Lyndon Lumber Co. v. Sawyer

Siebeckee, J. The appellant contends that the demurrer to tbe answer and tbe counterclaim should have been sustained, because the facts alléged constitute no defense nor facts constituting an estoppel, nor grounds for affirmative relief upon a counterclaim. Tbe questions on this demurrer involve inquiry as to whether the rights of the parties arising out of the transaction alleged are governed by tbe laws of tbe state of Mississippi or of the state of Wisconsin. Tbe pleading shows that tbe transfer embraces Mississippi lands; that tbe plaintiff is a corporation organized under Mississippi laws and that its officers and stockholders are residents of tbe state of Mississippi; and that tbe defendant is a resident of Wisconsin, where tbe option between him and Carter & Kennedy for tbe sale of tbe lands was made. This option provided that a conveyance under it was to be executed at Milwaukee, Wisconsin, or in Chicago, Illinois. It is alleged that tbe deed in question was actually executed and delivered and tbe consideration paid in Chicago. Tbe allegations [531] clearly show that tbe transaction is one between persons of different states, concerning lands in a state where one of tbe parties resides. It is well established that tbe law of tbe state wherein land is situated controls and governs its descent, alienation, and transfer, anctthe effect and construction of deeds conveying it, in so far as they affect tbe rights of parties arising from such descent, alienation, or transfer. McGoon v. Scales, 9 Wall. 23; Brine v. Ins. Co. 96 U. S. 627; Polson v. Stewart, 167 Mass. 211, 45 N. E. 737; Biley v. Burroughs, 41 Neb. 296, 59 N. W. 929; Tillotson v. Prichard, 60 Vt. 94, 14 Atl. 302; Scudder v. Union Nat. Bank, 91 U. S. 406; Frierson v. Williams, 57 Miss. 451. In tbe last case cited tbe court quotes with approval tbe following from Story, Oonfl. of Laws : “The general principle of tbe common law is that tbe laws of tbe place where such immovable'property is situate exclusively govern in respect to tbe rights of the parties, tbe modes of transfer, and -the solemnities which should accompany them.” Sec. 424. And: “Tbe same rule would also seem equally to apply to express liens and to implied liens upon immovable estate.” See. also, Dicey, Oonfl. of Laws, rule 151, p. 586. • Respondent contends that under tbe circumstances of tbe case tbe covenant here in question should be treated as separate and independent from tbe contract of conveyance. We cannot so consider it in view of its nature and its effect upon tbe rights of the parties respecting tbe title to this land. Hence the rule of tbe place governing ordinary commercial contracts (Brown v. Gates, 120 Wis. 349, 97 N. W. 221, 98 N. W. 205) cannot-apply. It is alleged by defendant that all tbe taxes assessed and levied on these lands at the time of conveyance were paid, and that defendant bad no knowledge or information sufficient to form a belief as to tbe allegation in tbe complaint charging that tbe lands were then subject to a tax duly assessed and levied under tbe laws of Mississippi, and that it constituted an incumbrance thereon, and that dec [532] fendant became indebted to plaintiff for the amount of snch tax, which plaintiff was compelled to pay in February, 1904, to protect its interest in the lands embraced in the deed. These allegations of the answer are a denial of the allegations of the complaint and thus raise an issue between the parties as to the matters thus alleged. The plaintiff’s demurrer to the answer and counterclaim relates back to tbe complaint and requires examination of tbe sufficiency of tbe complaint. Lawe v. Hyde, 39 Wis. 345, and cases cited. The question of the sufficiency of the complaint was not specifically presented on appeal in the briefs and arguments. An examination of the complaint discloses that plaintiff seeks to charge defendant with a breach of a covenant in this deed against incumbrances “made or suffered” by the defendant. But the complaint is silent as to whether the incumbrance, which is alleged to have existed at the time of conveyance, did in fact have its inception during the time that defendant was owner of the premises. Nor are the facts alleged in the pleadings sufficient to apprise the defendant of plaintiff’s claim in this respect. We deem such an allegation essential to complete the canse of action attempted to1 be alleged in the complaint. Counsel for both parties have fully discussed the question of the sufficiency of the answer and counterclaim under the demurrer thereto' and we will therefore proceed to consider them. The answer alleges that Carter and Kennedy wilfully concealed from defendant the facts now alleged by plaintiff as part of its cause of action, namely, that under the laws of Mississippi the annual taxes for 1903 were a lien on the real estate at the time of conveyance, and that the deed covenants against incumbrances of this nature. It is also alleged that they fraudulently represented to defendant, shortly before and at the time of the transfer, that the premises were free and clear from incumbrances, when they well knew that defendant was ignorant both as to the law of Mississippi and [533] as to the actual state of the title, 'which they claimed to have examined and represented to defendant to be free from in-cumbrances ; and that defendant believed the lands were in fact free from all claims for taxes and other incumbrances, as was represented to him. It is further alleged that plaintiff’s officers fraudulently prepared the deed in question by inserting the operative words “grant, bargain, sell, convey, and warrant” and fraudulently induced defendant to execute it with the fraudulent purpose of holding him liable for these taxes upon an implied covenant against incumbrances, well knowing that defendant was wholly ignorant of the effect of these words in such deed, and that he did not intend nor agree to covenant against incumbrances. If Carter and Kennedy understood that defendant was in fact ignorant of the laws of Mississippi respecting these matters, or if they had good reason to know that he understood and believed, through their representations, that the lands were in fact free from incumbrances or that no covenant against incumbrances was intended to be embraced in the deed, or that defendant was misled or induced to execute such a deed by their misconduct in this transaction, then defendant is entitled to relief, upon the ground of fraud, against the plaintiff’s claim. The fact that Carter and Kennedy individually obtained the option to purchase these lands from defendant cannot affect the status of the case, since it is averred that they caused plaintiff to be incorporated to purchase these lands, that they are its principal stockholders and officers, and that they conducted all the negotiations to their final conclusion by conveyance under this deed. Tinder these circumstances the effect of their acts and conduct, if established as claimed, would estop plaintiff from claiming any benefit as against defendant, if he in good faith relied on such alleged fraudulent representations as true. Mihills Mfg. Co. v. Camp, 49 Wis. 130, 5 N. W. 1; Two Rivers Mfg. Co. v. Day, 102 Wis. 328, 18 N. W. 440; Frels v. Little Black F. Mut. Ins. Co. 120 Wis. 590, [534] 591, 598, 98 N. W. 522, cases; Marling v. Nommensen, 127 Wis. 363, 106 N. W. 844. Tbe defendant alleges that be relied upon these allegations, by wbicb be claims to have been fraudulently induced to execute this deed containing a covenant against incumbrances, and therefore asks that tbe deed be reformed so as to express tbe true agreement, without such covenants. While tbe courts of this state cannot reach and modify tbe recorded deed in tbe proper county in tbe state of Mississippi, yet, since plaintiff appears in tbe courts of this state to enforce a right under such a deed against plaintiff, a court of equity may, as against plaintiff, upon such facts being shown, compel reformation of the deed so as to express the agreement actually made between it and tbe defendant. Dickson v. Loehr, 126 Wis. 641, 106 N. W. 793, and cases there cited. Tbe other questions presented in argument are not properly before us on this appeal and can only arise upon trial of tbe issues of fact raised by tbe pleadings. Considerable attention is given by counsel in argument to tbe effect of tbe law of Mississippi upon tbe covenants in this deed and tbe effect of tbe tax lien law under such covenants. Consideration of these questions should be deferred until proof is made of tbe law of Mississippi bearing on tbe questions raised under tbe allegations of tbe pleadings in tbe case. It seems that such proof is proper under tbe allegations on these subjects. Central T. Co. v. Burton, 74 Wis. 329, 334, 43 N. W. 141; 9 Ency. PI. & Pr. 542, “Foreign Laws; ” 20 Ency. PI. & Pr. 600, 601, subd. 3, “Manner of Pleading Foreign' Statutes,” and cases cited in note. Tbe court should have sustained the demurrer as a demurrer to tbe complaint. Tbe answer and counterclaim allege sufficient facts to constitute a defense and counterclaim. By the Court. — Order reversed, and tbe cause remanded for further proceedings according to law; respondent to recover bis costs in this court.