Chisum v. Huggins

• Decision Date: 11 January 1916
• Docket Number: Case Number: 6067
• Citation: 154 P. 1146,1916 OK 48,55 Okla. 423
• Parties: CHISUM v. HUGGINS et al.
• Court: Oklahoma Supreme Court

1916 OK 48

154 P. 1146

55 Okla. 423

CHISUM v. HUGGINS et al.

Case Number: 6067

Supreme Court of Oklahoma

Decided: January 11, 1916

Syllabus

¶0 1. CONTRACTS--Right to Enforce-- Fraudulent Representations--Negligence of Victim. A contract obtained by the fraudulent representation or conduct of one of the parties thereto should not be enforced, if it satisfactorily appears from the evidence that the party seeking a rescission has been misled in regard to a material matter by such misrepresentations or conduct to his injury; and it matters not that the party so misled may have been in some degree negligent, for it is not just, or equitable, for a person who has deceived another to challenge his credulity, or shield himself from the consequences of his own misconduct behind the faith and confidence reposed in him by his victim.

2. VENDOR AND PURCHASER-- Validity of Contract--False Representations. The rule of caveat emptor is no longer a shield and protection to the deliberate frauds and cheats of the "blue sky sharper." and where a party positively makes false representation, as an inducement for another to contract with him, and such person, relying wholly upon such false representations, enters into a contract, such contract is voidable for fraud, even though the false representations were innocently made.

3. FRAUD--False Representations-- Action for Deceit. A statement by a vendor that he has been offered a certain sum for the property on sale, or he has been offered a certain sum for the same kind of property in the same location, is a statement of a material fact affecting the value, and, if false, may form the basis of an action for deceit.

Paul F. Cooper, for plaintiff in error.

B. B. Blakeney and J. H. Maxey, Jr., for defendants in error.

ROBBERTS, C.

¶1 This action was commenced in the district court of Pottawatomie county on the 10th day of July, 1911, by W. C. Chisum against Ellen Huggins and T. W. Smith, to recover judgment upon a promissory note signed by said parties, and for foreclosure of mortgage on certain real estate in the city of Shawnee, executed by the defendant Huggins. The defendant Smith was surety on the note. The petition is the usual pleading for such proceeding. The parties herein will be designated "plaintiff" and "defendants," the same as below. The defendants answered by general denial of all allegations of the petition not specifically admitted in their answer or cross-petition. They admit the execution and delivery of the note and mortgage sued on, but allege that defendant Huggins was principal and defendant Smith was surety on said note, which fact was at all times known to plaintiff. They also allege that said note was given in part payment for the purchase of the real estate included in the mortgage, and that the plaintiff in person, and by his agents, Fay Chew and U.S. Hart, sold said real estate to the defendant Huggins for the consideration of $ 550, on which the defendant at the time paid plaintiff the sum of $ 250 in cash, and gave the note and mortgage involved for the sum of $ 300; and defendants allege that they received no consideration for said note and mortgage, and that they are not indebted to plaintiff on account thereof, nor for any amount whatever, and that said contract for the sale and purchase of said property has been rescinded on the ground of fraud, misrepresentation, undue influence, and abuse of confidence on the part of plaintiff and his agents above mentioned, in the following particulars: That at the time of the execution of the said note and mortgage, and at the time of the sale and transfer of said property, the plaintiff, in person, and through his agents, Fay Chew and U.S. Hart, stated to the defendant Huggins that immediately north, and within one mile, of this property, there was located at that time, and would within six months be built and maintained, a large packing plant; and that adjoining said packing plant lots had been laid out and would be sold to and occupied by persons who would be employed in the building and operation of said plant; and that in connection with said packing plant there had been located, and would be maintained, stockyards, which would accommodate a large number of cattle, and other stock, and the building and operation of said plant and cattle yards would greatly enhance the value of the property in that portion of the city. Defendant Huggins further alleges that she had had no experience in dealing in real property, which fact she told plaintiff and his agents, and knew nothing about the probability of the increase in value of the property, and that she was unable from her own inexperience to ascertain the value thereof, and told the plaintiff and his agents that she desired them to state to her the true condition in regard thereto; that she would rely upon their judgment in the matter, and asked them to tell her the truth, and the value of the property; and that plaintiff and his agents told the defendant Huggins that they knew she did not know the value of the property, and that they would tell her the true condition in connection therewith, and that she could rely upon their statements in that regard. And said defendant states that, reposing special trust and confidence in the integrity and ability of the plaintiff and his agents, and knowing nothing of the value of the property, she relied upon their representations and believed the same to be true, and that, relying upon their representations, she made a contract to purchase said property, and that she would not have made the contract under any other circumstances. Said defendant further says that $ 550 was more than five times the actual value of the property, unless the packing plant and stockyards were to be built, and said contract was made upon the express understanding that said improvements would be made. It is further alleged that plaintiff stated to defendant Huggins that he was the owner of other property adjoining this property, of the same size and location, and that he had been offered $ 1,200 for the same, and had refused to sell it; that the property he intended to sell to the defendant was the only property he had left in that section of the city, and he would sell it to her only for the reason that she was a special friend, and he wanted to give her a bargain; that the Development Company had, the day before, paid $ 40,000 cash for the Chas. Kirst place, and had refused $ 35,000 for 20 lots in the neighborhood of the property involved; that a wire and steel plant had been located in the immediate vicinity of this property, and an interurban railway had been located between Oklahoma City and Shawnee and would, within six months, be built and operated by said property; that, immediately across the street, H. T. Douglas had purchased property, and had agreed to build a handsome residence thereon within six months from that date; and defendant says that she believed such representations and relied thereon. Defendant further alleges that plaintiff, at the time of the purchase of said property, stated to her, as an inducement to purchase the same, that he could, and would, dispose of said property within 30 days for the sum of $ 1,200; that defendant believed the plaintiff would comply with his promise, and relied thereon; that said representations were false and fraudulent, and made by plaintiff without the intention of performing the same, but for the purpose of cheating and defrauding the defendant, and with no intention to carry the same out. And defendant alleges, in substance, that each and all of said representations of plaintiff as to said property, and the value thereof, and all other facts, conditions, and circumstances of and concerning said property and its surroundings, were false, and known by plaintiff and his agents to be false, and were made to defendant for the express purpose of inducing her to purchase said property at a price greatly in excess of its actual value, and to thereby, cheat and defraud her. Defendant further says that upon ascertaining that the said representations were false, and the true facts in relation thereto, she immediately offered to and did rescind the said contract, and offered to reconvey the property conveyed by the said plaintiff to her, and demanded that her note and mortgage be cancelled; but plaintiff refused to accept the same, and defendant now offers to rescind the said contract, and tenders into court a deed conveying the said property to the plaintiff and the amount of money necessary for the recording of said conveyance, and other expenses to the proper clearing of the title of said property, and asks that the said note and mortgage be canceled and ordered returned to her. Defendant alleges that, by reason of the said premises, the consideration for said note and mortgage has failed; that the said contract has been rescinded; and that she is entitled to have the same rescinded. Defendant prays that the plaintiff recover nothing, that the note and mortgage be canceled; the contract of sale rescinded, and defendant have judgment for costs. For her cross-petition, defendant Huggins alleges: That relying upon the said representations aforesaid, and believing them to be true, and relying upon the said promises to resell the said property within 30 days from the date of sale for the sum of $ 1,200, and believing that said promises were made in good faith, and intended to be performed, this defendant paid to the plaintiff the sum of $ 250 on the 8th day of March, 1910. That said promises and representations were false, and made with the intention to defraud, cheat, and swindle this defendant, and known by the plaintiff to be false at the time; and that, immediately upon learning that the same were false, this defendant offered the plaintiff a deed to said property, and offered to reconvey the same to him, and demanded that said note and mortgage be canceled and a repayment to this defendant of...