Baldwin v. Brown

• Decision Date: 03 March 1924
• Docket Number: 199
• Citation: 265 S.W. 976,166 Ark. 1
• Parties: BALDWIN v. BROWN
• Court: Arkansas Supreme Court

265 S.W. 976

166 Ark. 1

BALDWIN v. BROWN

No. 199

Supreme Court of Arkansas

March 3, 1924

Appeal from Washington Chancery Court; Ben F. McMahan, Chancellor affirmed.

Decree affirmed. Judgment reversed and dismissed. Motion for rehearing denied.

W N. Ivie and J. V. Walker, for appellants.

1. The alleged false and fraudulent representations, both under the allegations of the complaint and under the proof, all relate only to the value of the seven gold bonds of the Southwest Oil and Live Stock Association given as a consideration for the purchase of lands. There is no allegation or proof of confidential relationship between Baldwin and appellee, nor of any superior knowledge on his part as to the market value of the bonds. Representations that relate merely to the value of property, even if untrue, do not give the person to whom made a cause of action for damages against the party making them, nor a cross-action by way of recoupment or set-off. Smith on Law of Fraud, § 30; 76 Me. 223; 46 Minn. 463. Not only did Baldwin give appellee, as she herself admits the opportunity to investigate the value of the bonds, but advised her to make such investigation. 3 Wyo. 356; 163 Ill 17; Smith, Law of Fraud, § 34; 82 S.W. 433; 99 Ark. 438, 442; 11 Ark. 58; 19 Ark. 522; 46 Ark. 337; 47 Ark. 148; 95 Ark. 375.

2. There was no justification in the pleadings, even as finally amended, nor in the proof, for a personal judgment against Hurst, F. L. Bradley and Josephine Bradley. Josephine Bradley was a bona fide purchaser for a valuable consideration. 132 Ark. 158; 145 Ark. 121.

J. W. Grabiel, for appellee.

1. It is seldom that fraud can be proved by direct evidence, because of the difficulty arising from its nature, and circumstances enter largely into the proof. 130 Ia. 513, 114 A. S. R. 443; 4 Wall. 463. But the allegations of fraud in this case were proved as completely as could be, short of a full and complete confession.

2. To render one liable for damages in an action for deceit, it is not necessary that he shall have derived any benefits from the deception, or have colluded with the person who was so benefited, nor that he should have any interest in the contemplated transaction, or the subject-matter thereof, or in making the representation, or expected any benefit. 12 R. C. L. 394, par. 143.

3. The liability of each of the defendants, Bradley, Hurst and Baldwin, is clearly established. Even if Baldwin had made no misrepresentations, he would be liable, because he is bound by what the others said. 21 Vt. 129, 52 Am. Dec. 46; 12 R. C. L. 403, §§ 150, 151; Id. 402; Id. 429, § 176. Hurst, when Mrs. Brown was insisting that he disclose all the information he had relative to the bonds and the company that issued them, was bound to do so, and he could not avoid responsibility by stating only those things that were favorable to the matter in hand. Any concealment of facts which he knew would cause her to distrust his opinion or advice rendered him liable for fraudulent misrepresentations. 12 R. C. L. 310; 229 Mo. 27. While an express stipulation or warning may purge silence of its fraudulent import, yet there must be neither active concealment nor representations calculated to throw the other party off his guard. 9 Conn. 107. The rule that one may not rely upon representations of value or cost, but rather must exercise his own judgment, does not apply where the parties do not stand on an equal footing, especially where there is a relation of confidence or trust between them, or where one is fraudulently prevented from making inquiries. 12 R. C. L. 381, § 132; Id. 283, § 47. For rule as to whether statements relative to the value of property are mere expressions of opinion, or are material representations, see 99 Ark. 438; 162 Ill. 417. The fact that Baldwin told Mr. and Mrs. Brown that they should investigate, which occurred after they suggested a time to investigate, does not remove the taint of fraud from his dealing with them. It is significant that he told them what they should do, where they should investigate, and directed their inquiries to the parties who were working with him. And the fact that these parties made reference to the source of their information does not remove the taint. 12 R. C. L. 441, § 186; 2 Pomeroy, Eq. Jur., 4th ed., 1856, §§ 895, 896.

MCCULLOCH, C. J. HART, J., on rehearing. The CHIEF JUSTICE and Mr. Justice SMITH dissent. MCCULLOCH, C. J., dissent.

OPINION

MCCULLOCH, C. J.

The appellee, Mrs. Almyra C. Brown, was, on February 9, 1921, the owner of a farm in Washington County, containing 285 acres, which is the subject-matter of this controversy, and on that day she conveyed it to Thomas E. Baldwin, the sum of $ 7,000 being recited in the deed as the consideration for the conveyance. This consideration was in fact paid by the delivery to Mrs. Brown by Baldwin of seven so-called gold bonds of the Southwestern Oil & Livestock Association, of Fort Worth, Texas, an unincorporated concern doing business as a common-law trust. The bonds were each of the denomination of $ 1,000, bearing interest at eight per centum per annum, payable annually. Baldwin conveyed the land to Josephine Bradley, wife of F. L. Bradley, by deed dated February 12, 1921, but which was not filed for record until February 28, 1921; and on the last-mentioned date Mrs. Bradley mortgaged the land to Mrs. Lucy Wilson to secure a loan of money in the sum of $ 1,200. This mortgage was filed on the same date. On that date (February 28, 1921) Mrs. Brown instituted this action in the chancery court of Washington County against Baldwin to cancel the conveyance on account of alleged misrepresentations concerning the value of the bonds which were delivered as the consideration for the conveyance. S. K. Leskey was joined as defendant in the suit, on an allegation that he claimed a lien on the land, but it does not appear that Leskey was ever served with process, and he has passed out of the suit. Appellee filed a lis pendens under the statute on the day that the suit was instituted. At that time appellant was not apprised of the conveyance from Baldwin to Mrs. Bradley, nor of the mortgage executed by Mrs. Bradley to Mrs. Wilson. Subsequently appellee amended her complaint and joined as defendants Mrs. Bradley and Mrs. Wilson, alleging that neither of them were innocent purchasers for value, and also bringing in, as parties defendant, F. L. Bradley and George A. Hurst, alleging that they participated in the fraudulent misrepresentations by aiding Baldwin in inducing appellee to convey her land for the consideration named. Mrs. Wilson filed an answer, denying that she had knowledge of the fraud alleged to have been perpetrated on appellee, and she asked that appellants, Baldwin, Bradley and Hurst, be made parties, and that, if the court canceled her mortgage, she have judgment over against appellants for the amount of her debt.

The cause was heard by the court upon the pleadings and exhibits and the depositions of numerous witnesses, whose names were set forth in the decree, and the court found in favor of appellee upon the charge of fraudulent misrepresentations, and canceled her deed to Baldwin and the deed from Baldwin to Mrs. Bradley, but found that Mrs. Wilson was an innocent mortgagee, and the decree vested title to the land in appellee, subject to Mrs. Wilson's lien as mortgagee. The court also rendered a decree in favor of appellee for the recovery from Baldwin, Bradley and Hurst of the amount of Mrs. Wilson's mortgage debt, with interest.

Baldwin, Bradley, Mrs. Bradley and Hurst prayed an appeal, which was granted by the chancery court, and appellee also prayed an appeal from the decree in favor of Mrs. Wilson. This decree was rendered on November 23, 1922, and none of the appeals were perfected within ninety days, as required by statute, but on May 7, 1923, Baldwin, Bradley, Hurst and Mrs. Bradley filed an authenticated copy of the record with this court and prayed an appeal, which was granted by the clerk of this court. Appellee obtained a cross-appeal on November 11, 1923.

There is a conflict in every phase of the testimony, and we are unable to determine where the preponderance lies, for the reason that the deposition of one of the witnesses, J. C. Barthell by name, is omitted from the transcript. The record entry of the decree recites the name of this witness as one of the deponents in the trial of the case, but his deposition is not in the record. The clerk certifies that the record is complete, but, there being a conflict between the recital of the decree and the certificate of the clerk, the former must prevail. Weaver-Dowdy Co. v. Brewer, 129 Ark. 193; Massey v. Kissire, 149 Ark. 215, 232 S.W. 24. The absence from the transcript of part of the testimony in the case raises the presumption that the decree was correct. It is therefore unnecessary to discuss the testimony in further detail.

It is insisted by appellant that some of the testimony of the witnesses was incompetent, but we must indulge the presumption that the court only gave consideration to such testimony as was competent and relevant. Niagara Fire Ins. Co. v. Boon, 76 Ark. 153, 88 S.W. 915.

It is also contended that the personal decree in favor of appellee for recovery of the amount of Mrs. Wilson's mortgage debt is erroneous on its face, for the reasons, (1) that appellee's complaint contained no prayer for such relief, and (2) that appellee had no right of action for such recovery until she was compelled to pay the debt.

It is true that the complaint contained no specific prayer for such relief, but it contained a prayer for general relief, in addition to the specific prayer for cancellation of all the deeds, including the mortgage to Mrs. Wilson.

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