Kertz v. Dunlop

Perkins, J. Suit to rescind a contract. Demurrer to the complaint sustained. Final judgment in favor of the defendant. The contract sought to be rescinded was for the sale and purchase of certain lots in Dunlop & Co.’s subdivision of Morris’s addition to the city of Indianapolis. The contract was made in May, 1855, and the payments for the lots ran through about two years. The complaint alleges — 278 — that the contract was obtained by the fraudulent representations of Dunlop. The representations are thus set forth— “ The plaintiff further says, that at the time the defendant sold to him the above-named lots, he, the defendant, was engaged in selling off, in city lots, a subdivision of a part of B. F. Morris’s addition to the city of Indianapolis, containing a large number of lots, to-wifc, one hundred and five, and had already sold a large number of said lots, and that some of the purchasers had agreed, in their contracts of purchase, to build houses; that the . defendant, Dunlop, was well acquainted with the.situation of said lots, and of thek value, and of the probable improvements to be made in said addition and subdivision; -that he, the plaintiff, was not acquainted with the value, situation, and prospective improvement of lots in said subdivision; that the same were in a distant part of the city from his residence; that he was not a dealer in lots and real estate, was not acquainted with the value thereof, and relied upon the representations of the defendant in regard to the value and prospective improvement of the lots in said subdivision; that the defendant, at the time of, and before the sale, represented to the plaintiff, in order to induce him to purchase said lots, and to enhance their value in his eyes, and to deceive and defraud him, that from twenty to twenty-five houses would be built in said subdivision during the years 1855 and 1856; that such was the intention of the purchasers of said lots; that the subdivision would be settled within a short time, and built up in the years 1855 and 1856; that Dr. Lawson Abbett intended to and would build a large, handsome, and expensive dwelling house in said subdivision during the year 1855. The defendant further represented that he had sold certain lots for the sum of 150 dollars each, in said subdivision, to Dr. Lawson Abbett, when, in truth and in fact, he had sold them for 100 dollars each; and the said defendant attempted to induce said Dr. Abbett to join him in said misrepresentations, and requested him, Abbett, to state that said lots were sold for 150 dollars each, instead of 100 dollars, the — 279 — true price. The defendant further represented that it was the intention of B. F. Morris, who is the proprietor of the land situate between the said subdivision and said city of Indianapolis, to open a street through his said land, during the years 1855 and 1856, and that said Morris had agreed with him to do the same, which street would lead directly to the lots of the plaintiff, and would afford to the purchaser of said lots a short and direct route into said city; also, other streets to intersect with the streets of the city running north and south; that said lots are situate a quarter of a mile east of the Madison road, and without the opening of the street first above named, by B. F. Morris, are inconvenient of access, and in a remote, retired situation from travel and business, and of comparatively little value. The defendant further represented, to show that said lots were in demand, that he had sold seven lots in said subdivision to one Thomas Records. The defendant further represented that B. F. Morris had agreed to open half an alley on the north side of said subdivision. The complaint avers the utter falsity of all the defendants said representations, and charges that they were made with a full knowledge of their falsity, and for the express purpose of deluding and cheating the plaintiff, and that they produced their intended effect. The complaint shows that the plaintiff has been sued upon the notes as they became due, and has paid; that he has offered to rescind the contract, &c., and shows, prima facie, a sufficient excuse for the payment and delay. The rules of law governing the rescission of contracts are well settled. The difficult question that arises in this class of cases now is, do the facts of the given case bring it within those settled rules of law ? Some of the representations alleged to have been made in this case, however they may be regarded in the eyes of honor and morality, cannot be held violations of the common law. As to some, their legally fraudulent character or otherwise,is not clear; but one of those, at least, alleged to have been made, we think, was of matter of fact and not of opinion; was in relation to a matter material in the consideration of the — 280 — contract; was relied upon, and justly, by the purchaser; and, being false, constitutes a ground of rescission. We refer to the representations, made by Dunlop, that he had sold certain of the lots in the addition to certain persons, for certain prices. This representation was of matters of fact. It was not the expression of an opinion simply that those lots were worth such terms; nor was it, like the representation as to the number of houses to be erected, the assertion of future probabilities and expectations, upon which no one could rely with certainty; but it asserted that certain things had taken place—were existing facts, and they were material. What is the usual course of dealing in such matters? What are the data upon which purchasers in new and growing towns in the west form their opinions as to the value of property? They inquire, what do lots sell for in such and such localities, and who-buys them; and while, if they were told that, in the opinion of the informant, lots were really worth this or that much, they would be little influenced; if told that such and such lots had actually been sold for a given sum to certain persons, they would feel that they had acquired pretty accurate information of the market value of the property. And we think the assertion was one upon which the purchaser had a right to rely. The means of knowing its truth were not equally open to both parties. Dunlop knew for what he had sold the lots. He had perfect knowledge. Kertz did not know, and could only ascertain the fact with certainty from Dunlop or the purchaser; but the purchaser was under no obligation to give information touching the matter, and might even be interested to give false; besides, he might not be found within any convenient time, or in any coniiguous locality where he could be consulted. The rule of law should not require such trouble of a party to such a contract, 'in finding out whether the representation of facts made by the opposite party was true. And here a distinction may be noticed between this case and Cronk v. Cole, 10 Ind. R. 485. There the representation was not of the sale of particular parcels, but of the — 281 — general market price, among dealers, of a commodity of universal traffic, of a commodity whose current price was in almost every newspaper, and could be ascertained at any produce house in the land, if the party did not take a newspaper, a fact we should be sorry to presume. Such, also, in character, was the case of Barton v. Simmons, at this term (1). J. Coburn, for the appellants (2). H. C. Newcomb, J. S. Tarkington, J. Morrison, and C. A. Ray, for the appellee (3). The representation as to the opening the street was equally material, as to subject-matter. Of this there can be no doubt. Without such an outlet the lots could scarcely be worth much. The only doubt we have had on this representation is, as to whether it was sufficiently specific in its terms. Should Dunlop be estopped to deny that the agrément he had with Morris was one, the execution of which could be enforced? Clearly he intended that Kertz should so understand the agreement. This point has not been sufficiently discussed to justify its decision here. We say, as we said in Newell. v. Gatling, 7 Ind. R. 147, that the complaint makes a case upon its face for a rescission; it is sufficient to put the defendant to his answer, that a trial may develope the facts. We think a careful study of Shaeffer v. Sleade, 7 Blackf. 178; Haight v. Hoyt, 19 N. Y. R. 464; Newell v. Gatling, supra; and the same case in 9 Ind. R. 572, and in 12 Ind. R. 118; Hepburn v. Dunlop, 3 Cond. R. 513, and the cases collected in chap, xiii., commencing qn p. 604 of Eawle on Covenants of Title, and in Smith on Cont, by Rawle, top p. 221, will satisfy the mind that the case made in this complaint is not weaker than some that have been upheld. Per Curiam. The judgment is reversed with costs. Cause remanded, &c. Footnotes [(1)] Post. (2_) After a statement of the purport of the representations, Mr. Coburn argued as follows: — 282 — Were the representations of a character such as a Court will regard in cases of this kind? They were of matters of fact as to streets, as to houses, as to contracts. An agreement to open a street or alley, or build a house, is a fact; a price of a lot sold to another person, and adjoining, is a fact; the intentions of the purchasers and owners were facts; indeed, in many cases, the intention is the great fact. See 6 Gill and Johns. 58. They were material; for it is material that streets and alleys should be opened directly to town; that houses should be built; that improvements should go on. They were peculiarly within Dunlop’s knowledge. They were, as represented, calculated to deceive, and did deceive the plaintiff. Kertz put confidence in Dunlop, as he (Dunlop) knew, or ought to have known, more than all the world beside as to Ms own addition. A gross fraud was perpetrated: not a house is built, not a street or alley opened, not a thing done. A large addition is laid out, and it is to grow and fill up, and become populous, and well built, with thoroughfares to the city— and nothing is done. Now, did the plaintiff delay too long to offer rescission? The bargain was made in June, 1855. In the fall of that year, Kertz finding that part of Dun-lop’s representations were false, offered to rescind. In April, 1857, he offered again to rescind, when he had found that all of them were false, utterly and totally so. These improvements were to be made during 1855 and 1856, and during that time the notes were maturing, Dunlop was suing, and the false and fradulent representations were being developed, and the fraud being confirmed. Kertz had a right to wait until all of these representations were proved false. Kertz could not perhaps have enjoined the collection of any one of these notes until 1857, when the time in which these improvements were to be made had expired. At any rate he was not bound to enjoin each note as it became due, but could take them all at once. In the full and masterly discussion of the subject of frauds, in the case of Gatling v. Newell, 9 Ind. R. 574, we find the law upon which we rely, especially as to lapse of time and a restoration of the parties to. statu quo. See, also, 9 Ind. R. 9. In this case the land was not sold, and could be restored unincumbered to Dunlop. The judgments before the justices intervened; these were nothing more than payments of the notes, of which Dunlop cannot complain, and no third party intervened. Perhaps if Dunlop had assigned the judgments, and innocent parties wore interested, a Court of equity would refuse to intercede; but here the very man who perpetrates the fraud comes in and acknowledges it, but says it was so long ago, and it is now ratified by a judgment; it was dishonest, but now it is sanctified by a judgment upon default before a justice of the peace. A more astonislfing, impudent argument cannot be conceived of. In the case of Hunt v. Moore, 2 Barr, 107 (see note to Rawle on Covenants of Real Title, p. 619, and note), Justice Royns says, in view of a similar argument : “ Can it be the law that we are to repose no confidence in each other, without being branded with the charge of folly and losing the earnings -of a — 283 — lifetime. True, says the defendant, I told you a falsehood, but you ought not to have believed one word I said. Had you searched the records you would have discovered it was all untrue. I never can and never will consent that any person shall be permitted in this Court to take advantage of his own wrong.” This is the language of a judge'whose moral sense as well as his sound discrimination revolted at the quiet but monstrous outrages of wily cheat. .Going on further he says: “A Court of equity would lay hold of slight circumstances to release a victim to such duplicity. See, also, 6 Yerg. 108; 6 B. Mon. 23; 5 J. J. Marsh. 96; 4 How. (Miss. R.) 451; 3 Sandf. (Sup. C. R.) 526; Clark’s Ch. R. 571. Our own Supreme Court, in the case of Peter v. Wright, 6 Ind. R. 194, intimate that frauds are to be established by various circumstances which are slight in themselves. In that ease, the judicial mind with a consciencious regard for honesty in dealing, seized upon every badge of fraud to wrest from the wrongdoer his ill-gotten gains. See 22 Pick. 53. In the case of Grundy v. Boyce’s Executors, 3 Pet. 210, the Court held that a series of judgments might be rendered, as in this, on installments duo for land, and that in the end they might all be enjoined and set aside for fraud; in other words, it was not necessary to try the question upon each installment and create a multiplicity of suits, but that it might all be done at once. And that a misrepresentation is not susceptible of reparation in damages. The law abhors fraud, and does not permit it to purchase absolution or indulgence. In 22 Pick. 53, it is held not to be necessary that the false representation should be the predominant feature inducing the sale; but it is sufficient if it was a motive at all inducing to the sale. If it was one of several motives acting together, and by their combined force, producing the result, it is proper to be considered.