammond, 25 Cok. 367, 55 Pac. 1090; Collins v. Jackson, 54 — 193 — Mich. 186, 19 N. W. 947; Simar v. Canaday, 53 N. Y. 298, 13 Am. Rap. 523; Coulter v. Minion, 139 Mich. 200, 102 N. W. 660; Stonemets v. Head, (Mo.) 154 S. W. 108; Reeves v. Corning (C. C.) 51 Fed. 744; Murray v. Tolman, 162 Ill. 417, 44 N. E. 748; People v. Peckens, 153 N. Y. 576, 47 N. E. 883; Hetland v. Bilstad, 140 Iowa, 411, 118 N. W. 422. In Hetland v. Bilstad the court said: “The situation is somewhat like that of an expert who- undertakes to- impart information on a subject not generally understood. ' By the authorities generally, these to whom such information is imparted may rely thereon as a statement of fact. A person in giving an opinion on value or quality as one having special knowledge on the subject to> another known by him not to be possessed of any knowledge thereof is in a similar situation, and it is immaterial whether we say that the expression o.f an opinion in such a case amounts to a statement of fact, or that the opinion is so expressed as impliedly to represent facts -which will support' it as is sometimes said. Certain it is that opinions of value and quality may be so made as to- constitute, representations of fact. To hold otherwise would open a fruitful field for the exploitation of dishonest ingenuity and render courts powerless to correct some of the gravest wrongs.” Our views as above 'expressed render it unnecessary to consider the other questions raised. The trial court clearly erred in excluding evidence under the complaint. The judgment appealed from is reversed.