Kobiter v. Albrecht

LyoN, C. J. I. The defense set up in the answer of the mortgagors is that the plaintiff fraudulently misrepresented the quality and value of the mortgaged land, and that by reason of the misrepresentation of quality the land was not worth as much as the mortgagors paid down on their pur•chase, and hence that there was no consideration for the .note and mortgage in suit, which were given for the unpaid — 62 — balance of the agreed price of the property. In other words, the only defense pleaded is a total failure of consideration for such note and mortgage. That defense failed, for the plaintiff recovered over $800 thereon. If a partial failure of consideration may be pleaded as a defense merely (which is doubtful), such defense is not sufficiently pleaded, for the amount of damages resulting from the alleged fraudulent representations of the quality of the land is not stated. True, the answer alleges (contrary to the findings of the court) that the purchasers agreed to pay $11,000 for the land, and paid $7,000 thereof down in property and cash, and that the land was worth not to exceed $5,500. But it-does not allege the value of the land had it been as represented, which value, and not the purchase price, is the basis for computing damages for such alleged fraudulent representations. The findings are that the mortgagors agreed to pay $10,700 for the land and $2,122 worth of personal property, and that all the property was not worth to exceed $8,000. The proofs on the subject of values are no broader than the answer and findings, for they are confined to the question of the value of the land in its existing condition. No attempt was. made to show what the same would have been worth had it been as represented. The legal rule of damages in a ease like this is the difference in the value of the land as it was and its value had it been as represented. Neither the answer nor the proofs furnished the necessary basis for computing such damages. After the testimony had all been put in, and near the close of the argument, the attorneys for defendants asked leave to amend their answer by inserting a counterclaim therein based upon the same facts alleged as a defense. The court denied such request. For reasons already stated, such counterclaim, in the form proposed, would have been invalid; and had it been in proper form,— that is, had it alleged, by way of recoupment, the fraudulent representa — 63 — tions and tbe damages occasioned thereby, — the proofs furnish no basis for the assessment of such damages. Hence the refusal to allow the proposed amendment was not error. Under the pleadings and proofs, as they stand in the record, the court should have given judgment for plaintiff for the whole amount unpaid on the note and mortgage. The pleadings are quite similar to those in Herman v. Gray, 79 Wis. 182, and. much that is said in' that case is applicable here. The case is authority for the rules above stated. II. There having been a mistrial of the action, in that it was tried on insufficient pleadings, and the proofs were all directed to an inaccurate rule of damages, it may plausibly be claimed that, although the existing judgment must be reversed on plaintiff’s appeal, the case should be sent back for a retrial on corrected pleadings and with reference to the correct rule of damages. There would be force in this claim were, or could, the alleged fraudulent representations be clearly proved. But there is no reason to believe the defendants can make any stronger proofs thereof on a retrial than they have already made. Hence, unless the present proofs are sufficient to entitle the mortgagors to recover damages therefor, a retrial of the action should not be awarded. We are to determine, therefore, whether the proofs are sufficient for that purpose. The mortgagors purchased the land in April, 1885, and have resided upon and carried it on as a farm ever since. It must be conclusively presumed that, within a few months after the purchase, at the longest, they knew, or (what is the same thing) might have known had they exercised reasonable diligence, the quality of the land. Yet they paid the interest on the mortgage debt when it became due in 1886,188T, 1888, and 1889, and, when the mortgage debt was about to become due in 1890, applied to plaintiff to extend the time of payment. The plaintiff declining to do so, they applied to different persons for a loan — 64 — with which to pay such debt, and made to such persons substantially the same representations of the quality of the farm which they now charge the plaintiff falsely made to them. It does not appear that before this action was commenced the mortgagors ever claimed to the plaintiff or any one else that they had purchased the land .on the faith of plaintiff’s representations of its quality and value, or that the plaintiff ever made any such representations to them. Indeed, their conduct throughout was entirely inconsistent with such claim. The only excuse they give for such conduct and for their protracted silence in a matter of such vital importance to them is the lame and inconsequential one found by the court, that “ they did not know, and had not been advised, prior to the date of commencing this action, that they could defend against the payment of said note and mortgage, or could avail themselves of their defense, or of any defense, against the same.” They were bound to know that the legal remedies pointed out in Herman v. Gray, 79 Wis. 182, were available to them, and, if not so bound, their ignorance fails to explain their silence, and the same cannot reasonably be explained on any other theory than that they had not been cheated as they how claim they were. The testimony of the alleged fraudulent representations is conflicting. The defendants Frederick and Robert Albrecht, and another son of Frederick, testify that the plaintiff made the representation alleged, and the plaintiff denies that he made them. Standing alone, this testimony would probably support a finding either way. But, when the facts above stated are thrown in the scale, there should be no hesitation to hold that the alleged false representations were not proved. If, on the testimony of interested parties alone which is contradicted, a grantor of real estate can be held to respond in damages for an alleged parol misrepresentation of the quality of the land sold, first asserted years after the conveyance and after the purchaser had by his — 65 — silence or conduct or both negatived the making of such representations, there would be no safety for grantors of property. They would be at the mercy of unscrupulous parties or witnesses who choose to indulge in the safest of all perjury, by swearing, years after the alleged fact, to oral false statements of the grantor as having been made pending negotiations for the sale. Of course these remarks are not applied to the defendants or their witnesses. They are only made to exemplify the extreme peril of giving full credence to such testimony, and the absolute necessity of subjecting it to the closest scrutiny. The only safe and reasonable rule in such cases is to hold that, unless the conduct of the party who claims to have been defrauded has been throughout consistent with such claim,, but little weight should be given to the testimony of himself and family that the alleged false representations were made, when the same are denied by the party alleged to have made them. Before such misrepresentations can properly be found to have been made, the proof thereof should be clear and satisfactory. As a general rule, no testimony thereof, when disputed, is or can be sufficient clearly and satisfactorily to prove the fraud, if the uniform conduct of the party alleged to have been defrauded has, as in the present case, been for years entirely inconsistent with the claim that such fraud has been committed. Our conclusion is that the finding of the existence of the fraud charged, and upon which the Judgment is based, is agaiust the clear and satisfactory-preponderance of proof, and cannot be upheld. For the above reasons, and because the defendants have had the fullest opportunity to prove the alleged false representations unembarrassed by their defective answer, and because they have manifestly introduced all the evidence they have on the subject, we think another trial on corrected pleadings should not be awarded. In conclusion, it may be observed that the only effect — 66 — given to the conduct of the mortgagors and their delay in asserting a claim that they were the victims of the plaintiff’s fraud is the effect which those matters should legitimately have as evidence bearing upon the question whether the plaintiff made such misrepresentations. This is most favorable to defendants, for such delay is not treated as laches, working an estoppel against them to avail themselves of the alleged false representations as a defense or counterclaim in the action. Had the mortgagors brought an equitable action to procure the cancellation of the note and mortgage because of the alleged fraud, it is quite probable that their laches would have defeated the action, on the principle laid down by Judge Stoey in Gould v. Gould, 3 Story, 516, and approved and adopted by this court in Holden v. Meadows, 31 Wis. 284, that “a court of equity will never entertain a bill for relief, even in cases of asserted fraud, if the plaintiff has been guilty of gross laches or unreasonable delay.” Page 290. It might well be held that an effectual counterclaim herein would be the equivalent of such an action, and therefore within this rule. But we have chosen to take the more favorable view for the defendants, and to treat the supposed counterclaim as a mere recoupment of damages, and the equivalent of an action at law to recover such damages, and have given no conclusive effect to such delay, as would probably be done were such. counterclaim held to be an equitable one. We do not care to elaborate this subject. Many of the authorities bearing upon it will be found cited in 12 Am. & Eng. Ency. of Law, tit. “ Laches.” By the Court.— The judgment of the circuit court is reversed, and the cause is remanded with directions to render judgment for the plaintiff of foreclosure for the amount due on the note and mortgage in suit by the terms thereof. At least 100 pages of testimony have been unnecessarily printed in the case. In the taxation of costs that number of pages will be deducted therefrom.