Burger v. Calek

• Decision Date: 28 May 1923
• Citation: 37 Idaho 235,215 P. 981
• Parties: R. B. BURGER, Appellant, v. JOHN CALEK, ANEONIA CALEK and FIRST NATIONAL BANK OF NAMPA, IDAHO, Respondents
• Court: Idaho Supreme Court

215 P. 981

37 Idaho 235

R. B. BURGER, Appellant, v. JOHN CALEK, ANEONIA CALEK and FIRST NATIONAL BANK OF NAMPA, IDAHO, Respondents

Supreme Court of Idaho

May 28, 1923

FRAUD AND DECEIT-REPRESENTATION OF FACT-RELIANCE BY VENDEE-INDEPENDENT INVESTIGATION-REVERSIBLE ERROR.

Where a vendor makes material representations of fact, which are of such a nature that a person of ordinary prudence might rely upon them, the vendee may so rely, and is not bound to make an independent investigation.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Ed. L. Bryan, Judge.

Action for fraud and deceit, arising out of contract for purchase of land, with cross-complaint for balance of purchase price. Judgment for defendants. Reversed.

Judgment reversed, with costs to appellant.

Rhodes & Partridge, for Appellant.

If the respondent in making the representations complained of made them recklessly and without regard to their truth or falsity he cannot be excused on the ground that he did not have positive knowledge of their falsity. (Johnson v Holderman, 30 Idaho 691, 167 P. 1030; Parker v Herron, 30 Idaho 327, 164 P. 1013; 12 R. C. L. 337; 26 C. J. 1112; Faluks Acc. Air Motor Co. v. Thies, 26 Nev. 158, 99 Am. St. 684, 65 P. 373; Howe v. Martin, 23 Okla. 561, 138 Am. St. 840, 102 P. 128; Lahay v. City Nat. Bank of Denver, 15 Colo. 339, 22 Am. St. 407, 25 P. 704; Alvarez v. Brannan, 7 Cal. 504, at 508, 68 Am. Dec. 274.)

The plaintiff had a right to rely upon the positive assertions of the respondent to the effect that the lands were not subject to seepage, and was under no obligation to make an independent investigation for himself even though such an investigation might have revealed the true condition of affairs. (Baird v. Gibberd, 32 Idaho 796, 189 P. 56; Teague v. Hall, 171 Cal. 668, 154 P. 851; California Nat. Supply Co. v. O'Brien, 51 Cal.App. 606, 197 P. 414; Watson v. Molden, 10 Idaho 570, 79 P. 503; Mead v. Bunn, 32 N.Y. 275; Dow v. Swain, 125 Cal. 674, 58 P. 271; Gannon et al. v. Hausaman, 42 Okla. 41, 140 P. 407, 52 L. R. A., N. S., 519; Curtley v. Security Sav. Society, 46 Wash. 50, 89 P. 180; Whittaker v. Miller, 188 Mo.App. 412, 174 S.W. 115; Murray v. Davies, 77 Kan. 767, 94 P. 283; Neher v. Hansen, 12 Cal.App. 370, 107 P. 565; Pallister v. Camenisch, 21 Colo. App. 79, 121 P. 958; King v. Livingston Mfg. Co., 180 Ala. 118, 60 So. 143; Wilks v. Wilks, 176 Ala. 151, 57 So. 776.)

Wm. C. Bicknell, W. A. Stone and F. A. Hagelin, for Respondents.

"Even though an isolated instruction, considered alone, may be erroneous and misleading, when the instructions as a whole state the law correctly, no reversible error is committed." (Tyson Creek R. R. Co. v. Empire Mill Co., 31 Idaho 580, 174 P. 580; Lyons v. Lambrix, 33 Idaho 99, 190 P. 356; Raide v. Dollar, 34 Idaho 682, 203 P. 469; Taylor v. Lytle, 29 Idaho 546, 160 P. 942; Cady v. Keller, 28 Idaho 368, 154 P. 629.)

"A representation believed on reasonable ground, by the party making it, to be true, is not fraudulent." (Johnson v. Holderman, 30 Idaho 691, 167 P. 1030.)

"Means and opportunity of acquiring knowledge of fraudulent representations inducing the sale of land are equivalent to knowledge." (Lee v. McClelland, 120 Cal. 147, 52 P. 300; Rendell v. Scott, 70 Cal. 514, 11 P. 779; Reynolds v. Palmer, 21 F. 433.)

MCCARTHY, J. Dunn and William A. Lee, JJ., concur.

OPINION

MCCARTHY, J.

This is an action for fraud and deceit. Appellant purchased of respondents John and Aneonia Calek about 40 acres of land and certain personal property for $ 12,000. He alleges that respondent John Calek, in order to induce him to purchase the land, falsely and fraudulently represented to him that it was not subject to seepage; that he believed and relied upon said representation and purchased the land; that said land was subject to seepage to appellant's damage in the sum of $ 5,000. Respondent bank was joined for the purpose of restraining it from delivering to the other respondents certain notes, which had been given by appellant, and a deed which had been placed in escrow. Respondents denied all the material allegations of the complaint, and cross-complained to recover $ 1,000 due on the purchase price. The verdict and judgment were for respondents.

The only specification of error upon which appellant stands is that the court erred in giving instruction No. 4, as follows:

"You are instructed that in a transaction such as the one upon which this action is based, that where parties have equal means of knowledge as to the truth of representations relating to the condition or quality of the thing sold, no action for fraud or deceit will lie, and in this case, if you believe from the evidence that the plaintiff, Burger, could by reasonable investigation and inquiry, have ascertained the actual condition of the land involved, he cannot recover damage from the defendant."

In territorial days this court rendered a decision which supports the above instruction. (Brown v. Bledsoe, 1 Idaho 746.) At that time the weight of authority was perhaps to that effect. In later years this court and many others have been breaking away from that harsh rule. In Watson v. Molden, 10 Idaho 570, at 581, 79 P. 503, 506, this court quoted with approval the following from the American and English Encyclopedia of Law:

"By the overwhelming weight of authority, ordinary prudence and diligence do not require a person to test the truth of representations made to him by another as of his own knowledge, and with the intention that they shall be acted upon if the facts are peculiarly within the other party's knowledge or means of knowledge, though they are not exclusively so, and though the party to whom the representations are made may have an opportunity of ascertaining the truth for himself."

In Baird v. Gibberd, 32 Idaho 796, 189 P. 56, in the sixth paragraph of the syllabus, this court says:

"One has a right to rely upon a statement of a material fact made as a positive assertion under circumstances from which it is fairly inferable that the parties making the statement knew that the former was relying expressly upon their representations. Under such circumstances the one to whom the representations are made is under no obligation to inquire into their truth or falsity."

This is in accord with many well-considered cases. The rule is well stated by the supreme court of Alabama as follows:

"If a false statement is made by one who may be fairly assumed to know what he is talking about, it may be accepted as true, without question and without inquiry, although the means of correct information are within reach; contributory negligence not being a defense to an action for deceit." (King v. Livingston, 180 Ala. 118, 60 So. 143.)

The supreme court of Minnesota says:

"The maxim caveat emptor is not to be carried so far that the law shall ignore or protect positive fraud successfully practiced upon the unwary.

"As between the original parties, one who has intentionally deceived the other to his prejudice ought not to be heard to say, in defense, that the other party ought not to have trusted him." (Erickson v. Fisher, 51 Minn. 300, at 303, 53 N.W. 638.)

The supreme court of Michigan says:

"Where one assumes to have knowledge upon a subject of which another may well be ignorant, and knowingly makes false statements regarding it upon which the other relies, to his injury, we do not think it lies with him to say that the party who took his word and relied upon it as that of an honest and truthful man, was guilty of negligence in so doing, as to be precluded from recovering compensation for the injury which was inflicted upon him under cover of the falsehood. If a party's own wrongful act has brought another into peril he is not at liberty to impute the...