Chase v. Boughton
| Decision Date | 04 October 1892 |
| Citation | 93 Mich. 285,54 N.W. 44 |
| Court | Michigan Supreme Court |
| Parties | CHASE v. BOUGHTON et al. [2] |
Appeal from circuit court, Lake county, in chancery; J. Byron Judkins, Judge.
Bill in equity by Frank R. Chase against Frank P. Boughton and others to set aside a forfeiture of a contract to modify the contract and obtain a decree for the specific performance thereof when modified. There was a judgment for complainant and defendants appeal. Affirmed.
Norris & Norris and B. F. Graves, for appellants.
Thomas F. McGarry, William F. McKnight, and F. D. M. Davis, for appellee.
In October, 1887, the defendants Boughton & Lee purchased a tract of land, chiefly valuable for pine timber, for which they paid $125,000. The tract consisted of forty-five forties. In October, 1888, they sold the land to Wilson Luther & Wilson for $200,000, having in the meanwhile cut the timber from one 40, which had been burnt over. The sale was evidenced by a written contract, fixing the dates and amounts of payments, and declaring time to be "of the very essence of the contract." Wilson, Luther & Wilson entered upon the lands, and lumbered therefrom for one year, and meanwhile paid upon the contract the sum of $69,524.46. They then became involved in financial difficulties on account of the failure of a firm which was heavily indebted to them. Wilson, Luther & Wilson were indebted to complainant in the sum of $7,000. They executed an assignment of this contract to him, the sole consideration of which was $100. The assignment was absolute, and the consideration paid. Boughton & Lee gave their written assent to the assignment, which the contract required. Chase remained in possession of the land and carried on lumbering operations for one year, and during that time paid upon the contract $73,045.02. Neither Wilson, Luther & Wilson nor Chase fully complied with the terms of the contract. They failed to make payments, and also cut timber contrary to its provisions. Boughton & Lee, however, frequently extended the time for making payments. December 9, 1890, Boughton & Lee declared the contract forfeited. January 16, 1891, complainant filed this bill, alleging that he had been defrauded by the false representations of defendant Boughton, and of Wilson, Luther & Wilson, and that in reliance upon these representations he purchased the contract. The alleged false representations are contained in the following allegations of the bill: "That a short time prior to the 31st day of October, A. D. 1889, the said Wilson, Luther & Wilson, having previously become financially embarrassed and unable to pay their creditors in full, and unable to conduct a lumbering business and operations, and unable to make further payments upon said land contract, came to your orator, and severally and collectively represented to him that there was at least forty thousand dollars ($40,000) profit in the Boughton contract, (which is hereinbefore set forth at length;) that there was originally thirty to thirty-two million feet of merchantable pine and Norway timber thereon; that terms could be made with said Frank P. Boughton & Co. by which your orator would be enabled to fulfill the contract as assignee of said Wilson, Luther & Wilson, and realize large profits therefrom; that your orator never had any previous experience in pine lumber or of pine lands, or the manufacture of pine lumber, or the carrying on of a lumbering operation of any kind; that he was loath to engage in said enterprise; that he had previously been a farmer, a dealer in real estate, and attending to loans and collections, and knew nothing whatever of the quality or quantity of pine timber while standing and growing on land; that the said Wilson, Luther & Wilson continued their importunity of your orator until finally the said Frank P. Boughton, representing the firm of F. P. Boughton & Co., came to Belding, Michigan, and joined with said Wilson, Luther & Wilson in the representations concerning the timber situated on the land covered by said land contract, and the great value in said contract; that then and there the said Frank P. Boughton, who well knew that your orator had no knowledge of pine, or of estimating the same, represented to your orator that there had been more than twenty-two million of white pine and eight million feet of Norway timber on said tract of land before any had been cut therefrom; that he knew this to be a fact, because he himself had gone over the larger portion of said land, and knew the same to be as represented, of his own personal knowledge; that the said Frank P. Boughton then and there referred to said land contract and schedule incorporated in said land contract, and represented that the price set opposite each governmental subdivision in said schedule was based upon their (said Frank P. Boughton & Co.'s) estimate of the amount of timber thereon, at the following prices, viz. eight dollars ($8.00) per thousand feet for white pine, and five dollars ($5.00) per thousand feet for Norway; and that, as a matter of fact, the timber actually on said lands would overrun the estimate made thereon as represented in said schedule; and that the said David E. Wilson, William N. Luther, and Robert M. Wilson then and there represented that they had long known the said Frank P. Boughton, and knew him to be in every way responsible for what he said, and entitled to unlimited confidence, and said Boughton said that if the contract was allowed to become forfeited he would not enter into a new contract to sell the same for a price equaling the amount then remaining due on said contract; that when your orator suggested that the contract seemed ironclad as to the times of payment, the said Frank P. Boughton replied that, while that was true, still, so long as the interest and taxes were paid, and no more timber cut than was paid for, the contract might be continued indefinitely, provided your orator took an assignment thereof; that your orator believed the statements and representations of the said Frank P. Boughton and the said Wilson, Luther & Wilson to be true, and entirely relied thereon." The bill then alleges that complainant, on the 5th day of January, 1891, caused a careful estimate of the timber remaining on the lands to be made, and that he then ascertained for the first time that there was a shortage of from 7,000,000 to 10,000,000 feet of white pine. The prayer of the bill is as follows: (1) That the contract of assignment by Wilson, Luther & Wilson, be set aside, rescinded, and canceled; (2) that Boughton & Lee come to an account as to all the moneys received by them on said contract, and that an account be taken of the timber cut and the value thereof, and of the timber still standing, and the value thereof; (3) that complainant have a decree for the amount of money paid on said contract, less the value of the timber removed, and that complainant have a decree for a lien upon the land for that amount; (4) or if, upon the incoming of the proof, the court shall deem it more in accordance with equity, that the alleged forfeiture be set aside, and that a proper reduction be made from the contract price by reason of the shortage of said timber; (5) or if it shall appear that the amount paid sufficiently pays for all the timber on said land, that Boughton & Lee be decreed to deed said lands to complainants. Defendants Wilson and Wilson, survivors of the
firm of Wilson, Luther & Wilson, answered, virtually admitting the allegations in the bill, and claiming that their statements to Chase were based upon the information they received from Boughton at the time of their purchase. The decree was that Boughton & Lee deed the land to complainant, and that the contract and notes executed by Wilson, Luther & Wilson be delivered up and canceled; the court holding that the shortage in the pine amounted to the difference between the contract price and the amounts paid upon the contract by Wilson, Luther & Wilson and complainant.
The following facts are established by the evidence: Wilson Luther & Wilson entered into a preliminary contract with Boughton & Lee, September 27, 1888, for the purchase of these lands. A final contract was to be entered into on or before October 10th following, and was in fact made October 9th. Both contracts provided that Wilson, Luther & Wilson should be entitled to cut the pine from any government subdivision according to estimates then in possession of T. R. Welch and R. L. Russell; the former having made the estimate for Boughton, and the latter for Wilson, Luther & Wilson. These men were both expert woodsmen and estimators of standing timber. During the time that Wilson, Luther & Wilson had possession of these lands and carried on their operations, they made no complaint of any shortage. Chase made no complaint of any shortage until November 12, 1890, when he wrote Boughton & Lee as follows: "The seven forties we have cut have fallen short of the estimates 1,300 M, and we have been on 2, 12, and 1 with 1,500 more; 11 and 15 to get before we go back on your timber." It will be observed that this letter refers to "the estimate," not to any representation of fact as to the amount of timber. There was frequent correspondence during all this time between Chase and Boughton and between Wilson, Luther & Wilson and Boughton, asking for extensions of time, which Boughton usually granted. In all this correspondence there is not even a hint of any false or fraudulent representations by Boughton, who conducted all the negotiations on the part of his firm. No charge or hint of fraud is made until the bill was filed in this cause. There is no claim of any concert of action between Boughton and Wilson, Luther & Wilson in making the sale to complainant. Boughton knew nothing...
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