Hough v. Richardson

STORY, Circuit Justice. This cause has been very fully and ably argued, and is not unattended with difficulties. The bill is, in substance, a bill to rescind a contract made or asserted to be made with the defendants, for the purchase of certain lots of land in the town of Carmel, in Maine, and for other consequent relief. Several points have been made at the bar; and among those most material to be considered are the following questions: (1) Whether the defendant, Moulton, in making the sale of the lots in question, acted as the agent of the other defendants, or as principal on his own account. (2) Whether there was any material misrepresentation made by Moulton to the plaintiff at the time of sale, on which the plaintiff relied as a true representation, and which constituted the basis of the sale. (3) Whether the lapse of time since the sale, and before the bringing of the bill, connected with the other circumstances of the case, furnish a sufficient ground, upon which this court, sitting in equity, ought to deny the relief asked by the bill. Upon the first of the questions, I cannot say, that I perceive any reasonable ground for doubt. It appears to me, that, taking the circumstances together, the sale was made by Moulton, not as a principal on his own account; but as the agent of the other defendants. Hie bond given to Moulton by the other defendants, in the condition, after reciting; “And whereas we have agreed to sell and convey the same (lots) to said Moulton, or his assigns, provided he shall, within thirty days from this date, elect, to purchase the same at the rate of five dollars and fifty cents for each and every acre thereof, payable one quarter part thereof in cash on the delivery — 577 — of the deed, and the remainder by good notes, in three equal payments, with interest annually from this date, secured by mortgage or otherwise, to the satisfaction of said ob-ligors, and also in case of a sale of the same by the said Moulton within the said thirty days, the further amount of one half of the excess of such sale over and above five dollars and fifty cents an acre,” — proceeds to state: “Now, if the said Moulton shall elect to purchase said land, or shall make a sale of the same within the said thirty days, and shall perform the several conditions aforesaid, and said obligors shall and do thereupon execute and deliver to the said Moulton or his assigns, a good deed of general warranty of the premises, then this obligation shall be void, otherwise shall remain in full force and virtue.” It is plain, from this language, that the vendors (the obligors) contemplated two alternatives, one a sale to Moulton himself at his election, to be made within thirty days, at a fixed price, the other a sale to be made by him to other persons or purchasers, at a higher price, of which, if made, they were to receive one half of the excess beyond the fixed price. It is very certain, that Moulton did not make any such election to purchase at the fixed price on his own account The-sale actually made by him was to other persons as purchasers, and among them the plaintiff; and one half of the excess was to be, and was actually accounted for to the plaintiffs. The sale was, therefore, manifestly made by Moulton for the other defendants, as their agent, since he did not elect to become himself the purchaser; and they had an interest in the sale co-extensive with the purchase money, he, Moulton, receiving the one half of the excess only, and that as in the nature of a compensation for his services. It is no answer to suggest, that the other moiety of the excess was received by and was for the sole benefit of Mussey, one of the vendors — for, if so received, it was a mere private affair between Mussey and his co-vendors— | with which the purchasers and Moulton had ■ nothing to do; and the interest in the sale . was the same in all the vendors, and through i one and the same agent. And besides, the i bond itself treats the moiety of the excess : as belonging to all the vendors, and they cannot be permitted now to aver their ignorance of this clause in the bond. It is also wholly immaterial, whether the sale was made within the thirty days or afterwards; for if made afterwards, it was adopted by all the vendors, and bound them as a sale through their agent; and they, and not Moulton, gave a deed of conveyance to the purchasers accordingly. The sale, then, being made by Moulton, not as himself the owner — which he was not— but as the agent of the owners, it follows, that they are bound by his representations made at the time touching the sale, as a part of the res gestae, and as to the purchasers, it makes no difference whether these representations were made by the authority of the owners or not, if they were material to and constituted the basis of the sale, and it was made by the purchaser on the faith and credit of these representations. Under such circumstances, the sale is good in the entirety, or not good at all. The owners have no right to insist upon the validity of the sale independent of the representations. The whole must be taken together as a part of one and the same transaction. It cannot be adopted in part and rejected in part. It must be taken as good for the whole or not at all. I have on several occasions expressed my opinion upon this point; and especially in the case of Daniel v. Mitchell [Case No. 3,562], and in another case recently argued,— Doggett v. Emerson [Id. 3,960], — and decided in favor of the plaintiff. The case of Small v. Attwood, Younge, 407, and the same case on appeal (Attwood v. Small, 6 Clarke & F. 232), go far to support the same doctrine, although somewhat distinguishable in its circumstances. Let us then proceed to the consideration of the second question, and that is, whether any false or material representations were made upon the sale, and which constituted the basis of the sale on the part of the purchasers, and by which they were, in fact, misled in the purchase. And here it is important to state, that both facts must concur, there must be false and material representations, and the purchaser must have purchased upon the faith and credit of such representations. It is not necessary, that he should have solely relied on these representations. It is sufficient if they constituted a part of the res gestae, upon which he relied, and without which the purchase would not have been made. There is another consideration, applicable to the circumstances of the present case, which is fully sustained by the case of Attwood v. Small (in the house of lords), 6 Clarke & F. 232, and which, perhaps, cannot be more briefly expressed, than it has been, with a slight addition, in the marginal note of the reporters. If, upon a treaty for the sale of property, the vendor makes representations (touching the nature and character and value of that property) which he knows to be false, the falsehood of which the purchaser has no means of knowing, but he relies on them, a court of equity will rescind a contract so entered into, although it may not contain the misrepresentations. But it will not rescind without the clearest proof of fraudulent misrepresentations, and that they were made under such circumstances as show that the contract was based on them. But if a purchaser, choosing to judge for himself, does not avail himself of the knowledge or means of knowledge open to him dr to his agents, be cannot be heard to say, that he-was deceived by the vendor’s representations, the rule being caveat emptor, and the knowledge of his agents being as binding upon him as his own knowlédge. Now, this doctrine is, in both its aspects, just as true as to — 578 — gross misrepresentations, made by mistake, going to the essence of the bargain, as it is to the misrepresentation founded in fraud;— I do not say morally, but in construction of law. If the purchaser relies on them, and is deceived, he does not buy what he intended, and he is misled to do what he would not otherwise have done. But, then, on the other hand, in cases of mistake, the bargain must have been made in strict faith and reliance upon such gross misrepresentations; and if the purchaser has acted upon his own judgment, uninfluenced by such misrepresentations, and has within his immediate reach full means of knowledge, and has declined to use those means, then he has ne right to complain of his bargain. And here again the proof should be clear, that there has been gross misrepresentation, and that the purchaser has been seduced into the bargain by them. Now, keeping* this whole doctrine in view, in its various aspects, one is obliged to pause in the present case, and cannot escape from the consciousness that there are difficulties about it In the first place, what were the misrepresentations made by Moulton? I do not understand, that there is any satisfactory proofs to overcome the full denials of his answer, that he made any positive representations of the nature, and extent, and value of the timber on the lands — as within his own knowledge. On the contrary, if he is to be believed, he made no representations, which ought to have been relied on by any one; he expressed to the purchasers, who went on the land with him, that he had no previous knowledge thereof, and had no better means or opportunities of knowledge than they had, at the time when they partially explored a part of the lots. The general rule in equity is, that an answer responsive to the facts alleged and charged in the bill is to be taken to be true until the contrary is established It is not necessary in the present case to say that Moulton’s answer is placed beyond all doubt or question. It is sufficient to say, that it is not absolutely overcome by full, clear and positive testimony, or by controlling circumstances. There are some circumstances in the case, which go to corroborate it; and, at all events, I cannot say, that its credibility is satisfactorily impeached. It is also to be taken into consideration, that some portion of the opposing evidence comes from sources not altogether disinterested — since it is given by persons who are co-purchasers, and whose claims are yet subject to litigation. In the next place, what is the misrepresentation complained of? It is alleged in the bill, that, at the time of the purchase, a certificate was shown by Moulton to the plaintiff and his co-purchasers, as containing a true description of the land, and upon the faith of which the purchase was made, and that it was false in substance. The certificate was as follows: “June 12, 1835. This is to certify that I have partially explored the lands in the town of Carmel, which are bonded to Mr. William Moulton, and, as far as my knowledge extends, there is an average of eight thousand feet or more of sound timber per acre, exclusive of a ■ large quantity of growing timber, hard wood, cedar, mixed growth, &e. This timber is on good water for driving logs, and the land is good farming land. George Herrick.” Now, upon this certificate there are several observations forced upon the court by the evidence.' The very date — whether it was the true date, is a matter of controversy. The plaintiff insists that it was actually made and dated on the 12th of June, 1835, before the sale, and then shown to the purchasers. On the other hand, the defendants contend, that it was not made until the 23d of June, at least two days after the purchase, and then was made at the suggestion of the purchasers. Undoubtedly the actual date on the face of the paper is prima facie evidence, that that is its true date; and there is much evidence in the case in support of this view of the matter. But it is encountered by very strong circumstantial evidence on the other side, and of the most unexceptionable nature. It is certain, that the purchasers went with Moulton on the land and made some partial exploration of some of the lots on the day before, or the very day of the purchase, and before it was completed. It is as certain, that Herrick did not go on the land on the same day with them. It appears from the testimony of McLaughlin, an inn-keeper at Bangor, that, by his memorandum book, Moulton went up the river on the morning of the 12th of June, and that he did not return to Bangor until the 22d of June, and that Moulton and Herrick went out to Carmel together on the 23a of June. And Herrick states, that he was only once on the lands with Moulton, and that his certificate was made after his return from that exploration. If this be true, then it is clear that the certificate was antedated; and that it was actually made ten days after the purchase was completed. Herrick, indeed, states, that he believes the certificate is truly dated, because he was in the habit of giving the true date to papers signed by him. It is to be recollected, that the testimony of Herrick was not taken until November, 1842, seven years after the transaction. But the memorandum book of McLaughlin is a written memorandum made at the time, and therefore more likely to be correct, it being made in the course of his business, than the mere recollections of Herrick at such a distance of time. I confess myself to be in no small degree embarrassed by the state of the evidence on this point, looking at all the circumstances, and if my judgment were compelled to decide one way or the other, I should incline rather to think, that the certificate was antedated. But the way in which I wish to put the point is, that it is a matter of grave doubt, and necessarily obscured by the lapse of time, upon which a court of equity can have no — 579 — .security, that it can act either safely or wisely in granting relief upon such a ground. Then, again, as to the terms of the certifi•cate. Herrick is the plaintiff’s own witness; amd I do not understand, that his good faith in giving the certificate is impeached, or that he has not truly stated what was his real •opinion and judgment so far as the explanation went Now, what is the just purport ■of his certificate? Upon its very face it states that he had but “partially explored" the lands; and he cautiously adds that “as far as my knowledge extends” there is an .average of timber as stated in the certificate. Now, although the certificate is dated •on the very day when the purchase was made, and, if truly dated, Herrick must have then been at Bangor with the plaintiff and his co-purchasers, they did not make any ’inquiries of him on the subject; what exploration he had made, its extent, its thoroughness, and his means of knowledge — or what he meant by a partial exploration. Yet these inquiries were most important to the purchasers, if they relied on his certificate as the basis of their purchase. If, indeed, the certificate was not given until the 23d of June, that would explain the omis:sion to make any inquiries; but then it would be fatal to the claim set up by the plaintiff. But if the certificate is truly dat•ed, how can we account for the total omission of any inquiries of Herrick by the plaintiff and his co-purchasers, otherwise than upon the supposition, that it had not any decisive influence upon the purchase. Indeed, it would be strange, if a certificate, so vague .and indefinite, referring only to a partial exploration, and not affecting to state any adequate means of knowledge, and assigning no extent of examination, could have had any great influence in the purchase of fourteen lots, amounting to 3792 acres oi land in a township like Carmel, which had been settled many years, and where there must have been inhabitants engaged in farming, capable of giving precise information. Besides, the township was but a short distance from Bangor, where the bargain was made. It was easily accessible; and, ’in point of fact, the plaintiff and his co-purchasers went on some of the lots with Moulton, for the purpose of an exploration, before the purchase was made; and partial ■as their examination was. they did not, by what they saw, decline to make the purchase. Here, then, the purchasers had a full •opportunity of exploring for themselves, of making satisfactory inquiries upon the spot from the inhabitants, and of deliberately ascertaining the true value of the land, and the amount of timber thereon. Here, then, we have a case falling within the line of the reasoning in Attwood v. Small, 6 Clarke & F. 232, where the purchasers do not choose to avail themselves of the knowledge or the means of knowledge open to them as to all the material circumstances of the value of the land and the amount of the timber thereon, and yet ask the court to grant them the same relief as if they had possessed no such means of knowledge, and had availed themselves of all reasonable diligence. Under such circumstances in the case of Att-wood v. Small, the house of lords thought, that the purchasers ought not to be heard to say, that they were deceived by the vendor’s representations. There is another considefation applicable to this.part of the case. It is, that the plaintiff and his co-purchasers had no right to rely upon the statements of a certificate so vague and indefinite, so partial and so inconclusive. In Trower v. Newcome, 3 Mer. 704, Sir "William Grant held, that when a representation made upon a purchase was vague and indefinite, its only effect ought to be to put the purchaser, upon making inquiries -respecting all the circumstances previous to his becoming the purchaser. In Scott v. Hanson, 1 Sim. 13, Mr. Vice Chancellor Shadwell fully recognized the same same doctrine, and said that a representation, that the premises sold were “uncommonly rich water meadow land,” applied to the quality of the land, and not to its being perfectly watered; and that the representation must be deemed a loose opinion in which the vendee ought not to have placed and could not be considered to have placed any reliance, that it was perfectly watered. Now certainly nothing could be more vague and indefinite as to the extent of knowledge and the extent of the exploration of the premises by Herrick, than this certificate. It should have stimulated and not lulled farther inquiries. And if it contained truth so far as Moulton and Herrick then knew or believed as to the state of the land, but was too indeterminate and loose reasonably to have become the basis of the bargain, or actually at the time to have misled the purchasers, it surely ought not now to affect any of the defendants. Besides, the plaintiff and his co-purchasers went on the land themselves With Moulton, and explored for themselves as far as they chose; and they could not but know from the very form of the certificate, that Herrick had made but a partial exploration, and, therefore, that they had as good means to judge as he. If Moulton is to be believed, he had no more knowledge of the land than the purchasers, and he went on the same for the first time with them, and so told them. It is no where satisfactorily shown by the evidence, either that Moulton knew more, or had any peculiar means of knowledge beyond that of the purchasers, as to the state of the land. But the great and grave question in the cause is, after all, the lapse of time connected with the other circumstances of the case. It is clear from the plaintiff’s own statement, that he did not buy the lands on speculation for an immediate sale, for he says in his answer to the cross bill, that he bought “with — 580 — a design to’ keep the lands, as he supposed lands so well timbered, in the vicinity of Bangor, must be very valuable to be preserved for the timber and wood.” The conveyance was made on the 30th of June, 1835, and a mortgage given back to the grantors on the same day, to secure the purchase money by three annual payments by the grantees of their respective proportions of the purchase money. That the plaintiff and his co-purchasers took possession of the lots is none doubted. Agents were employed by them, and among others, William Loker, an inhabitant of Carmel, was employed, as agent for the lands, from 1835 to 1840. During this time about 33,000,000 feet of pine timber were cut off of the land under the direction of the agents. But what is most important in this part of the case, Loker had been employed for about two years before as agent of the then proprietors of the land, and in 1834, at their request, he made an exploration of the lands. He began his examination in the autumn of 1834, and completed it in March, 1835; and he then estimated the pine timber on the lots at 13,000,000 feet Since his agency ceased in 1842, he made an exploration of the lots with one Joseph Haddocks, and he then estimated the pine timber thereon at 6,120,000 feet; and in his testimony he states as his opinion, that since 1835 there had been as much pine timber cut off of the lots, which had not been accounted for (part I presume by trespassers) as had been accounted for; that is, as I suppose, an amount equal to 33,000,000. I am aware, that Haddocks and Usher make a lower estimate, from 4,752,000 to 4,970,000 feet; and Fuller and Heald as low as 2,218,000 feet. But I do not rely upon any of these estimates as decisive of the cause. What I proceed upon is, that the plaintiff had through his agent, Loker, full knowledge and means of knowledge of the state of the lots and tho probable quantity of timber on them during the period of Loker’s agency from 1835 to 1840. I say the plaintiff had knowledge and means of knowledge through Loker, for what the agent knows in the course of his agency, the principal is presumed in law to know, and cannot be heard to aver his ignorance. This doctrine * was clearly laid down in Attwood v. Small, 6 Clarke & F. 232, 233, 351. The plaintiff and his co-purchasers having full means of knowledge within their reach, were bound to make due inquiries (and their agent had the fullest means of knowledge;) they had no right to go on and cut down the timber year after year, and proceed to treat the property as their own, and then, at the distance of six years, when the value of the property had been essentially changed, by the state of the market, by depredations upon the property, and by the public reverses growing out of the extravagance of timber speculators, to turn round and insist, that the defendants, Richardson, Mussey and Deering, the two latter having become insolvent, shall take back all the property and bear all the losses incident to such a bargain, after such a lapse of time. If the plaintiff had come earlier, the defendants might have had far better means of .meeting the exigencies of the case, and of repelling the allegations of the bill. We are also to take into consideration the circumstance, that Carmel was a township in the course of settlement for agricultural purposes, and not a township composed merely of what is expressly called wild lands, and bought solely for the sake of the timber thereon, as a matter of immediate speculation and sale; and the plaintiff and his co-purchasers do not appear to have expressed any dissatisfaction with the purchase during the whole time of Loker’s agency. Neither does the bill state or affect to stdte any new discoveries made, as to the quantity and value of the timber, which might not by reasonable diligence have been obtained within a single year after the purchase. Indeed, the bill is silent as to any time when, or means by which the discovery of the supposed misrepresentation was first brought to the plaintiff’s knowledge. Yet it is most manifest, that the very lapse of time since the purchase and the change of circumstances must constitute a strong objection to the maintenance of the suit. I have had occasion to consider this subject with a scrupulous attention in several recent cases; and especially in Sanborn v. Stetson [Case No. 12,291], and Veazie v. Williams [Id. 16,907], at the present term. The case of Vigers v. Pike, 8 Clarke & F. 562, in the house of lords, furnishes much wholesome instruction to assist us in the administration of relief in equity in cases of this sort. Upon that occasion, Lord Cot-tenham said: “In a case depending upon alleged misrepresentation as to the nature and value of the thing purchased, the defendant cannot adduce more conclusive evidence, or raise a more effectual bar to the plaintiff’s case, than by showing, that the plaintiff was, from the beginning, cognizant of all the matters complained of, or, after full information concerning them, continued to deal with the property and even to exhaust it; as by working mines.” — And again: “The doctrine of carrying equities by acquiescence I consider to be one of the most important to be attended to; for otherwise there is great danger of the principles of a court of equity, thus improperly exercised, producing great injustice. A man who, with full knowledge of his case, does not complain, but deals with his opponent, as if he had no case against him, builds up from day to day a wall of protection for such opponent which will probably defeat any attack upon him.” Every portion of this language is strictly applicable to the present case; and if we simply add that ample means of knowledge is equivalent to actual knowledge, and that knowledge of the agent is knowledge of the — 581 — principal, the doctrine would seem conclusive upon the merits of the present suit. Upon the whole, my judgment is, that the plaintiff’s bill ought to be dismissed, with costs for the defendants.