Barnes v. Union Pac. Ry. Co.

• Citation: 54 F. 87
• Decision Date: 27 January 1893
• Docket Number: 155.
• Parties: BARNES v. UNION PAC. RY. CO.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

54 F. 87

BARNES v. UNION PAC. RY. CO.

No. 155.

United States Court of Appeals, Eighth Circuit.

January 27, 1893

Charles M. Campbell, for plaintiff in error.

Willard Teller, (John M. Thurston, H. M. Orahood, and E. B. Morgan on the brief,) for defendant in error.

Statement by SANBORN, Circuit Judge:

This writ of error was sued out to reverse a judgment sustaining a general demurrer to the plaintiff's amended complaint. In this complaint the plaintiff alleged: That the defendant was the grantee from the United States of a railroad land grant. That about September, 1881, the defendant represented to him that a certain tract of land in Boulder county, Colo., was a part of its railroad land grant, and that it was the sole owner thereof. That he trusted to and relied on these representations, and in reliance thereon purchased the land of the defendant, paid it $2,376.60 therefor, and took its deed thereof, without covenants. That the land was never in fact granted to the defendant. It was never in possession of it, and it never had any title to or right in it. But the plaintiff did not know this fact until 1890, because the defendant continued to assert that the land had been granted to it, and in a contest before the local land office obtained a decision favorable to its contention. In 1883, in a cause which was not finally settled adversely to it by the decision of the secretary of the interior until 1890. That the plaintiff has been compelled to and has bought the land of the United States, by exercising his right as a homesteader, under its laws, and has entirely lost the amount he paid the defendant. That he demanded the repayment of this amount before the commencement of this action, and that it was refused.

Before CALDWELL and SANBORN, Circuit Judges, and SHIRAS, District Judge.

SANBORN Circuit Judge, (after stating the facts.)

A vendor who makes a false statement regarding a fact material to the sale, either with knowledge of its falsity, or in ignorance of its falsity, when from his special means of information he ought to have known it, and thereby induces his vendee to purchase, to his damage, is liable, in an action at law, for the damage the purchaser sustains through the misrepresentation, or to have the sale rescinded in a suit in equity, at the option of the purchaser. The boundaries, description, and title of the subject-matter of a sale are peculiarly within the range of the vendor's knowledge, or means of knowledge; and the purchaser has the right to presume that the positive statements regarding them made by the vendor to induce the sale, are knowingly made and to rely upon these representations. If such statements are false, and result in damage to the purchaser who acts of them, they are fraudulent, in the eye of the law, and actionable. This complaint states, in substance, that the defendant had a grant of land from the United States; that it represented to the plaintiff that the tract it gave him a deed of was a part of that grant, and that it was the sole owner of it; that plaintiff knew nothing about this title, but relied upon this statement, and was thereby induced to pay the defendant $2,376.60 for its deed of the tract, when in fact it had no title, or color of title, to the land, it was not in possession of it, and the deed it delivered conveyed no right whatever. Here was a misrepresentation of a material fact, which was peculiarly within the defendant's knowledge. It was made with the intention to induce the purchase. It was acted on by the plaintiff, and the misrepresentation caused him serious damage. In the eye of the law the complaint alleges fraud on the part of the defendant, and damage directly caused by that fraud.

That there is no express allegation that the defendant knew the land was not within its grant, and that it was not the owner thereof, when it made this false representation, and no express allegation that it made the same fraudulently to induce the plaintiff to purchase, is not material. The misrepresentation was made in apt time to induce the purchase, and did induce it. Every one is presumed to intend the natural consequence of his acts. The fact misrepresented was one that the defendant ought to have known, one that it had extraordinary facilities for knowing, one that a purchaser would naturally assume, and have the right to assume, the defendant did know, when it made positive statements concerning it; and the presumption is, from the allegations of this complaint, that it did have full knowledge that its statement was false at the time it was made. Even if it could be assumed that the defendant had no actual knowledge of the fact misrepresented, this would not relieve it from liability. It represented the fact to be, as of its own knowledge, that this land was within its grant, and that it was the owner of it. If it knew this to be false, that was fraud of the most positive kind. If it did not know whether its statement was true or not, the positive statement, of its own knowledge, that it was so, was a false and fraudulent statement that it did know this to be the fact; and, as this statement caused the same damage to the plaintiff, the defendant is equally liable in either event. In Cooper v. Schlesinger, 111 U.S. 148, 1555, 4 S.Ct. 360, Mr. Justice Blatchford, delivering the opinion of the supreme court, declared that a statement recklessly made, without knowledge of its truth, was a false statement, knowingly made, within the settled rule. In Kiefer v. Rogers, 19 Minn. 32, 36 (Gil. 14,) where the defendant, in ignorance of the existence of a mortgage of $2,250 on his property, had stated that no such incumbrance existed, and had thereby induced the purchaser to buy, the supreme court of that state said, speaking of the time when the representation was made:

'Although the defendant was then ignorant of the existence of the incumbrance thereon of the mortgage for $2,250, there is no doubt that under the circumstances, his representation must be treated as fraudulent; as much so as if he had told a willful falsehood.'

In Slim v. Croucher, 1 De Gex, F. & J. 518, where one sought to borrow money upon a lease for 98 years and a half, which the borrower represented he was entitled to, the lender required an intimation from the proposed lessor that he would grant such a lease. The lessor knowingly gave it for this purpose. The loan was made upon it. The lease was afterwards made, and mortgaged by the lessee to the lender. It turned out that the lessor had some time before made a lease of the same premises to the same lessee for the same term, and that the latter had, since the loan was made, assigned this lease for value; but, at the time the lessor gave the intimation, he did so innocently, because he had forgotten the former lease. The high court of chancery held that, although he did not know his intimation was false when he made it, it was a fraud, in the eye of the law, and he must repay to the lender the amount of his loan. In that case it was urged that the complainant had a complete remedy at law, and hence that the court of chancery had no jurisdiction. Lord Chancellor Campbell said: 'The defense set up in this suit is that there was a remedy at law, and that that is the only remedy competent to the plaintiff. Now, that there was a remedy at law I think is quite clear. Here was a misrepresentation made by the defendant of a fact which ought to have been within his knowledge. It was made with the intention of being acted upon. It was acted upon, and thereby a loss accrued to the plaintiff, and there is no doubt, in my mind, that an action would lie, and that it would be for a jury to assess the damages.'

In Litchfield v. Hutchinson, 117 Mass. 195, 198, which was an action at law for damages for inducing one to purchase a horse by a false statement that he was sound, the supreme court of that state thus laid down the law on this subject:

'If one states, as of his own knowledge, material facts susceptible of knowledge, which are false, it is a fraud which renders him liable to the party who relies and acts upon the statement as true, and it is no defense that he believed the facts to be true.'

To the same effect are Hazard v. Irwin, 18 Pick. 96; Savage v. Stevens, 126 Mass. 207, 208; Frost v. Angier, 127 Mass. 212, 218; Jewett v. Carter, 132 Mass. 335, 337; Cole v. Cassidy, 138 Mass. 437, 438; Masson v. Bovet, 1 Denio, 69, 73; Lockbridge v. Foster, 4 Scam. 569, 573; Joice v. Taylor, 6 Gill & J. 54, 58; McFerran v. Taylor, 3 Cranch, 270; Doggett v. Emerson, 3 Story, 700, 732, 733; Burrows v. Lock, 10 Ves. 470, 475; Ayre's Case, 25 Beav. 522; Rawlins v. Wickham, 3 De Gex & J. 304, 313; Sears v. Hicklin, 13 Colo. 143, 152, 21 P. 1022; Haight v. Hayt, 19 N.Y. 464, 470, 471.

Nor is it a valid objection to the maintenance of this action that the misrepresentations related to the title to land, and the defendant used a deed without covenants as a means of perpetrating its fraud. That deed was worthless from its execution. It took nothing from the defendant. It vested nothing in the plaintiff. Its only effect was to assist the defendant in wrongfully obtaining plaintiff's money by false representations, and no principle of law or equity occurs to us that requires this court to give it the further effect of perpetuating the wrong, or preventing its redress. Why should a fraudulent misrepresentation of the soundness of a horse, or of his ownership, be ground for an action at law after the bill of sale has been delivered; why should a fraudulent misrepresentation as to boundaries, location, the timber upon, or any other material fact, relating to the description of land, be actionable at law after the deed has passed, although the damages are often small and...