Collier v. Nolan

• Citation: 211 A.2d 265,125 Vt. 82
• Decision Date: 01 June 1965
• Docket Number: No. 294,294
• Court: United States State Supreme Court of Vermont
• Parties: Durwood C. COLLIER and Leona B. Collier v. George C. NOLAN, Florence Nolan and Patrick H. Brown.

Page 265

211 A.2d 265

125 Vt. 82

Durwood C. COLLIER and Leona B. Collier v. George C. NOLAN, Florence Nolan and Patrick H. Brown.

No. 294.

Supreme Court of Vermont.

June 1, 1965.

Lee E. Emerson, Barton, for plaintiffs.

Downs & Rachlin, St. Johnsbury, for defendants Nolan.

Richardson & Caldbeck, St. Johnsbury, for defendant Borwn.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

SMITH, Justice.

This is an action for fraud in the sale of a farm, bought by the Colliers from the Nolans and located in Hardwick. In the summer of 1960 the Colliers learned from defendant, Patrick H. Brown, manager of the Farm Production Credit Association of St. Johnsbury, that the complete farm unit owned by the Nolans was for sale. Meetings took place between the Colliers and the Nolans and Brown, at which the condition and productivity of the farm and the livestock thereon were discussed between the parties. On July 2, 1960, a contract was entered into between the parties in which the Nolans agreed to sell, and the Colliers to buy the farm, equipment and stock for the total price of $28,000.00. The contract provided that on July 14, 1960 a deed would be given by the Nolans to the Colliers and they would receive in return a cash payment of $15,500.00, with the balance of the purchase price to be secured to the Nolans by a real estate mortgage from the Colliers. A down payment of $600.00 was made on July 2nd by the Colliers to the Nolans. Defendant Brown was present, and was a witness, at the signing of the contract, representing the Farm Production Credit Association, which association was financing the Colliers, in part, in making the purchase.

On July 14, 1960, the transaction was completed and the plaintiffs received their deed to the property and have since resided there.

Plaintiffs brought their action of fraud against the Nolans and Brown in the Caledonia County Court on October 28, 1963. Jury trial in said court resulted in a jury verdict for the plaintiffs against both defendants on April 10, 1964, in the amount of $4,500.00. Defendants Nolan and defendant Brown, have taken their appeals here from verdict and judgment. For the reason that the Nolans and Brown have respectively briefed their appeals here on different grounds and are represented by different counsel, we will consider such appeals separately, first considering the appeal of the Nolans.

The claim of fraud advanced by the plaintiffs was based upon various alleged misrepresentations claimed by the Colliers to have been made by the Nolans regarding the farm and its stock to induce them to enter into the contract of July 2, 1960.

The first two issues presented to us in the brief of the defendants Nolan have to do with the claimed misrepresentation by the Nolans to the Colliers of the milk production of the farm here during the time that the Nolans were in possession of the farm. The evidence of the plaintiffs was that the Nolans stated to them that the cows on the farm had been producing 900 pounds of milk per day during the last several months of the Nolans' ownership and that such representation was relied upon by the Colliers to their damage.

The fact that such representation was made, and that it was a misrepresentation is not denied by the Nolans here. Their contention here is that the falsity of such representation became known to the Colliers prior to the time that the transaction between the parties was completed by the passing of the deed on July 14, 1960. Therefore, defendants say, the Colliers did not rely upon such representation in their purchase of the property, and such issue should not have been submitted to the jury by the court below.

The evidence is undisputed that Durwood Collier came on to the farm the day after the contract was signed on July 2, 1960, and managed and milked the cattle there during the period that intervened before the contract was consummated on July 14, 1960 by the passing of the deed. Also undisputed is that during this intervening period Collier discovered for himself that the cows were producing only 600 pounds of milk a day rather than the production of 900 pounds as represented by the Nolans.

The question presented is can an action of fraud be maintained by a buyer who is induced to enter into an executory contract by fraud of the seller, but who discovers such fraud before the consummation of the contract, and then proceeds with such consummation.

'To support an action for fraud or deceit the representations must be of existing facts relating to the subject matter of the contract, affecting its essence and substance, not matters of judgment or opinion, nor of facts that will exist, nor of promises. The representations must be made by the seller to induce the buyer to enter the contract; they must be false and at the time known by the seller to be false; or made by the seller of his own knowledge without his in fact knowing them to be true; they must not be open to the knowledge of or known by the buyer and must be relied upon by him in entering the contract to his damage.' Batchelder v. Birchard Motors, Inc., 120 Vt. 429, 433, 144 A.2d 298, 300; Hunt v. Lewis, 87 Vt. 528, 90 A. 578.

The argument of the defendants Nolan is that the Colliers, having knowledge of the falsity of the representation relative to the milk production at the time that the deed was passed, did not rely upon such representation in their performance of the contract and cannot pursue this action for fraud and deceit on this issue.

However, our rule, as appears in Batchelder v. Birchard Motors, supra, is that an action of fraud and deceit is supported if the fraud of the seller is relied upon by the purchaser 'in entering the contract,' not in its consummation. In the instant case the contract was entered into by the parties on July 2, 1960, when the agreement to buy and sell was signed by the parties and the plaintiffs made a down payment of $600.00. At the time plaintiffs entered into this contract they did so with full reliance on the misrepresentation of the defendants on the farm's milk production.

A situation similar to the one now presented was considered by this Court in Mallory v. Leach, 35 Vt. 156, at p. 172:

"There is no principle of authority showing that where a person had been defrauded by another in making an executory contract, subsequent performance of it on his part, even with knowledge of the fraud, acquired subsequently to the making and previous to the performance, bars him of his remedy for any damages for the fraud. The party defrauded, by performing his part of the contract with knowledge of the fraud, is deemed to have ratified it and is concluded thereby from subsequently disaffirming it. That is the extent of the rule. His right of action for the fraud remains unaffected by such performance."

No doubt exists that the plaintiffs could, upon the discovery of the fraud, have rescinded the contract and demanded their payment back. But they were not bound to do so. The plaintiffs had the right to retain the property purchased and maintain an action for damages suffered by reason of the fraud and deceit. McAllister v. Benjamin, 96 Vt. 475, 485, 121 A. 263. This was one of the four rights that plaintiffs could have exercised upon discovering the fraud. They could have rescinded the contract and recovered back what they had paid; (2) they could have resisted an action for the purchase price; (3) they could have stood on the contract and recovered such damages as they suffered by fraud; or (4) they could have recouped such damages in an action brought against the defendants on the...