James G. v. Thompson

Mr. Chief Justice Sharkey, delivered the opinion of the court. The appellants contracted with the appellee for a tract of land in Yalobusha county, containing nine hundred acres, at twenty dollars per acre, for which they executed their three promissory notes for six thousand dollars each; the first, payable on the first of March, 1838, and the others payable annually thereafter. They took from the vendor a bond to make title, in the penalty of thirty-six thousand dollars, which bears date the 29th of November, 1836. It recites the contract of sale, and the condition is, that the vendor was to make to the vendees a good title, with covenants of warranty, on payment of the notes, without specifying at which payment the title was to be made. Suit was instituted on the first note, and the appellants filed their bill for an injunction, and for a rescission of the contract on the ground of fraud. The various charges of fraud may be comprised under three heads. 1. Fraud committed by false representations as to the quality of the land. 2. Fraud in false representations made as to the boundary of the land. 3. Fraud in falsely representing that he, the vendor, had a good title, and in concealing incumbrances. First, as to the fraud committed by false representations as to the quality of the land. The bill charges that Thompson represented the tract as containing only fifty or sixty acres of untillable land, whereas about three hundred acres are unfit for cultivation. This allegation is denied by the answer. The proof is, that Thompson had previously represented to a witness that there were only forty or fifty acres of untillable land on the tract, but it is not shown with certainty that this statement was made to complainants.' But, admitting that it was made, it will not, under the circumstances, entitle them to relief. It appears that they remained at Thompson’s house a week or two, examining land with a view of buying. They examined his tract more than once. It was shown to them by Peele, and by Thompson himself. They state in the bill that they examined the laud. Under these circumstances, they must be held to abide by their own judgment. The rule of caveat empicr ap — 482 — plies. When a purchaser has examined an estate which has patent defects that could be discovered by ordinary vigilance, he can have no relief on account of such defects. Sugden on Tendors, 1, 2, 307. Anderson, v. Burnet, 5 How. 167. This rule would not apply when fraudulent means had been employed to conceal the defects, but no such thing is pretended in this case. As a general rule, the vendor must make every important disclosure of which the vendee is ignorant, but this rule is subject to some qualification. Judge Story says, that undue concealment is the non-disclosure of facts and circumstances which one party is under, a legal or equitable obligation to communicate. 1 Story’s Equiry, 216. Chancellor Kent lays down the rule to be, that each party is bound to communicate to the other his knowledge of material facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the reach of his observation. 2 Kent, 482. Judge Story says, that these remarks of the learned chancellor, must be taken with some qualification, by limiting them to cases rvhere there is an obligation to communicate facts, or where there is a peculiar relation, trust or confidence between the parties, which will justify the presumption, that there is no undue concealment. We may readily perceive, from the remarks of both these learned authors, that this obligation ceases when each party has an opportunity of examining for himself, and undertakes to do so without relying u ion the statements of the other. Then the ignorance of the facts is not presumed to exist, and the confidential relations cease, and, of course, the legal obligation to make disclosures also cease-!. Fraud is n< t necessarily implied in such cases from concealment. When the party undertakes to examine for himself, it is evidence of a want of confidence, and a determination to rely on his own judgment, and he is presumed to have made himself acquainted with patent defects. It is not the mere opportunity to examine which relieves the other party from the duty to disclose, for although the opportunity exist, yet, if the party reposes confidence in the vendor, and does not examine for himself, then the duty to disclose defects is equally obligatory, and the vendor will be held bound for all statements, and — 483 — all undue concealments. 5 Day’s Rep. 439. Sugden also lays down the rule, that the vendor must disclose defects, and if he gives a false description, equity will relie re by rescinding the contract. Sugden on Yendors, 372. This’ rule, however, was evidently intended by the learned author to have an application only in cases where no examination had been made, as is shown by the class of cases which he refers to. In the same chapter, and in other parts of his work, he holds to the doctrine of caveat emptor, in reference to patent defects. The case of Boyce v. Grundy, has been also examined on this branch of the subject. The report of the case is very unsatisfactory for want of the facts, though it is believed to be in accordance with the principles laid down by elementary writers. Representations were there made both as to the boundary and quality, in reference to which the buyer could not inform himself. Now, although the respondent may have made the statement imputed to him, yet it was in reference to a matter about which the complainants were competent to judge; and as they several times examined for themselves, they are precluded by their own acts. There does not appear to be any peculiarity about >the land which would show that the defects could only be ascertained at particular times, such as liability to inundation, or the like, which was one peculiarity in the case of Boyce v. Grundy. Second, as to the fraud charged in pointing out the boundary, it appears that the eastern boundary passed through the yard, and it is said that there was a misrepresentation in pointing it out, ás including the whole of the yard. The answer denies this, and avers that a line tree in the yard was pointed out. The witness, Peele, also states that he showed the line, but a short distance north of the house, and also but a short distance south of it. The complainants, then, could not have been \Yell mistaken as to where it would run. In this particular, their charge is not sustained. There is also a charge of misrepresentation, as to the locality of the western boundary which divided the land sold, from that owned by Carpenter <fc Irish. The answer states that they were told by respondent, that this line had never been run out — 484 — that it was what is called an open line,' which means an ideal line, designating the legal subdivisions of a section. The witness, Peele, states that he told them the same thing. It seems, then, that they were fully informed that the precise locality of this line was uncertain. All the statements made, 'were mere matters of opinion, and must have been so understood by them. They had certain means of information by a survey, and should have resorted to it. It turns out that there was a mistake in regard to this line. A survey brings Irish <fc Carpenter’s line somewhat further east than it was supposed it would run; thus cutting off about twenty-five or thirty acres of land, which they supposed they were buying, and which the respondent supposed he was selling; but there is no deficiency in quantity. They have the nine hundred acres, which they bought; nor is there any proof that the land which had fallen to Carpenter & Irish, is of better quality, than that of complainants. It is difficult to imagine that this small strip of land could have formed the main inducement to the purchase, and it is certainly not proven that the respondent made any positive statement about it. His statement was such as must have informed the complainants that it was somewhat uncertain where this line would run. There is also a complaint that a small portion of the southern boundary was improperly pointed out, but this is not sustained by proof. Altogether the charge of fraud in reference to boundary has not been sustained. In connection with this branch of the inquiry, we may also notice the allegation, that respondent stated that he had two hundred and fifty or three hundred acres of cleared land, and that in fact the quantity is greatly less. This seems to have been stated as matter of opinion, and is a matter about which the complainants must also have formed an opinion. They examined the cleared land particularly, and cannot urge this deficiency as a reason for rescinding the contract. We would not be understood as giving sanction to a rule which would exclude parties from rescinding a contract, on account of mis-statements in reference to boundary. A case of gross deception might justify the interposition of a court of chancery, but this is certainly not one •of that description. — 485 — Third, as to the false representations in regard to title, and the concealment of incumbrances. This is the point mainly relied on for reversing the decree of the chancellor. The authorities generally concur in the leading principles on this subject, and yet there seems to be some degree of confusion arising from the grest variety of circumstances which have called for an application of these principles. Fraud, it is said, vitiates every contract into which it enters; and the vendor who makes statements which he knows to be untrue, is guilty of direct fraud, if the vendee is thereby deceived to his prejudice. And if the vendor undertakes to make statements without knowing whether they are true or false, this is also fraud in law, and he must make those statements good. So a false impression, produced with a view to mislead or entrap another, is’ fraudulent. But to justify relief in chancery, the representation must be in reference to some material thing, unknown to the purchaser; which want of knowledge must not arise'from mere negligence, but for a want of actual examination—for want of an opportunity to be informed, or from an entire confidence reposed in the vendor; and then the remedy must be prosecuted in good time after the injury is discovered. If the. question depends on a mere matter of judgment, then there is ho ground for relief. But. the law holds it-to be fraudulent also, in the vendor to conceal material facts which are within his knowledge, and unknown to the other party; such facts being calculated to influence the other party, and to operate to his prejudice. 1 Story’s Equity, 201-2. Sugden on Vendors, 1, 2, 6, 7,_8. 1 Mar. Rep. 433. 13 Peters, 26. And these principles apply to the quality and identity of the estate, as well as- to incumbrances. Let us then see how far the facts in the case will justify an application of these principles. It is alledged in the bill, that Thompson stated to complainants that he had a clear, unincumbered title, and offered to make them a deed to the land, provided they would give a deed of trust for the purchase money; but they preferred taking his bond for a tifie. The complainants also charge that they confided in his representations, and that they were false, as Winter held at the time a deed of trust — 486 — for the land or a part of it, with power to sell on default of payment, which payment had not been made. It is said that these allegations are not denied by the answer, and that on a motion to dissolve the injunction, the statements in the bill which are not denied are to be taken as true. But the counsel must be laboring under a mistake in saying that the answer does not deny the existence of incumbrances. The language of the answer is this : “ this defendant positively denies that he represented to complainants that the land which he claimed was free from incumbrances, or that he was then able to make to them a fee simple title to said lands ; for the fact was not so.” This is an unqualified denial of false representations. But the answer goes further, and states that respondent urged complainants to take up the deed of trust out of the first payment, in order that he should be able to make them a good title; which he would do, if they would give security for the purchase money that would remain due after the first payment. This is a denial of the charge of concealment of the incumbrance. The position, then, that the injunction ought not to have been dissolved, because the allegation of concealment was not denied by the answer, is unsupported. But it is further said, the concealment of the incumbrance is established by proof. To establish the charge, a conversation is relied on, which took place between Hall and Thompson early in 1838, in Coffeeville. This conversation is detailed by three witnesses, Folkes, Arnold and Ramsey. Folkes states that Hall charged Thompson with having practiced a fraud upon him in the sale of land, and offered to give up the bond, which was then tendered to Thompson, and a demand made of the notes which had been given for the land. Thompson disregarded the tender of the bond, and the proffer to give possession of the land, and refused to give up the notes. He also denied the imputed fraud, and inquired how he had been guilty of it. Hall charged him with having concealed a deed of trust which incumbered the land and lessened the value, as it had prevented him from making an advantageous sale. The witness was asked if Thompson denied the truth of the charge, and answered that he did not, but replied that they — 487 — had nothing to do with the deed of trust; that he intended to pay it off, and free the land from the incumbrance. He also stated that he was willing to pay it off and make them a title. Arnold gives Eolkes’s answer as his own. Ramsey’s testimony is the same in all respects except one; he states that Thompson “ did not deny the charge of concealment, but admitted the suppression.” On this testimony, hangs the whole application for a rescission of the contract; we shall see what weight it is entitled to. An admission of the fact .spoken of, is supposed to arise, if no denial is made by the party against whom it is to operate. But this description of evidence is considered proper only for a jury, being a circumstance from which they may draw an inference. When anything is attempted to be established in this way, all the attending circumstances should be known; the temper of the parties, accompanying declarations, and the tenor of the conversation should all be stated with accuracy. It is said that such evidence is'equivocal, and should be received with cautious and reluctant credence. 1 Serg. & Rawle, 398. This is manifestly so, as but few men can be supposed to know the effect of their silence, and a failure tq, contradict may arise from various other circumstances. It is not an invariable rule that men in conversation deny everything that is asserted against them. We cannot attach to this evidence sufficient importance to justify a rescission of the contract ; such a decree should never be made, unless on a clear case fully established. It is to be remarked that Thompson in the outset, denied the fraud. If his silence is to be taken as evidence against him, his assertion must operate equally strongly in his favor. The one is counterbalanced by the other. Much stress is laid upon the testimony of Ramsey, who says that Thompson “ did not deny the charge of concealment, but admitted the suppression.” It is somewhat remarkable that the other witnesses heard nothing of this admission; and it is also remarkable that the witness does not give the language in which the admission was made. He has given Thompson’s language when speaking of other parts of the conversation. This testimony justly weighed, raises but a very remote presumption. — 488 — To hold that it would justify a rescission, would be to establish a rule by which any artful man may obtain a rescission of a bad bargain. On this evidence, it may be possible that a court of chancery would not decree a specific performance; but a contract will not always be rescinded when a specific performance would not be decreed. Although this evidence is deemed insufficient to justify a reversal of the decree, yet it becomes necessary to look further into the state of the case presented by the record. It was but an executory contract, the complainants having taken a bond for title, which of itself is a circumstance implying one of two things, either that the title is imperfect, and time is required to perfect it, or that the vendor retains the title for his own security. But if it should be made manifest that the vendor never can make a title, or that he never can make anything more than an equitable title, the chancellor should have interposed to stay the collection of money, for which the purchaser never can receive a consideration. At law, if the covenants are independent and there is no fraud, the vendor must rely on his obligation— but a court of chancery may afford protection against one who has engaged to convey, when it is clear that he never can do it. Such an undertaking would amount to fraud; but the complainant who relies upon the inability of the vendor to convey, must show it. But as Thompson has set out his title, if it be defective, the opposite parties may avail themselves of the defects. The imperfection insisted on mostly, is that the conveyance from Winter to Thompson was improperly acknowledged and recorded, and is therefore void as to creditors and purchasers without notice. After the long possession of complainants, the decision in the case of Dixon & Starkey v. Lacoste, made at this time, is an answer to this objection; but the certificate of the justice is itself sufficient. Although it does not pursue the language of the statute, it contains the substance, which, by the terms of the statute, is sufficient. Instead of certifying that Winter “acknowledged that he signed, sealed and delivered the foregoing deed,” in the words given by the statute, he certifies — 489 — that “ Winter acknowledged the foregoing instrument to be his act and deed.” This is, in effect, a good acknowledgment. The instrument was acknowledged as his deed. A deed is a writing signed, sealed, and delivered. The. words used by the justice, mean then everything that the statute requires. It is in legal effect, a certificate that he acknowledged that he signed, sealed and delivered the deed—for it was not his deed unless he had done all these things. The statute only declares that the acknowledgment “ shall be in the form, or to the effect following.” It was also objected that all the dower rights had not been relinquished ; but this is a mistake, and the other conveyances by which Thompson acquired title are all sufficient. ' The whole case presents this aspect. Thompson agreed to sell, and the complainants agreed to purchase nine hundred acres of land, worth $1^000. Thompson gave bond to make title when he received the purchase money. He shows that he is able to comply with his contract. By paying the purchase money the complainants get what they contracted for. Under such circumstances we cannot think they have shown a case for relief. If fraud, in concealing the incumbrance, had been clearly proven, the case might be different; but the proof of concealment leaves the fact doubtful. Fraud must be accompanied by injury. The definition of fraud is, “ deceit in grants pnd conveyances of land, and bargains-and sales of goods, &c., to the damage of another person.” Tomlin’s Law Dictionary. A court of chancery must have something more tangible than a mere harmless idea or intention to act upon. But, says the counsel, there was injury, because Hall was prevented from selling for a good price. It will be recollected, that in the conversation already referred to, Hall is represented as saying that the concealment of the deed of trust greatly lessened the value of the land, as it had prevented them from selling for a good price. This testimony deserves some further remark. What had Hall to sell? Nothing more than - a- conditional equity; an equity when the purchase money was paid. Is it not singular that he should have said that the existence of the deed of trust of $600 had prevented him from making a good sale, when — 490 — there was an obstacle of far greater magnitude? a title in Thompson which could not be extinguished but by the payment of $18000. And is it not singular that the deed of trust should have in reality prevented the sale, when an incumbrance so much greater, and so much more obstinate was entirely overlooked? His proposed purchaser must have entertained strange ideas of the effect of incumbrances, to have overlooked the greater and shrunk from the least. It would require great credulity to give much weight to this statement. Indeed, the fair conclusion from it is rather unfortunate; it looks like a scheme designed to give color to a supposed injury. But there is another view entitled to much weight. The Halls had agreed to purchase an estate, subject to a trust. Taking the trust property, they stood in the place of Thompson. The purchase money was not paid, and the chancellor would at any timehave decreed the payment of the trust incumbrance, out of the purchase money ; so that if they were disposed to pay for the property, they were in no danger. On the whole, then, although there may be some doubts as to the fact of concealments (and there is certainly nothing more than doubts) the solemn contract of parties cannot be set aside on such uncertain grounds; this should only be done on clear proof. There are perhaps few contracts which are not attended by some circumstances which may look like unfair dealing; but it will not do-for a court of chancery to rescind in all such cases. In this instance the parties have been slow to make their application. It is straining much to suppose that it could not have been done sooner, and that the incumbrance never was discovered until the suit at law. If the land had increased in value to double the amount agreed on, we cannot but believe that we never should have heard of the incumbrance. The decree of the chancellor must be affirmed. Within the time prescribed by the rules of the court, Mr. W. Yerger, one of the counsel for the appellants, applied by petition for re-argument, which was granted, and he submitted the following Avritten argument on behalf of the appellants. — 491 — W. Yerger, on behalf of appellants. This case comes before the court upon a re-argument. In the former opinion, it was admitted by the court, that if Thompson had been guilty of any fraud, concealment, or misrepresentations, in relation to the title to the property, that the complainants were entitled to relief; and that even if such were not the case, still, if in fact, he did not have the title to the property, that the purchase money would be enjoined till the defendant could make title. In the opinion heretofore given, the court stated that there was not sufficient evidence of fraud, to entitle the complainants to relief upon that ground, and that the title exhibited by the defendant was good. It is a fact to be borne in mind in the investigation of this case, that it does not come before the court, by appeal from a final decree, but from an order dissolving an injunction. 1. It is a well settled rule of equity pleading and practice, that upon motions to dissolve injunctions, whatever is stated in the bill and not denied by the answer, is to be taken for true. 2. Now the bill expressly states, that Thompson concealed the existence of the deed of trust, and this allegation is nowhere denied. In fact, the answer substantially admits the allegation, for it is admitted as charged in the bill,, that “defendant did propose to make them a deed for the land, and to take a deed of trust to secure the purchase money.” See pp. 9 and 30 of the record. The testimony of the witnesses, however, is conclusive upon this point. Jeptha Folkes says that in the early part of 1838, Hall proposec to give up the land, and tendered Thompson his bond, sayin§ he had been defrauded. Thompson refused to rescind, and de nied the imputed fraud, and asked, “ How or in what way h< had been guilty of the charge of fraud Y> Hall answered, “ Yoi concealed the existence .of a deed of trust, which, at the sale incumbered the land, and now incumbers it, and greatly lessen its value.” This charge or specification, Thompson did no deny. John Arnold proves the same facts. — 492 — John G. Ramsay also proves the same. See p. 184. Ramsay proves further, “ Thompson did not deny the charge of concealment, but admitted it.” We have in this record, then, the proof of concealment made out in three ways. First, an allegation in the bill, and no denial in the answer. Second, a direct charge of concealment, in answer to a demand of specific charges, and no denial of the the charge, which amounts to an implied admission; and,third, we have the proof of a direct charge of concealment, and its admission at the time. This, it does seem to me, is conclusive. If it be not so, in the absence of contradictory testimony, then it would appear that there is no mode of establishing a fact. The court, in the former opinion, say, that a mere failure to deny, when a charge is made, is not conclusive evidence of the fact. That the accompanying circumstances, Sec., all should be detailed, &c. These propositions will not be controverted, and it is believed that this case is clearly within the rule. The witnesses do detail the accompanying circumstances ; they bring the parties together, place them into altercation with each other; one makes a general charge of fraud, which is denied, and he is required to specify the particulars. He does so, saying you concealed a deed. This specific charge, made in answer to a demand of specifications, is not denied, say two witnesses—and says another witness, “ it is not denied, but admitted.” Surely here is a sufficient detail of accompanying circumstances. The rule of law is clear, and it is admitted by the court, that an admission may arise from the silence of the party; and it is conclusive against him, if made under circumstances which afforded him an opportunity to act or speak, and which would properly and naturally call for some^action or reply, from men similarly situated. Greenleaf’s Ev. 229. Thus, if a tenant personally receive notice to quit on a particular day, without objection, it is an admission that his tenancy expires on that day. 2 Taunton, 109. 2 Camp. 647, 559. 13 East. 405. 4 Tenn. Rep. 361. So, too, if a trader hear a creditor ask for him, and his clerk — 493 — reply that he is not in, and do not announce himself, it is evidence of an act of bankruptcy. Key v. Shaw, 8 Bing. 320." The rule is, that the assertion must be of that direct kind, which naturally calls for contradiction—some assertion made to the party, with respect to his right, which, by his silence, he acquiesces in. 14 Serg. & Rawle, 393. 2 Car. & Payne, 193. I refer the court to the first part of Cowen & Hill’s notes to Phillips on Evidence, p. 192, where a complete summary of the American cases will be found; and I believe I may safely say, that in not one of the cases there cited, in which courts held the silence of the party to be evidence of the truth of the charge, were the circumstances stronger, nor such as more naturally and properly would have called for a reply, than is exhibited in the present case, in which two parties meet together at arms length and commence an altercation in reference to a trade made between them. Where one of the parties making a general allegation of fraud, is met with a prompt denial, and required to specify particulars, who, therefore, does specify and charge the concealment of a particular deed, and which specific and particular charge, made at the demand of the other, is, in the language of the witness,<£ not denied but admitted.” But even if mistaken in supposing the fraud to be made out, I think it is demonstrable that Thompson has not shown that he has a good title to the land, which, in a court of equity, is a prerequisite to the payment of money by a vendee. Upon this branch of the case, I refer the cou'rt'to the brief made by me on the previous argument of the cause. The Gotjrt adhered to its former opinion.