Hurlbert v. T. D. Kellogg Lumber & Manufacturing Co.

Winslow, J. This was an action at law to recover damages for breach of a written contract. Upon the trial the court held upon demurrer ore tenus that the answer contained neither a good defense nor a good counterclaim, and directed a judgment for the plaintiffs, from which judgment the defendant appeals. [226] In order to understand the questions raised by tbe ruling, it will be necessary to make a brief recapitulation of tbe pleading's and tbe facts appearing when tbe ruling was made. Tbe complaint was upon a written contract, wbicb bound tbe plaintiffs to cut and deliver to tbe defendant, free of liens, all the saw logs (except piling timber) on a certain eighty acres of land, for wbicb tbe defendant agreed to pay the market price for such logs at tbe opening of tbe season, it being agreed that tbe defendant should execute and tbe plaintiffs accept a deed of such lands in part payment for tbe logs to tbe amount of $300. Tbe plaintiffs alleged full performance of the agreement on their part, and the delivery of 140,000 feet of logs thereunder at tbe agreed price of $8 per 1,000, and that tbe defendant bad refused to convey tbe land, or pay any part of tbe purchase money except tbe sum of $380.50, leaving a balance due tbe plaintiffs of $746.60, for wbicb judgment was demanded. Tbe answer admitted tbe making of tbe contract and tbe delivery of about 140,000 feet of logs thereunder at tbe agreed price of $8 per 1,000 feet, but alleged as an affirmative defense that tbe plaintiffs before the execution of tbe contract, falsely and fraudulently represented to tbe defendant that they owned said eighty acres of land in fee, and owed $300 upon tbe purchase price, and solicited a loan of tbe defendant of $300 to pay such debt, agreeing to give defendant a deed of tbe premises, together with outstanding tax certificates, as security for the loan, and to sell and deliver all the saw logs on tbe lands in accordance with the terms of tbe contract; that tbe defendant relied on tbe truth of tbe statements) and made tbe loan asked for, and took tbe deed and tax certificates as security, and received tbe logs aforesaid, but that tbe plaintiffs bad no title to tbe lands, and committed trespass in cutting and removing tbe logs, and that tbe rightful owners of tbe lands have made claim against the defendant for all damages resulting from tbe cutting of the logs, and demanded a conveyance of tbe premises, and [227] tbat defendant has been obliged to pay the rightful owners a large sum of money in settlement of the trespass, and to- deed to them the premises, to avoid a threatened lawsuit to remove a cloud from the title. The same facts are alleged by way of counterclaim, with the additional fact that the defendant had paid plaintiffs upon the contract price of the logs $360.21, relying on the false representations of title aforesaid; and judgment was demanded for the recovery of this sum, together with the $300 loaned by the defendant to the plaintiffs. The plaintiffs made reply to the counterclaim by way of general denial, and the case came on for trial. The plaintiffs made a prima facie case, and, when the defendant attempted to introduce evidence to substantiate the allegations of the answer, objected to the introduction of any evidence under either defense or counterclaim. This objection was sustained, and the question upon this appeal is whether the ruling was correct. It is attempted to be sustained by three propositions which will be briefly considered. 1. It is said that fraud is not sufficiently alleged, in that the charge of fraud is a general allegation, and relates to an opinion upon a question of law, and not to a matter of fact. Doubtless, the question whether a given title is a good title or not is a question of opinion merely; but a direct representation made by one man to another that he has a fee title to certain described real estate cannot be considered as necessarily a mere-legal opinion. The circumstances may show, perhaps, that it was a mere opinion as to the validity of a certain title, and was so understood by the parties, in which case, of course, fraud cannot be predicated upon it; but, on the other hand, the circumstances under which it was given may demonstrate that it was intended and understood as a representation of a fact, and, if such is the case, and it was relied upon to the damage of the other party, it becomes an actionable fraud. 1 Bigelow, Frauds, 527, and cases cited in note; Ballou v. Lucas, 59 Iowa, 22, 12 N. W. 745. See, [228] also, Reuter v. Lawe, 86 Wis. 106, 56 N. W. 472. Tbe allegations of the answer and counterclaim here are amply sufficient to charge a false and fraudulent representation as to the fact of title, and they are certainly as definite and specific upon that subject as they could well be made. 2. It is claimed that the defendant must offer to return the logs received before it can defend on the ground of fraud-ar recover damages on account of the fraud. It is well understood that there can be no rescission of a contract at law without'a return or an offer to return the property received under it, but the rule does not go to the absurd length contended for here. If A. steals B.’s property, and sells it to O'., and C. is compelled to pay B. for it, must he return it to A., or be compelled to pay A. also ? The question answers itself, and seems to afford also a very satisfactory answer to this contention. 3. It is contended that, if the defendant be allowed to prove the defense alleged,.the rule forbidding the reception of parol testimony to alter or modify a written contract would be violated. This is untenable. It is always competent to show by parol that a given contract was entered into relying upon fraudulent representations; and, when a written contract does not contain the entire agreement between the parties, it is competent to show by parol or by other writings executed at the same time what the balance of the agreement or transaction was. There are m> invasions of the well-understood rule above cited, and under them it is evident that it was entirely competent for the defendant to show the alleged fraudulent representations, as well as to show that the deed of the eighty acres of land given by plaintiffs to the defendant was in fact a mortgage for the loan of $300; in fact, to show the entire transaction of which it appears that the contract sued upon was only a part, but not, of course, to contradict or vary by parol any of the agreements contained in the written contract. By the Court. — Judgment reversed, and action remanded 'for a new trial.