Alger v. Keith

• Decision Date: 07 November 1900
• Docket Number: 760.
• Citation: 105 F. 105
• Parties: ALGER v. KEITH et al.
• Court: U.S. Court of Appeals — Sixth Circuit

105 F. 105

ALGER v. KEITH et al.

No. 760.

United States Court of Appeals, Sixth Circuit.

November 7, 1900

This is a bill filed by Russell A. Alger to procure a rescission of the sale of a large tract of wild mountain land in Franklin county, Tenn. The defendants are Mrs. Louie H. Keith executrix of the last will of John F. Anderson, the vendee in the conveyance to Alger; John W. Gonce, who had been the owner of the three-fourths interest in one of the tracts included in the conveyance by Anderson to Alger; and several others, who are sued as heirs and representatives of the heirs of John F. Anderson, as a class. The pleadings, in substance, aver that the said lands were purchased by complainant through O. J. Sheridan and W. J. Green real-estate agents at Chattanooga, Tenn., doing business under the name of Sheridan, Green & Co., and that said Sheridan, Green & Co. were the agents of said John F Anderson and of John W. Gonce in the sale of said lands to complainant; that said agents made many grossly false and fraudulent representations concerning the timber and coal upon said lands, and as to the title of the vendor to large and material parts of same; that complainant, who lived in a distant state, and never saw said property before the sale had been consummated, undertook to verify the truth of the representations so made, and for this purpose sent one or more persons to examine and report upon said property, but that the said Sheridan, Green & Co., by tricks, frauds, deceits, and artifices, had prevented such an examination as was intended and desired, and corruptly and fraudulently bribed one A. J. Freer, who was sent by complainant to measure the thickness of veins of coal at the entries or openings upon the property, and to inspect and estimate the timber upon the surface; that the property was bought upon the faith of the representations so made by the agents of the vendors, and upon the reports of those representing complainant, who had either been deceived and misled by the active fraud of the agents of the vendors, or corruptly bribed to hide the truth and induce the sale by false reports. It is then averred that the fraudulent and corrupt conduct of said Sheridan, Green & Co. in respect to the agents upon whom complainant relied was not discovered until April, 1894; the bill being filed in August of the same year. The answer denied all fraud, denied that Sheridan, Green & Co. were acting as agents for either the said F. Anderson or John W. Gonce in making said sale, and denied that complainant had but recently discovered the alleged frauds practiced upon him by said Sheridan, Green & Co. A vast amount of evidence was taken, and the cause brought to a hearing before Clark, District Judge, who, in a full and careful opinion, found that the averments of the bill were fully sustained, and granted a decree for rescission, as prayed. Subsequently and at the same term a rehearing was allowed, and the case opened for proof upon alleged newly-discovered evidence tending to show that complainant had knowledge of the several frauds which he claimed had been practiced upon him several years before seeking rescission, and long antecedent to the date of his alleged discovery of the bribery of his agents. Much additional evidence was submitted upon this aspect of the case, and upon a final hearing the former decree was set aside and the bill dismissed upon the ground that complainant, after knowledge, had elected to abide by the transaction, or had been guilty of such delay in seeking rescission as to repel him from a court of equity, and remit him to his remedies at law upon the covenants of his deed, and his action for fraud and deceit. From this decree the complainant has appealed. Further facts will appear in the opinion.

Albert D. Marks, Floyd Estill, and J. J. Lynch, for appellant.

Frank Spurlock and John J. Vertrees, for appellees.

Before LURTON, DAY, and SEVERENS, Circuit Judges.

LURTON Circuit Judge, after making the foregoing statement of the case, .

It will not be possible or profitable to go over in detail the complicated facts presented by the transcript of the record before us, and we shall chiefly advert to such of the more prominent matters which involve the substantial merits of the case, stating for the most part only those conclusions of fact which we reach from an attentive examination of the whole of the evidence. The case resolves itself into these several questions: First, did Gen. Alger make the purchase of the lands in question, induced by false and material misrepresentations made as to the character and extent of the timber and coal on the lands, and as to the title of the vendor to the lands included within the boundaries of his deed? Second, were the efforts of complainant to verify these representations before concluding the purchase frustrated by the artifices of the vendor or his agents, so that the fraudulent character of the representations was concealed, and false reports by complainant's agents thereby induced? Third, were Sheridan and his associates in the sale the agents of the vendor? Finally, does the evidence show that after knowledge of the fraud the complainant exercised his option to take the property notwithstanding the fraud, or have the lapse of time and other circumstances interposed any bar to the maintenance of a bill for rescission? A collateral question will be the liability of the defendant John W. Gonce to account for that part of the purchase money received by him, as the owner of an interest in one of the parcels included in the deed of John F. Anderson.

1. In respect of the first question it may be said that before the conclusion of the sale the complainant discovered that the timber was not nearly so abundant or valuable as had been represented, and we are not satisfied that he was induced to make the purchase by reason of any representations in this regard. In regard to the representations touching the title of the vendor to the lands sold, it is perhaps established that there is a shortage in acreage, the sale having been by the acre; but this shortage in acreage, the sale having been by the acre; but this shortage is not of so material a character, nor the fraudulent character of the representations in that respect so well made out, as to justify a decree of rescission wholly on that account. The remedy upon the covenant of seisin and warranty will abundantly protect complainant, if pursued, against any consequence of such shortage. We may as well say here that the court below seems to have based its action wholly upon the question of fraud in respect to the representations as to the coal upon the lands, and the learned counsel upon both sides have expended their strength mainly upon the consequences to be deduced from the representations and frauds affecting the values of the land for coal-mining purposes. The case for rescission must turn here. There can be no reasonable ground to doubt but that this land was purchased mainly, if not altogether, upon the representations touching the existence of workable veins of coal, which were represented to show, in entries made by the vendor, or natural exposures, a thickness of from 4 to 11 feet. These representations were made in printed circulars and letters issued by Sheridan, Green & Co., who represented themselves as real-estate agents having the land for sale, and who addressed themselves to Gen. Alger, then and now residing at Detroit, Mich. Gen. Alger was a man of large means, and had been engaged in many important business enterprises, chiefly connected with the lumber interests of his state. The time was propitious for attracting his attention. The mountain region of Tennessee and North Alabama was known to be rich in minerals and timber, and a curious spirit of wild speculation in such lands was then prevailing, which led to much ultimate disaster to many of those who came under its influence. O. J Sheridan and his partner had been residents of Michigan, and acquainted with complainant's speculative tendencies. Hence they addressed him, as a possible purchaser. He replied, making inquiries as to price, terms, etc. At this stage of the case another Michigan man, to some extent an acquaintance of the complainant, was utilized for the purpose of inducing a sale to him. This was one E. J. Lynn. Sheridan and Green, concluding that Lynn's acquaintance might be of value, secretly interested him in the commissions or profits to be made in case of a sale. Lynn's connection with them was not at once disclosed. He was for a time held out as himself a probably purchaser, and an oral option given him. Lynn 'dropped in' on Gen. Alger, accidentally, according to the color given the interview, and told the general of this body of land, and fixed his attention upon it. Finally the complainant determined to investigate the matter, being attracted at first by the vast quantities of valuable timber represented as standing upon it. He sent, for this purpose, one A. J. Freer to go over the land and report as to the representations made touching its timber and coal. Sheridan and his associates were notified that Freer would go down as the agent of complainant, and that complainant would be largely governed by his report. Without going into details, it is enough to say that Freer made glowing reports, both written and oral, to complainant as to the thickness of the coal veins exposed in the old entries and otherwise. He professed to have measured several veins which showed a thickness of solid coal of from 4 to 11 feet, and made a detailed report from entries made at the time and on the ground in a memorandum book. His timber report was, however, not particularly favorable, and the preponderance of evidence indicates that the...