Watkins v. West Wytheville Land & Improvement Co.

Harrison, J., delivered the opinion of the court. The West Wytheville Land and Improvement Company sold to Warner M. Watkins four lots, for the aggregate price of $1,000. Of this sum $250 was paid in cash. A deed was made to the purchaser, and a contemporaneous deed of trust was executed to secure $750, the balance of the purchase money. Payments were made on the balance thus secured, and the vendor instituted this action to recover of the vendee $333.33, with interest, that being the balance remaining unpaid upon the transaction. The defendant filed three special pleas in writing, under section 3299 of the Code, alleging that the plaintiff represented at the time of the sale that certain valuable improvements would be erected on the company’s lands, near the lots bought by defendant, which would greatly increase their value; that these representations were false; that the improvements had not been made, and that the lots had consequently become of little valne, worth not more than $25 each, aggregating $100, and that he had suffered damage to the amount of $900, which he claimed as offset to the plain — 8 — tiff’s claim, and asked for judgment against the plaintiff for $566.67, the difference between the damages claimed and the balance of the purchase money sued for. To the filing-of these pleas the plaintiff objected, and the court sustained the objection, and rejected said pleas. The court then entered judgment in favor of the plaintiff, and the defendant obtained a writ of error from this court. It is insisted that these pleas were properly rejected, because the defence set up under them was a purely equitable one, and could not be made at law ; that the defendant, by his pleas, sought to rescind and set aside his contract of purchase, and to re-invest the vendor with the title to the lots. We do not understand this to be the purpose or effect of these pleas. On the contrary, they expressly set out the value of the lots, in consequence of the false representations complained of, and only claim damage by way of offset for the difference. The purchase price of the lots was $1,000. The pleas allege that they are now worth $100, and that the damage sustained, which is filed as offset, amounts to $900. Ho rescission of the contract of sale is asked for, nor is any needed. The defendant has a deed to the lots, and, if he were to prevail with his defence, he would only have to move the court, under the statute (section 2é98), to have the deed of trust resting on the lots marked “ satisfied ” on the deed-book, and produce the judgment in his favor as evidence of its satisfaction. The party claiming to have been damaged by fraud and misrepresentation in the sale or purchase of real estate may elect to ask a court of equity to rescind the contract, or proceed at law for damages. Under the rejected pleas the defendant had clearly elected to keep the lots and seek compensation for the damage sustained. Section 3299 of the Code is as follows: “ In any action on a contract, the defendant may file a plea alleging — 9 — any such failure in the consideration of the contract, or fraud in its procurement, or any such breach of any warranty to him of the title or the soundness of personal property, for the price or value whereof he entered into the contract, or any other matter as would entitle him either to recover damages at law from the plaintiff, or the person under whom the plaintiff claims, or to relief in equity, in whole or in part, against the obligation of the contract; or, if the contract be by deed, alleging any such matter arising under the contract, existing before its execution, or any such mistake therein, or in the execution thereof, or any such other matter as would entitle him to such relief in equity; and in either case alleging the amount to which he is entitled by reason of the matters contained in the plea. Every such plea shall be verified by affidavit.” The language of this statute is broad and comprehensive, and was intended to avoid a multiplicity of suits, and give full opportunity for making defences at law under the special plea of set-off provided for by it. Before this statute was as broad in its terms as now, Judge Lee, in commenting upon it, in Watkins v. Hopkins, 13 Gratt. 743, 746, says: “The diminution in the value of the subject by reason of the vendor’s shortcomings should therefore in some form be made good to the vendee, and I can perceive no good reason why compensation should not be made good in this form by an equitable plea of offset under our statute. Indeed, it seems a very appropriate mode by which the diminution of the value of the thing purchased may be compensated by a corresponding diminution of the price to be paid. There is nothing in the terms of the statute to restrict the plea of equitable set-off to contracts in relation to personalty. The terms of the act are general, ‘ in any action on a contract,’ and it includes contracts by deed as well as contracts by parol, and there can be no reason for excluding all contracts relating to the sale and purchase of real property from the operation.” In the case of Grayson v. Buchanan, 88 Va. 251, this court held pleas under section 3299 good which were filed for the purpose of recovering damages for a deficiency in the quan — 10 — tity of land, and for the loss of one-half of a spring which the vendor represented was on the land sold. In the case of Mangus v. McClelland, decided at the present term of this court, in which special pleas filed under section 3299 were rejected, it appeared that the object of the pleas was, not only the recovery of damages for the false representation made to the defendant, but to have the contract between the parties rescinded, and to re-invest the vendor with the title to the lots which he had conveyed to the vendee; and a deed was filed with the pleas from the defendant re-conveying the several lots to the plaintiff, and waiving and relinquishing all claim upon them on the part of the defendant. The court held that the pleas were not available in such a case, because a court of law was not competent to do complete justice between the parties, and recourse must of necessity be had to equity. The only object of the pleas in the case at bar was the recovery of damages by way of set-off resulting from failure of consideration, in consequence of the false representations of the vendor. In a case, therefore, where the equitable grounds relied on would require a rescission of the contract, and are-investment of the vendor with the interest alleged to have been sold, a plea by way of special set-off under section 3299 could not be relied on ; but where no rescission is asked for, and none is needed—the only purpose of the plea being to ascertain the damage sustained by reason of the default of the vendor—the plea can be relied on and the defence made at law under the statute. The pleas were therefore improperly rejected on the ground that the defence could not be made at law. The second and third pleas make in somewhat different form the same defence. They allege that the inducement to the defendant to buy the lots was the representation by the plaintiff, at the time of the sale, that there would be built upon the company’s land, and near the lots sold defendant, -a — 11 — hotel to cost $50,000; that an electric street-car line would be built, running near said hotel; and that on land adjacent and near thereto a large stove foundry, and other manufacturing plants, would be erected, and were in process of erection; and that by reason of said improvements, and particularly the hotel, the lots would be very desirable and valuable ; that these representations were relied on by the defendant, and constituted the sole inducement to the purchase. A misrepresentation, the falsity of which will afford a ground of action for damages, must be as to an existing fact. It must be an affirmative statement or affirmation of some fact, in contradistinction to a mere expression of opinion, which ordinarily is not presumed to deceive or mislead. This is the general rule in all this class of cases, and we are unable to perceive that the case stated in these two pleas comes within any exception to the rule. When, for the purpose of obtaining a subscription, a promise was made that a branch road would be built, it was held that this promise was but the expression of an existing intention, which was liable to be changed, and was no defence. McAllister v. Indianapolis R. R., 15 Ind. 11, cited in Cook on Stockholders, sec. 138. The pleas under consideration allege the mere expression of an opinion by the plaintiff, or its agents, that the improvements mentioned would be built. This is not such an affirmative statement or affirmation of fact as would make the plaintiff liable in damages, and was therefore no defence, and these two pleas were properly rejected as insufficient. The first plea does not allege any fraud, misrepresentation, •or other conduct on the part of the plaintiff that would entitle the defendant to the relief sought; but it does allege, substantially, that at the time of making the writings sued on, and contemporaneously with the contract of sale, and as a part thereof, the plaintiff, in consideration, that the defendant — 12 — would purchase the lots, undertook, and then and there faithfully promised the defendant, that there should be constructed and built upon said company’s lands, and near the lots sold, a hotel to cost not less than $50,000; that the defendant, relying upon this promise and undertaking of the plaintiff, did buy the lots and execute the writings sued on. It is further alleged that the plaintiff did not perform its promise or undertaking, and that by reason of the breach he has suffered damage to the amount of $900. If the allegation made in this plea can be supported by legal proof, the defendant'would be entitled to recover, and hence it must be held to be a good plea, and the defendant be afforded an opportunity to prove the case stated in it by such legal evidence as he may be able to produce on the trial. For the reasons stated, the court is of opinion that the second and third pleas were properly rejected, and is further of opinion that it was error not to allow the first plea to be filed. The judgment of the Circuit Court must therefore be reversed and set aside, and this case remanded for a new trial, to be had in accordance with the views expressed in this opinion. Reversed.