Darnell v. Darnell, 11298.

• Decision Date: 13 November 1952
• Docket Number: No. 11298.,11298.
• Citation: 91 US App. DC 304,200 F.2d 747
• Parties: DARNELL v. DARNELL.
• Court: U.S. Court of Appeals — District of Columbia Circuit

91 US App. DC 304, 200 F.2d 747 (1952)

DARNELL v. DARNELL.

No. 11298.

United States Court of Appeals District of Columbia Circuit.

Argued October 7, 1952.

Decided November 13, 1952.

Mr. George L. Hart, Jr., Washington, D. C., with whom Mr. Arthur G. Lambert, Washington, D. C., was on the brief, for appellant.

Mr. Raymond Gittelman, Washington, D. C., for appellee.

Before PRETTYMAN, PROCTOR and FAHY, Circuit Judges.

FAHY, Circuit Judge.

In an effort to mitigate their marital difficulties the appellant, who is the wife, and appellee, husband, entered into a written agreement dividing between them real estate located in the District of Columbia which they owned. As the result a small apartment house was deeded to appellant. The agreement contained, among other provisions, the following relating to these premises:

"* * * Second Party the husband has represented to First Party the wife in this connection and First Party has relied on said representations that said premises presently produce a gross yearly income of approximately $13,074 * * *."

On the day the agreement was signed it was presented to the District Court as the basis for an order disposing of litigation between the parties. Conveyances were executed and recorded carrying out the agreed division.

It developed that the representation in the agreement as to the gross income of the apartment house was erroneous. The actual gross being $11,934 a year, or $95 a month less than represented, the wife brought this suit against her husband for damages, alleging false representations. On the trial, which was without jury, it appeared the erroneous figure was reached at a conference between counsel for both parties and the husband. In discussing values of various properties in attempting to arrive at a proper division, the husband, when the apartment house was reached, recited certain figures, saying there were so many apartments at such and such a rental. Counsel for plaintiff multiplied the number of apartments by the amount of rent and put that figure down. He then totaled the figures, arriving at $1089.50 a month. Upon being asked if this total was correct the husband replied in the affirmative. Counsel for plaintiff then multiplied the monthly total by twelve and obtained the $13,074 annual gross. Expenses were then discussed and a net revenue reached. Thereafter counsel for the wife prepared a draft agreement containing the provision above quoted. This draft was sent to counsel for the husband, who after several days returned it with notations indicating it had been perused by both him and the husband. It was then placed in final form and executed with no change in the critical provision.

Several weeks later the husband on request furnished a list of tenants with the rental of each apartment. The discrepancy then became apparent. The discrepancy is not disputed but it cannot be said to have arisen from any deliberate or intentional misrepresentation.

At the conclusion of plaintiff's case, the substance of which has been set forth, the court on motion of defendant dismissed the action for failure of evidence from which an inference of fraud could be drawn. Thereupon appeal was taken to this court.

It might well be that the dismissal would stand against attack except that the record indicates the trial judge reached his conclusion upon a view of the law which we deem erroneous. He said that while an innocent representation may be the basis for rescission, nevertheless if one sues for damages for fraud, as here, fraudulent intent must be proved. He pointed out that such intent may be inferred, but it seems clear he thought such inference could not be drawn if the misrepresentation were unintentional, that is, without "fraudulent intent." The reiteration by the judge of the necessity of proof of fraudulent intent indicates, though not with absolute clarity, a view on his part that the evidence must at least furnish basis for inferring an actual intent to deceive.

The decisions of this court do not support this view. We need not now explicitly approve all contained in them by way of dicta, but we adhere to the decisions. They hold that where a contract is executed upon the basis of a material misrepresentation of fact made by a party to it, which is relied upon, and where the party making the representation assumes to have actual knowledge of the existence of such fact, when he is conscious he has no such knowledge, or the representation is with respect to his own...