Carlton v. Hulett

Collins, J. Counsel for appellant has argued quite a number of assignments of error, but aside from one, which is sustained, in so far as may be requisite in order for this court to direct a modification of the conclusion of law of the court below, they really need no special consideration. This one is the assignment which questions the principal finding of fact, as unsupported by the evidence. This finding was based upon the answers returned by a jury to certain specific questions of fact, which answers were, in effect, that when conveying the ten (10) lots on Minnesota Point to Mrs. Carlton, the defendant falsely and fraudulently stated and represented to her and to her husband, since deceased, that he had good title to all of said lots, which title was worth the sum of $200; that both plaintiff and her said husband believed and relied upon the statements and representations, and were thereby induced to and did accept from defendant his quitclaim deed to the lots, in lieu of $200 in money, when executing and delivering the mortgage in question upon certain real estate, including their homestead. From other findings, which we regard as sustained by the testimony, it appears that plaintiff and her husband were residing upon the property in question in the month of February, 1874. Mr. Carlton was sick, and had been disabled for about one year, most of the time confined to his house and bed. The family, a husband, wife, and a small child, — 316 — was in straitened circumstances, had great difficulty in obtaining the necessaries of life, and plaintiff was obliged to nurse and care for her husband both day and night. She was in great distress of mind and body, and pregnant, giving birth to a child in the spring of that year. There were an unpaid and past-due mortgage and unpaid taxes resting upon the land, amounting in all to about $475. The defendant was the county treasurer, an old acquaintance, a frequent guest at their home, with whom plaintiff and her husband freely consulted concerning their business affairs, and in whom they seemed to have had implicit confidence. Just previous to February 14, 1874, Mr. Carlton, his residence being fifteen miles from the county seat, requested defendant to assist him in obtaining a loan of money sufficient in amount to pay said past-due mortgage and the unpaid taxes, the loan to be secured by a mortgage upon the same land, including the homestead. On February 14, 1S74, defendant went to the residence of the Carltons, taking with him a notary public and the mortgage in question. He informed them that he had concluded to loan the money himself, but that it was his custom to require any person obtaining a loan to take some lots from him as part of the consideration of the mortgage to be given as security. He thereupon produced a quitclaim deed of the ten lots before mentioned, and made it a condition that they accept said deed in lieu of the sum of $200. The balance of the amount represented by the note, to secure which the mortgage was to be given, $475, was to be used by defendant in behalf of the Carltons in paying off the mortgage incumbrance then resting on the premises, the taxes, and contemplated insurance. As a matter of fact, unknown to the Carltons, the defendant had already procured an assignment of the unpaid mortgage at a discount of $58. He reserved the full amount due thereon out of the $475, using the balance, as agreed upon, for taxes and insurance upon the buildings. It stands undisputed, then, that the sole consideration for the note and mortgage executed by the Carltons was the quitclaim deed, consideration fixed at $200, and $475 in cash, and out of this defendant made a profit of $58, as before stated. There was testimony sufficient to sustain plaintiff’s contention, although the same was em — 317 — phatically contradicted by defendant, that her husband, at first, refused to take any lots from defendant, as he had too much of that sort of property then on hand, and that he yielded to the imposed conditions only when he found that defendant persisted in them, and would not make a loan otherwise; and while the defendant denies this, as before stated, he admitted, upon cross-examination, that at the time of this transaction the Carltons had a large number of town lots, and, as he expressed it, were “land poor.” The defendant’s mortgage was regularly foreclosed by advertisement in May, 1877, and at the sale he purchased the tracts of land. There was no redemption. Mr. Carlton died testate in August, 1879. His will, wherein plaintiff was duly named sole devisee, was duly probated and allowed in this state, April 21, 1890. Mrs. Carlton removed from the state in 1880, remaining absent about ten years. As a matter of fact, defendant had no title whatsoever to the lots conveyed by his quitclaim deed. His pretended tax title thereto was utterly worthless, being of that class of tax titles or deeds declared void in Greve v. Coffin, 14 Minn. 345, (Gil. 263,) about five years prior to this transaction. Of this failure of title to the lots the court found that plaintiff had no notice until 1890, and that there was no testimony tending to show that her deceased husband was advised of it in his lifetime. Recurring, now, to the principal question, it must appear that if defendant asserted that he had a good title to these lots, and that the quitclaim deed conveyed a good title thereto, he misrepresented a material fact. The remarks of counsel in his brief as to the impropriety of submitting questions to the jury numbered four, (4,) five, (5,) and six, (6,) which he says relate both to the goodness of title and the value of title, and which he asserts will not bear the test of logical analysis, may be quite correct; but by one of these questions the jurors were required, in everyday sort of language, plain enough, we think, to answer whether the defendant, at the time he delivered his deed, represented that such deed conveyed a good title; and, further, perhaps not quite so clear an inquiry, whether he represented that such title was worth the sum of $200. The jury answered this question in the affirmative. Its submission was warranted by the issues — 318 — made by the pleadings, and particularly by the allegation in the complaint, controverted by the answer, that defendant stated and represented his title to said lots to be perfect, and that their market value, with such title as he should convey by said deed, was $20 each in cash. With the assertion that he had a perfect title, the further statement as to their market value was not qualified. It was a positive assertion as to their real value in the market, with an unquestionable title. If the title was not good, a material fact was misrepresented by defendant, and it is not important whether he misrepresented as to value, although the court found the value with a perfect title to be but five dollars each, when deeded, and that defendant’s misrepresentation as to value was material. The misrepresentation on these points was one of fact, not of law, as defendant’s counsel argues. This brings us to a consideration of the further finding that these misrepresentations were fraudulently made. Was defendant guilty of an intentional fraud, and, if so, were the Carltons justified in believing and relying upon the statements and representations? On examination of the evidence, we are driven to the conclusion that defendant must have known he had no title to these lots when he conveyed them to Mrs. Carlton. Defendant was then, as the evidence discloses, the county treasurer, a prominent man in his locality, dealing largely in real property and tax titles. This court had declared this class of tax deeds void and worthless five years previously. ■ We think it can fairly be inferred that defendant knew of the invalidity of these titles or deeds, as adjudged by the courts. In fact, he made no claim, when on the witness stand, that he believed his title to these lots of any value. He seems to have justified a sale to the Carltons because other prominent men were dealing in such titles, and he also states that they, (the Carltons,) in a number of conversations he had with them in regard to the value of tax titles, expressed an opinion that “a tax title was as good or better on Minnesota Point than the town council title.” What his opinion was, does not appear in words; but we observe from the testimony that at this time he was engaged in procuring the original, or town council, title to lots on which he held tax titles, as the opportunities — 319 — were presented. But, according to the record, the assertion was an unqualified one, amounting to an affirmation as of his own knowledge. If false representations are made as of one’s own knowledge, or unqualifiedly, being such as might and do mislead, they are unjustifiable and fraudulent. Merriam v. Pine City Lumber Co., 23 Minn. 311; Bullitt v. Farrar, 12 Minn. 8, (13 N. W. Rep. 566.) We are also of the opinion that the testimony, a repetition thereof not being essential because the substance has already been stated, warranted the conclusion of the jury, and the finding, that the Carl-tons were justified in believing and relying on defendant’s statements and representations as to his title being perfect. Their situation and helpless condition at the time, physically and otherwise, their relations with defendant, and his positive affirmation as to the character of his title, relieve them from the charge of negligence, and were sufficient to justify their failure to examine the records or the tax-deeds. See, on this, Kiefer v. Rogers, 19 Minn. 32, (Gil. 11 ;) Porter v. Fletcher, 25 Minn. 193; Griffin v. Farrier, 32 Minn. 174, (21 N. W. Rep. 553;) Reynolds v. Franklin, 39 Minn. 34, (38 N. W. Rep. 636;) Erickson v. Bennet, 39 Minn. 326, (10 N. W. Rep. 157.) There is nothing whatever to appellant’s claim that the court below erred when admitting Mrs. Carlton’s testimony as to the conversation had between defendant, herself, and her husband in the life time of the latter, all three persons being present and taking part, or the contention that it was error to admit in evidence the duly-authenticated copy of Mr. Carlton’s last will and testament, and of the probate thereof. We have indicated, however, that the conclusion of law of the trial court must be modified. It is argued by appellant that, before this action could be brought, it was essential that plaintiff should tender to defendant a reconveyance of the lots; and further, that the fact of such tender should have been averred in the complaint; to which respondent’s counsel reply that, as appellant’s title to the lots was wholly worthless, it was not necessary to offer to return or reconvey, in order to repudiate and rescind the contract. — 320 — Authorities in support of respondent’s position on this point are abundant, but are foreign to the case, because she has not attempted! to abrogate and rescind the mortgage contract by her own act, but-by judicial proceedings instead. In such cases, where one seeks the-aid of a court to set aside and rescind a contract, it is not essential that he should have previously attempted a rescission, or should have made any tender to the other party, except when such tender is-necessary i¡p put the other party in default. By submitting her cause-to the court, the plaintiff expressed a willingness to perform such conditions as it may regard necessary to impose as proper terms on which relief shall be granted. What such a plaintiff ought to do, and what he must do, to reinstate the other party in statu quo, as a condition for repudiation and rescission, is for the court, which always-possesses the necessary power to determine the question. Knappen v. Freeman, 47 Minn. 491, (50 N. W. Rep. 533.) See, also, Kiefer v. Rogers, 19 Minn. 32, (Gil. 14;) Coolbaugh v. Roemer, 32 Minn. 445, (21 N. W. Rep. 472.) A defrauded party, appealing to a court of equity for relief, must be compelled to exonerate himself from all imputation of ratifying, in any degree, the fraud of which he complains. He cannot be permitted to affirm as to a part of the transaction and repudiate as to the residue. It must be rescinded in toto, if at all, except in very special cases, where it is evident no injustice will be done. See Bradley v. Bosley, 1 Barb. Ch. 125. The maxim to be ordinarily applied suggests itself, “he who seeks equity must do equity,” and a. court ought not and will not set aside and rescind a contract without, requiring the party who makes the application to restore the one-against whom relief is-sought, as far as possible, to that which shall be a just situation as respects- the rights he held antecedently to the transaction. Citations on this proposition seem superfluous, but see. Grymes v. Sanders, 93 U. S. 55, and Savery v. King, 5 H. L. Cas. 627. It is recognized as the law in Hegenmyer v. Marks, 37 Minn. 6, (32. N. W. Rep. 785,) and Knappen v. Freeman, supra. To allow the plaintiff to retain the money or the benefit of the sum which was paid out and advanced for the mortgagors by defendant,. — 321 — and which became a part of the mortgage debt, and at the same time to cancel and annul the mortgage, with the foreclosure of the same, would be an exceedingly unjust proceeding. It would be at once a ratification and a repudiation, and these cannot be allowed to concur in the same action. All of the proceedings had below have been certified up. We find no allusion therein to the matter of a reconveyance of the town lots, or to the more important subject, probably, of a return or repayment of the money which was advanced and paid out by the mortgagee defendant at the request of the mortgagors. By the single conclusion of law appended to the findings of fact, judgment was ordered in plaintiff’s favor, wiping out of existence, without terms or conditions, defendant’s mortgage security and the foreclosure proceedings, with all record thereof. The entry of so sweeping a judgment would be most unfair and inequitable. It cannot be permitted, but in this connection we ought to say that it is quite evident that the attention of the trial court was not drawn to this branch of the case by the defendant’s counsel; and, although covered by one or more assignments of error, he has wholly failed, in brief or in his oral argument, to refer, when presenting this appeal, to the injustice of a decree which would set aside and cancel the mortgage, and fail to require a return or repayment of the mortgagee’s money to secure which it was given. He has in his brief referred, somewhat incidentally, to the mortgagee’s right to a reconveyance of the lots, as before stated. While it is extremely probable that such a reconveyance will confer nothing of value upon defendant, there may be some collateral rights or interests which will be protected or made available thereby; and as the conclusion of law must, in any event, be modified or amended, so as to impose equitable terms upon the plaintiff in respect to the sum of money which constituted a part of the mortgage debt, a reconveyance should also be directed. It is therefore ordered that the case be remanded to the court below for a modification or amendment of its conclusion of law in the manner intimated. Judgment for the plaintiff will be directed only upon condition that she — 322 — convey, or offer to convey, to defendant, and by quitclaim deed, the lots in question, and that she pay, or cause to be paid, to him, the sum of $475, with interest at seven per cent, from and since February 14, 1874. An application for a reargument was denied April 25, 1892. (Opinion published 51 N. W. Rep. 1053.) The court below will also, in its conclusion of law, prescribe a reasonable period of time within which the deed must be tendered and said money paid, or, in case of a failure on plaintiff’s part, judgment may be entered against her, and in defendant’s favor.