Edwards v. Noel

BOND, J. In order to recover in an action at law for deceit or fraudulent misrepresentations, it is necessary to allege and prove, first, that the representations were false; second, that they were known to be false when made, or, wbat is tantamount to such knowledge, -that they were made as of bis own knowledge by tbe utterer, when in fact be bad neither any knowledge on the subject, nor any reasonable grounds to believe the representations so made to be true; third, that the plaintiff had a right to, and did rely upon the truth of such representations, and suffered damage and loss by reason of their falsity. Paretti v. Rebenack, 81 Mo. App. loc. cit. 498, and cases cited; Hamlin v. Abell, 120 Mo. 188. Breach of warranty or fraud in the sale of personal property is ground of rescission, but the vendee is not compelled to rescind for either of these causes, for both warranty and fraud will survive an acceptance of the goods. In the case of breach of warranty, the vendee, although he has accepted the thing sold with knowledge that it does not fulfill the warranty of the vendor, yet hath still that covenant on which to rely and this covenant being one which is collateral to the contract of sale, is not waived merely by an acceptance of the thing purchased. So, likewise, a defrauded vendee of personal property may sue for the damages thus caused, although he has accepted the thing sold and retained it after knowledge of the fraud of the vendor. Robinson v. Siple, 129 Mo. loc. cit. 222; Miller v. Crigler, 83 Mo. App. loc. cit. 401; Shinnabarger v. Shelton & Lane, 41 Mo. App. 155; Nauman v. Oberle, 90 Mo. loc. cit. 670. In the case at bar, although the written terms of sale of the Lindell Hotel bond were accepted by plaintiff two days before the delivery of the bond itself, accompanied by a draft for its purchase price, still the plaintiff had the right, upon the receipt of the bond, to inspect it and if it disclosed any material misrepresentation upon the part of the defendant in effecting [440] the sale, the plaintiff might have refused to pay for the bond and returned it, thus rescinding the sale. He was not bound, however, to take that course, for it was equally permissible for him to have accepted the bond, paying the price therefor, and if a subsequent inspection of the bond disclosed that he had been led into the contract by means of a false representation of a fact material to its formation, he would still be entitled to an action for any damages caused by such deceit. The first question, therefore, is whether in the sale of the bond, such material misrepresentation was made by defendant and relied upon by plaintiff to his damage ? This necessarily involves an inquiry as to the truth of the representation contained in the letter of defendant as to the security existing for the payment of the bond at the time he offered it for sale to plaintiff. As has been seen, the representation in substance was that the bond was secured by a deed of trust conveying a perpetual lease upon the ground whereon the hotel was situated at an annual rental of $27,500. The actual fact was that there was only a deed of trust conveying a lease upon the ground for the same rental for a term of ninety-nine years. Unless, therefore, such a lease was a perpetual one as understood in the law, the representation of defendant to that effect was untrue. A lease is a contract for. the possession and profits of land and tenements, either for life or a certain term 'of years, or during the pleasure of the parties. Bouvier’s Law Dictionary. To the above definition, some of the text writers have annexed the qualification of a reversion being .left in the party from whom the grant or assurance proceeds. As to the latter requirement, however, there is some conflict in the English cases. 1 Platt on Leases, p. 18. The right ■of the lessee to enforce a covenant for perpetual renewals, is .now an established doctrine in the English courts. 1 Platt on Leases, p. 708. In the application of these principles, the [441] term “perpetual lease” can only mean one for years wherein tbe lessee bas tbe covenant of tbe lessor for perpetual renewals. Sucb a covenant does not offend tbe rule against perpetuities, provided its entire control is in tbe bands of a person wbo bas a vested interest under tbe lease. On tbe other band, if the covenant for perpetual renewals does not lie with a person whose interest bas vested under tbe lease, but is subject to a condition precedent, which may not happen within the time (twenty-one years or some life in being), prescribed by tbe rule against perpetuities, it is a bad limitation or void. Gray on tbe Eule Against Perpetuities, sec. 230, and cases cited. An analogue to tbe estates created in England by a lease with a covenant for perpetual renewal exists in this State and in tbe United States, and is termed a fee farm rent, as to which our Supreme Court bas said, speaking by Judge Scott : “A fee farm rent is where tbe rent is created by deed and tbe fee is granted. Whatever may be thought of this matter elsewhere, sucb reservations are upheld in tbe United States.” Alexander v. Warrance, 17 Mo. loc. cit. 231. "While tbe terms “perpetual lease” used by the defendant would justly describe either a lease for years with a covenant for perpetual renewals as is upheld in English courts, or a fee farm rent as defined by our Supreme Court, yet the terms in question are wholly inapplicable to a mere lease for ninety-nine years, for that does not satisfy their obvious import. It follows that tbe description of tbe security for tbe bond sold by defendant, contained in bis letter to plaintiff, was contrary to tbe fact. If be made this representation with knowledge of its untruth, or without reasonable grounds to believe it to be true, in either event, a sufficient basis was laid for tbe inference of a guilty motive necessary to sustain tbe present action. There was abundant evidence tending to prove that tbe plaintiff’s reliance upon this misrepresentation of defendant, was tbe indue [442] ing motive to his purchase and that it wrought a substantial loss to plaintiff. In view of the further proof tending to establish the elements necessary to a recovery in this action, the trial court should have permitted the case to go to the jury, unless there was evidence establishing the other defenses of a former adjudication, or of the statute of limitations. Neither of these defenses was sustained by4the record. The former suit was one for an alleged breach of contract of guaranty simply; it did not in any way embrace the issues essential to a recovery in the present action. As to the statute of limitations, it is sufficient to say, according to the testimony of the plaintiff, he only discovered the fraud and misrepresentations of the defendant about one year previous to the trial of this suit. Eor the error of the learned circuit judge in giving a peremptory instruction in this case, the judgment herein is reversed and the cause remanded. Judge Goode concurs; Judge Bland dissents, because he thinks there was no substantial evidence of fraudulent misrepresentation by defendant, and that the court did not err in taking the case from the jury.