Connecticut Mut. Life Ins. Co. v. Carson

• Decision Date: 12 December 1914
• Docket Number: No. 1261.,1261.
• Citation: 172 S.W. 69
• Parties: CONNECTICUT MUT. LIFE INS. CO v. CARSON.
• Court: Missouri Court of Appeals

172 S.W. 69

CONNECTICUT MUT. LIFE INS. CO v. CARSON.

No. 1261.

Springfield Court of Appeals. Missouri.

December 12, 1914.

Rehearing Denied January 7, 1915.

1. VENDOR AND PURCHASER (§ 33) — FALSE REPRESENTATIONS — VALIDITY OF CONTRACT.

That agricultural land was sold to an inexperienced buyer, on false representations that it was well drained and fertile, and that arrangements had been made with a railroad company to place an agency very near the property, and the land was shown on a rainy day, when the soil appeared black, while its natural color when dry was light, was sufficient to entitle the buyer to rescind.

2. BROKERS (§ 102) — ACTS OF AGENT — FRAUD — PRINCIPAL'S LIABILITY.

Where plaintiff company sold land to defendant, utilizing the services of a specified broker, and conveyed the land to defendant through the broker, paid him a commission and thereafter accepted the benefits of the bargain, it was bound by the broker's false representations to plaintiff concerning the land, made to induce defendant to purchase.

3. SET-OFF AND COUNTERCLAIM (§ 28) — RIGHT — WRONG — OBJECT — SUBJECT OF ACTION.

Rev. St. 1909, § 1807, provides that a counterclaim must be one existing in favor of a defendant and against the plaintiff between whom a several judgment might be had in the action, and arising out of a contract or transaction set forth in the petition as the foundation of plaintiffs' claim, or connected with the subject of the action. Held, that in a suit by a vendor against a purchaser to recover the land, the right is the right of possession, the wrong the dispossession, the object is to obtain possession, and the subject of the action is the land and usually the title; and hence, in such action, the purchaser may set up as an equitable counterclaim a right to have the contract rescinded for fraud and to recover payments made thereon.

4. VENDOR AND PURCHASER (§ 119) — RESCISSION OF SALE — FRAUD — LACHES.

Where a vendor had not changed its position or suffered by the vendee's delay of a year and four months in electing to rescind and set aside the contract for fraud, such delay was not sufficient to bar the right to rescind.

Robertson, P. J., dissenting.

Appeal from Circuit Court, Stoddard County; W. S. C. Walker, Judge.

Action by the Connecticut Mutual Life Insurance Company against Arthur P. Carson, to recover certain land in which defendant filed a counterclaim to set aside a contract of sale, and to recover payments made thereon, for fraud. From a judgment for plaintiff for possession and granting defendant the relief prayed in his counterclaim, plaintiff appeals. Affirmed.

Wammack & Welborn, of Bloomfield, and Chas. Liles, of Dexter, for appellant. Fort & Green and Mozley & Woody, all of Bloomfield, for respondent.

FARRINGTON, J.

The plaintiff is a foreign corporation authorized to do business in Missouri. The defendant, for the past three years, has resided in Stoddard county in this state. In December, 1910, the plaintiff owned several thousand acres of land in Stoddard county and surrounding counties in Southeast Missouri. On December 31, 1910, the defendant paid to one W. Ross McKnight $100 as a part payment for 80 acres of land in Stoddard county, which was then owned by the plaintiff, and took a receipt so stating, which receipt also contained a memorandum of purchase. The total price to be paid was $37.50 per acre. The vendor, the plaintiff, according to the memorandum, agreed to clear 20 acres of the tract at $7.50 per acre, this amount to be added to the purchase price. The first payment was to be one-tenth of the entire purchase price, and was to be paid on or before January 10, 1911, and the remainder of the purchase price was to be paid in eight equal annual installments, evidenced by notes payable on the 1st day of each January, beginning January 1, 1913, drawing interest at the rate of 5 per cent. per annum, to be secured by a deed of trust. The memorandum further evidenced that during the year 1911 a slough on the land would be drained. On January 2, 1911, the plaintiff by its proper officers executed a warranty deed to the defendant for the land. This deed was delivered to defendant by W. Ross McKnight, who received the first payment in cash and the notes for the balance, together with a deed of trust in which William Collins (the general agent for plaintiff in Missouri concerning lands) was trustee. The notes were made payable to the order of the plaintiff, and they were accepted and held by plaintiff until default in their payment, when foreclosure proceedings occurred whereby plaintiff became the purchaser of the land at the price of $2,000. Plaintiff then brought this suit to eject defendant from the land, and for damages alleged to have been occasioned by defendant unlawfully withholding possession. Defendant's answer admitted plaintiff's right to possession, but denied that plaintiff was entitled to any damages, and set up a ground for affirmative relief, asking that the unpaid notes and the deed of trust be canceled, and, further, that he be given damages sustained by him on account of certain fraudulent representations made to him by W. Ross McKnight through whom he was induced to purchase the land from plaintiff. The court gave plaintiff judgment for possession, and on defendant's behalf ordered a cancellation of the unpaid notes and deed of trust and gave him judgment for $586.10, which represented the amount defendant had paid on the purchase price, together with the taxes he had paid and interest on such amount.

A brief statement of the facts will suffice to dispose of the case. The evidence showed without controversy that on January 2, 1911, the plaintiff owned the land in question and made a warranty deed therefor to the defendant and received from him the notes and deed of trust. These instruments were delivered by the parties through W. Ross McKnight, a resident of St. Louis. Plaintiff owned this tract, together with thousands of acres that it was selling on the market. W. Ross McKnight and one Weeks undertook to carry through a colonization scheme, by which they would sell 40 to 80 acre tracts and locate the buyers around a central model or demonstration farm, to be in charge of an expert. To do this required that they get a body of land comprising from 1,000 to 1,500 acres and then to find purchasers for the tracts. To accomplish the scheme, which, from the advertisements and prospectus introduced in evidence, was Utopian in character, they (W. Ross McKnight for the most part) took up the matter with one Collins, a resident of St. Louis, who was the agent of the plaintiff having general control of plaintiff's unsold land. An arrangement, not necessary to detail in this opinion, was perfected whereby W. Ross McKnight could dispose of the plaintiff's land to buyers on certain terms, and Collins, after negotiating with the plaintiff, agreed to make conveyances to such buyers. The defendant saw the advertisements of W. Ross McKnight's scheme printed in one of the St. Louis daily newspapers. He was a clerk working in East St. Louis on a salary, and was not familiar with farming or agricultural land and so informed McKnight. He called on McKnight after reading the advertisement and received a prospectus of the scheme and a circular with McKnight's name stamped upon it. This circular was one put out by the plaintiff, a number of them having been turned over to McKnight by Collins when they perfected the arrangement to deed the lands. The prospectus issued by McKnight contains many things contained in the circular issued by the plaintiff. It covers 10 pages of the printed abstract, and under heavy headings it takes up, first, a description of the general nature of the scheme, then a description of Southeast Missouri and Stoddard county, followed by headings such as, "Soil, Water and Rainfall," "Crops and Stock Growing," "Climate," "Topography," "Tract Selected," "The Colony," and, lastly, the terms of settlement. It contains many representations which are promissory in nature and many that might come under the term "puffing," and others that border closely on representations of existing facts. The defendant was given an application to sign, entitling him to become a purchaser in the colonization scheme. Defendant went with McKnight and looked over the land on a rainy day when the soil appeared black or dark. The natural color of the soil when dry was light. Defendant says, and we have no reason for doubting him, that W. Ross McKnight made the following representations, which were relied on by him and which induced him to become a purchaser: That the lands were all well drained, and that this was not true; that arrangements had been made with the Iron Mountain Railway Company to place an agency at Reeds Spur, which was very near plaintiff's property, and that at the time of the trial, which was several years after the representation was made by McKnight, no such agency had been established; that this land would not overflow, and that it does overflow.

We are convinced, after reading the evidence, that these representations were untrue and were false, and that McKnight knew they were false, or did not have sufficient knowledge on the subject to warrant him in asserting that they were true. This brings his conduct within the rule laid down in Ray County Savings Bank v. Hutton, 224 Mo. loc. cit. 70, 123 S. W. 47, that a statement made carelessly without caring whether it be true or false, which proves to be untrue, is fraud, and such as that an action for fraud and deceit can be maintained by one damaged thereby. See, also, Peters v. Lohman, 171 Mo. App. 465, 156 S. W. 783, and cases cited.

It is true that a great many of the representations made by McKnight to defendant were in the nature of promises or descriptions of what would take place, and others that would probably escape criticism in an action for fraud and deceit because they were mere "puffing," and...