Connell v. El Paso Gold Min. & Mill. Co.

• Decision Date: 07 November 1904
• Citation: 78 P. 677,33 Colo. 30
• Parties: CONNELL v. EL PASO GOLD MIN. & MILL. CO.
• Court: Colorado Supreme Court

78 P. 677

33 Colo. 30

CONNELL v. EL PASO GOLD MIN. & MILL. CO.

Supreme Court of Colorado

November 7, 1904

Appeal from District Court, El Paso County; Louis W. Cunningham Judge.

Action by the El Paso Gold Mining & Milling Company against J. A Connell. From a judgment for plaintiff, defendant appeals. Reversed.

Hall, Babbitt & Thayer and F. L. Sherwin, for appellant.

Gunnell Chinn & Miller, for appellee.

CAMPBELL J.

The defendant, Connell, who was the record owner of the Gibralter lode mining claim, sold and conveyed it to the plaintiff gold mining company for the sum of $3,000. After the sale was thus executed, the plaintiff, learning that the purported discovery shaft of the claim was not within its exterior boundaries, but on a previously patented location, tendered to defendant a reconveyance of the property, and demanded the return of the purchase money, which the defendant refused to refund. Thereupon plaintiff brought this action, charging that defendant falsely and fraudulently represented to it that the mining location was valid, and that its discovery shaft was within its exterior boundaries, and that such representations were false, and that no discovery shaft had been sunk within the limits of the claim, but outside thereof, and that at the time of making such representations the defendant knew they were false, and made them with the intent to mislead and deceive the plaintiff, and, believing the same to be true, and hence relying thereupon, the plaintiff did purchase the mine, and paid the consideration of $3,000 therefor, which it would not have done, had it known that the discovery shaft was on a patented lode. The allegations of fraud were denied, and, upon trial by the court without a jury, the court made findings of fact, from evidence which was not at all conflicting, that the defendant was not guilty of any fraud in fact, but was guilty of fraud in law, in that, during the negotiations which culminated in the purchase, he exhibited and submitted to plaintiff an incorrect diagram which was a copy of the original patent plat of the claim, made by the surveyor general of the United States for the district of Colorado, and certified by him as correct, and filed in the United States land office with the application for the patent; and while the court specifically found that neither at the time of exhibiting the plat, nor at any other time, did defendant make any representation whatever concerning the same, save that it was such a copy, and while the finding, also, was that defendant had no knowledge of the falsity of the map, yet since, as a matter of fact, it was incorrect in the particular noted, defendant became thereby responsible for its falsity, and so, in law, was guilty of fraud. Both parties to the negotiations apparently believed that the plat was correct, and the findings, as well as the proofs, are that plaintiff would not have bought the claim, had it not supposed it contained a valid discovery shaft. In short, the court, while expressly finding that the defendant was not guilty of fraud in fact, held that the mere fact of his exhibiting to plaintiff a true copy of the original incorrect plat made him responsible for its falsity, although he made no representation whatever concerning it, and plaintiff knew that such copy, as well as the original, was not made by the defendant, but by a third person. The judgment of the court was for damages against the defendant in favor of the plaintiff in the sum of $3,000, the amount of the purchase price.

1. It is not altogether certain from the allegations of the complaint whether the action was intended by plaintiff to be one sounding in tort for damages for the fraud, or equitable in its character, based upon an anterior rescission of the contract. The most favorable view for the plaintiff that can be taken of this pleading is that it is equitable in its nature, and that plaintiff had rescinded the contract upon discovery of the alleged fraud, and sought to recover the purchase money after tendering back a deed of the claim. In any event, the only cause of action set up in the complaint was based upon fraudulent misrepresentations of the defendant. It is a settled doctrine of this court, ever since the decision in Sellar v. Clelland, 2 Colo. 532, that, for a misrepresentation to be actionable, the party charging the same must, inter alia, show not only that it is false, but that the party making it knew it to be false. This general doctrine, however, is subject to the modification that 'when one has made a representation positively, or professing to speak as of his own knowledge on the subject the intentional falsehood is disclosed, and the intention to deceive is also inferred, or, at all events, this is so when the matters falsely represented are peculiarly within the knowledge of the party making them, and are not known to the party to whom they are made.' This...