Beetle v. Anderson

Newmah, J. The principal errors claimed are in the instructions of the court! The court instructed the jury, at the defendant’s request, that “ it was the duty of the plaintiffs to make investigation for themselves as to the nature, quality, and value of the securities offered and purchased by them; and the maxim, Get the purchaser beware,’ is applicable to the sales of all species of personal property.” The’ issue in the case was whether the sale had been induced by fraudulent representations of the seller. The rule caveat emjptor has no application to cases of fraud. Story, Sales (4th ed.), § 378. While it is always wise for the purchaser to be on the alert against deception, the law still permits him tó confide in the statements of the seller; and it makes no difference in the rule if the purchaser makes some investigation for himself, where the truth or falsity, of the representations are not readily discoverable by him. Porter v. Beattie, 88 Wis. 22. So this instruction was error. But the defendant claims that the error was cured, and its bane neutralized, by an instruction which the court gave later of its own motion. The court said: “When a person makes representations of material matters affecting the kind, quality, or value of property,. [9] for the purpose of inducing parties to purchase the same, which are within the knowledge of the seller and are not known to the purchaser, the purchaser has the right to rely on such representations.” This really seems to be unexceptionable. But it cannot be a complete antidote for the former error, for, when combined, the compound is scarcely, if any, less baneful than the single unmixed element of error. Combined, the instructions are to the effect that, although the plaintiffs had the right to rely on the representations made by the defendant, yet, if they did so, it was at their own risk, for the rule of caveat erwptor applied, and it was-their business to investigate for themselves. That certainly is not the law as applied to the issue and facts of the case,, and must necessarily mislead the jury. The court also instructed the jury, at the defendant’s request: “If Charles Wattley was not appointed and made . the agent of the defendant, then his representations to the plaintiffs could not bind the defendant. If he, in fact, was made and appointed the agent of the defendant, then his representations to the plaintiffs would not render the defendant liable, unless such representations were made by the said Wattley knowing them to be false, or were made-by him with the knowledge of the defendant, and the defendant knew them to be false or had no good reason to believe them to be -true.” This instruction seems to be based upon an entire misconception or perversion of the proper effect of the evidence bearing upon the relation which the parties to the transaction bore to each other and to the transaction itself. Wattley, clearly, was the agent of the plaintiffs. He negotiated the transaction for them. They acted only through him. Eepresentations made to him were,, in legal contemplation, made to them. Although he may also, for some purposes incident to the negotiations, have-represented the defendant, as a mere broker often represents both parties, that does not disturb the rule. The de [10] fendant is responsible for such representations as he makeg to the plaintiffs’ agent, and upon which the agent or plaintiffs act in making the purchase, whether the representations are communicated to his principals, by the agent, or not. And it makes no difference whether the misrepresentations are wilful. The seller is bound to know that the representations which he makes to induce the sale of his property are true. Miner v. Medbury, 6 Wis. 295; Cotzhausen v. Simon, 47 Wis. 103; Montreal River L. Co. v. Mihills, 80 Wis. 540; Gunther v. Ullrich, 82 Wis. 222. The fact that Wattley was the agent of the plaintiffs also, seems to have been completely obscured and lost in the verbiage of the instruction. The plaintiffs complain that the court failed to give the correct rule of damages. The rule given was the difference between the actual value of the securities and their value as represented. No doubt the proper rule for this case is comprehended in this general statement. But perhaps more ■definite and specific instructions were desirable in this case. As applied to this case, the rule would mean a sum equal to that portion of the mortgage debt which the securities, when properly applied thereto, will fail to pay, on the hypothesis that, if they had been as represented, they were adequate to pay the whole debt. If the securities had been already foreclosed and applied, evidence of that fact would be pertinent and cogent to' establish the actual amount of damage. Foster v. Taggart, 54 Wis. 391. The defendant alleged in his answer, and claims on the proofs, that there is a misjoinder of plaintiffs and of causes of action. The point is this: The evidence tends to show that the plaintiffs furnished the money which was invested in these securities by each contributing equally one fourth. They proposed, at one time, to have a one-fourth interest assigned to each separately. In fact, the assignment was made to them all jointly. So their interests in the securities [11] are joint, and not several. The proportionate interest of each in the securities is not significant. Their interest in whatever affects the value of the securities is joint, and not several. The action was well brought by them jointly. For the errors in the instructions, the judgment must be reversed. By the Court.— The judgment of the circuit court is reversed, and the cause remanded for a new trial.