D. H. McDonald v. Frederick Mcneil

• Decision Date: 16 May 1918
• Parties: D. H. McDONALD v. FREDERICK McNEIL
• Court: Vermont Supreme Court

104 A. 337

92 Vt. 356

D. H. McDONALD v. FREDERICK McNEIL

Supreme Court of Vermont

May 16, 1918

February Term, 1918.

ACTION of tort for deceit. Plea, the general issue. Trial by jury at the March Term, 1916, Washington County, Butler, J presiding. Verdict for plaintiff. Defendant excepted.

Judgment affirmed.

Fred L. Laird for defendant.

John W. Gordon for plaintiff.

Present WATSON, C. J., HASELTON, POWERS, TAYLOR, and MILES, JJ.

OPINION

POWERS

This is a tort action for false representations whereby the plaintiff was induced to purchase a certain piece of real estate. There was evidence tending to show that the defendant, who owned a piece of land on the shore of Cold Stream Lake, in Penobscot County, Maine, by falsely and fraudulently representing to the plaintiff that a ninety acre lot contiguous to the one above mentioned had growing upon it eight hundred large hemlock trees, one hundred and fifty-three large pine trees, a certain large number of cords of bobbin-stock white birch, and other valuable wood and timber, and that there were twenty-five valuable cottage lots on that part of the lot bordering on the lake, induced the plaintiff to furnish the money and buy said ninety acre lot and to take the title thereto to said parties jointly, and to give the defendant credit for his half of the investment that it turned out that the number of pine and hemlock trees was grossly overstated; that the quantity of wood and lumber was greatly exaggerated; that the shore land was too wet to be available for cottage lots; and that the value of the land bought was much less than represented.

The trial below was by jury, and the verdict was for the plaintiff. By special verdicts, the jury found that the defendant induced the plaintiff to furnish the money and buy the land by false statements and representations knowingly made with intent to deceive; that the plaintiff relied upon them, believing them to be true; that the property in question was worth $ 1,900; and that it would have been worth $ 800 more, if it had been as represented.

The case, then, presents the novel feature of one held for a tort by which he, himself, lost as much as the other party. This feature does not prevent a recovery. Ordinarily, the parties to actions of this character stand in the relation of vendor and vendee, or as parties to an exchange of property. But such relations are not essential to the right of recovery. Liability grows out of the fact that the plaintiff has been misled to his prejudice, and not that the defendant has profited by his wrong. An actual motive to do injury to the plaintiff is not essential, but if a false representation is made with knowledge of its falsity, the intent to deceive is presumed. 12 R. C. L. 349; note to Cottrill v. Krum, (Mo.) 18 Am. St. Rep. 561. It is not necessary to show that the defendant acted from motives of personal advantage (Whiting v. Price, 169 Mass. 576, 48 N.E. 772, 61 Am. St. Rep. 307), and the fact that he actually gains nothing by the deception is not controlling. Pasley v. Freeman, 3 Term. R. 51, 2 Smith Lead Cas. 1300, and note; James v. Crosthwait, 97 Ga. 673, 25 S.E. 754, 36 L.R.A. 631; Endsley v. Johns, 120 Ill. 469, 12 N.E. 247, 60 Am. Rep. 572; Medbury v. Watson, 47 Mass. 246, 39 Am. Dec. 726; Chellis v. Cole, 116 Me. 283, 101 A. 444. In Ewins v. Calhoun, 7 Vt. 79, the defendant gained nothing by his fraud, yet he was held liable; and in Paddock v. Fletcher, 42 Vt. 389, it was said that the defendants were liable for their deception whether its fruits went into their own pockets or not.

With these rules in mind and the special verdicts before us, we find little difficulty in disposing of the question of liability. Though the defendant lost equally with the plaintiff by the purchase, he knowingly misrepresented material matters, and did this in circumstances rendering him liable to the plaintiff for his share of the loss.

In actions for deceit in the sale or exchange of real estate, two different rules for the assessment of damages have grown up, each recognized by courts of the highest authority. One is that the damages are to be measured by the difference between the property as it is and as it would be if it was as represented. The other is that the damages are to be measured by the difference between the value of the property and the price paid. Our rule is the one first above stated. It applies as well to personal as to real property, to sales and exchanges, and is too firmly established to be questioned. Bowman v. Parker, 40 Vt. 410; Shanks v. Whitney, 66 Vt. 405, 29 A. 367; Belka v. Allen, 82 Vt. 456, 74 A. 91; Howton v. Strout Farm Agency, 90 Vt. 50, 96 A. 330; Maidment v. Frazier, 90 Vt. 520; Turner v. Howard, 91 Vt. 49, 99 A. 236. This was the rule applied to the case before us,--the plaintiff being allowed to recover one-half the difference between the value as it was and as it was represented. The defendant excepted, and insists that the second rule above specified should have been applied. So it remains to consider whether the facts that the defendant gained nothing by the transaction and was to become a partner in the enterprise affect the question.

It is to be noted that it is not the case of one partner deceiving another. The deception preceded the partnership. It was the deception that resulted in forming the partnership. So the fact that the defendant became a part owner as one of the results of his misrepresentation does not affect the quality of his conduct or the results flowing from it. He stands no differently than one wholly disinterested. The plaintiff's situation is affected by this relation only to the extent that he is relieved of one-half of the loss he would otherwise have sustained.

We see no logical reason why the damages here should not be assessed under our usual rule. We find no case wherein any such distinction as the defendant insists upon has been discussed, though the rule we adopt appears to have been applied in several cases. Medbury et al. v. Watson, 47 Mass. 246, 39 Am. Dec. 726, was an action brought against a third person for fraudulent representations regarding the cost and value of a certain tannery. One of the plaintiffs sold out his interest in the property for just what he paid for it, and it was urged in behalf of the defendant that as one of the plaintiffs had suffered no loss, there could be no recovery. But the court held otherwise, saying, in effect, that if through fraud he paid a higher price than the estate was worth, he was entitled to damages, without regard to what disposition he afterwards made of the property.

In Shaw v. Gilbert, 111 Wis. 165, 86 N.W. 188 a manufacturer was induced by the defendant's false and fraudulent representations to sell his goods on credit to an insolvent corporation, and was allowed to recover their full value, though this included his usual...