Cornwall v. McFarland Real Estate Company

• Decision Date: 06 June 1899
• Citation: 51 S.W. 736,150 Mo. 377
• Parties: Cornwall, Appellant, v. McFarland Real Estate Company
• Court: Missouri Supreme Court

51 S.W. 736

150 Mo. 377

Cornwall, Appellant, v. McFarland Real Estate Company

Supreme Court of Missouri, Second Division

June 6, 1899

Appeal from St. Louis City Circuit Court. -- Hon. L. B. Valliant Judge.

Affirmed.

Fisse & Kortjohn for appellant.

(1) The falsity of these specific statements of fact being conceded it is impossible to avoid stigmatizing them as fraudulent. Herman v. Hall, 140 Mo. 270; Rothschild v Mack, 115 N.Y. 1; Marsh v. Falker, 40 N.Y. 562; Knappen v. Freeman, 47 Minn. 491; Borders v. Kattlemann, 31 N.E. 19; Caldwell v. Henry, 76 Mo. 254; Dunn v. Oldham, 63 Mo. 181; Hamlin v. Abell, 120 Mo. 188; Holland v. Anderson, 38 Mo. 55; Bailey v. Smock, 61 Mo. 213. That false statements as to the cost of property are sufficient to justify a judgment of rescission, or for damages, has been often decided. Manning v. Albee, 11 Allen, 520; McAleer v. Horsey, 35 Md. 439; Bradley v. Luce, 99 Ill. 234; 1 Bigelow on Fraud, 493; Garrett v. Wannfried, 67 Mo.App. 437. (2) The contract is one so hard and unfair that specific performance would have been denied defendant. Therefore, it can not have reparation in damages for a breach of the contract. 1 Bigelow on Fraud, 74; Smith v. Hughes, 50 Wis. 620; 1 Pomeroy, Eq. Jur., sec. 110; Fry, Specific Performance, p. 180; 2 Story, Eq., sec. 769; Veith v. Gierth, 92 Mo. 104; Pomeroy v. Fullerton, 131 Mo. 592. (3) The counterclaim counts upon a right of action which is essentially a contract right and must be treated as a count for a breach of contract. Kerr v. Simmons, 82 Mo. 275; Clark v. Clark, 86 Mo. 124.

McKeighan, Barclay & Watts for respondent.

(1) The whole issue of alleged fraud, as claimed here by plaintiff, depends on the value of speculative property, a "tonic beer" business (on one side) and a mortgage, secondary to prior liens (on the other side). Where a representation is of the value of such property, and both parties are on equal footing, any "puffing" or expressions of value are not actionable. Anderson v. McPike, 86 Mo. 293; Nauman v. Oberle, 90 Mo. 666. (2) A party to a cause is bound by the statements he makes as a witness as much as though the statements were in his pleadings. State v. Brooks, 99 Mo. 137. (3) When a certain conclusion follows from admitted facts, as a matter of law, no instructions are necessary to a review of a conclusion other than that one, even in an action at law. Kronenberger v. Hoffner, 44 Mo. 185. (4) Where a party acts on his own judgment and does not rely on the statements of another in making a contract, he can not claim fraud where the subject-matter (as that of value of speculative property) is equally known to both parties. Anderson v. McPike, 86 Mo. 293; Powell v. Adams, 98 Mo. 598.

BURGESS, J. Gantt, P. J., and Sherwood, J., concur.

OPINION

BURGESS, J.

This is a proceeding in equity for the rescission of a contract entered into by plaintiff and defendant by which plaintiff sold to defendant a certain "tonic beer" business belonging to him, and conducted in the city of St. Louis, in consideration of the amount of $ 14,000, secured by a deed of trust on property in that city. As part of the consideration plaintiff obligated himself to lease the business from defendant during part of the year 1896, and to pay therefor the sum of $ 3,500. In addition to what has been stated the petition alleges as part of the transaction, that defendant agreed to obtain for him on ten days notice, and at any time within thirty days after October 24, 1895, the price of $ 5,000 in cash for the $ 14,000 deed of trust.

The ground alleged for rescission of the contract is that plaintiff was induced to enter into it by reason of the defendant's false and fraudulent representations concerning the value and income of the property, which constituted the security for the notes which formed the consideration of the trade.

These representations are alleged to be:

First. Assurance that the property in question, though encumbered with debts to the amount of $ 66,000 (including the deed of trust for $ 14,000 in question here), was actually worth $ 100,000, and that, within a short time previous to this transaction, it had actually been sold at that price.

Second. That the property was actually of an annual income value of $ 9,600 per year, and actually paid in rental income a sufficient sum to provide for the payment of all taxes against the property, for interest on senior mortgages, and leave about $ 2,000 per year to be applied to the discharge of certain incumbrances senior to this $ 14,000 deed of trust, which last mentioned deeds, by their terms, were payable out of the rents, which had been assigned for that purpose.

The answer of defendant admits the trade, and its terms, the delivery by it in payment of the contract price, $ 14,000, in notes secured by deed of trust; the lease of the property by plaintiff from May 1 to September 1, 1896, at $ 3,500, all as alleged, but denies all other allegations in the petition.

And by way of counterclaim it alleges the assignment by defendant to plaintiff of the note for $ 14,000 dated September 4, 1895, and the deed of trust by which its payment was secured, as alleged in plaintiff's petition, then proceeds as follows:

"That on and prior to the said 29th day of October, 1895, the plaintiff, John Cornwall, was the owner of a certain business conducted by him in the city of St. Louis, wherein he was engaged in the manufacture of what is known as Doctor Cornwall's Tonic Beer, the formula of which beer or tonic was secret and wholly unknown to any person other than the plaintiff herein. That plaintiff was also the owner of certain personal property, used by him in conducting said business as aforesaid, which said property is more particularly described as 'one lot of machinery, one lot of appliances, patented and otherwise, used in and for said business, certain wagons and fixtures, certain live stock and harness on hand, all feed for live stock, one lot of advertising matter of any nature, one lot of bottles and cases for shipping same, subject to customers' rebate for same, one lot of labels, a stock of beer on hand in factory and in city of St. Louis, one lot of office fixtures, certain raw material for compounding said beer or tonic, and certain trade-marks and letters patent.'

"That being the owner of said business and property used in conducting same, plaintiff, John Cornwall represented to the defendant herein that said business was very profitable, earning over $ 6,000 per annum, and together with its good will, was reasonably worth at least the sum of $ 14,000, and at the same time plaintiff offered to sell said business, the good will thereof, and the property used in conducting same, as aforesaid, together with the disclosure to the defendant of the formula for making said tonic beer, and an agreement thereafter to preserve the secret of said formula inviolate, and never thereafter to engage in the manufacture of said beer or tonic, for the sum of $ 14,000. That defendant then and there offered to purchase said property of plaintiff if plaintiff would lease the said business for the months of May, June, July and August, 1896, for $ 3,500, payable the first day of May 1896, said lease to be executed in due form, accompanied by an agreement to accept the plant and business as found, and leave said business in like condition, the usual wear and damage excepted.

"That in consideration of the delivery to him by defendant of said note for $ 14,000, and said interest notes, together with the deed of trust securing said notes, as hereinbefore particularly described, plaintiff, John Cornwall, thereafter to wit, on the said 29th day of October, A. D. 1895, by instrument of writing by him executed and delivered to ...