Dillman v. Nadlehoffer
| Decision Date | 15 May 1886 |
| Citation | 119 Ill. 567,7 N.E. 88 |
| Parties | DILLMAN, Surviving Partner, Etc., v. NADLEHOFFER. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Second district.
This is an appeal from a judgment of the appellate court for the Second district, affirming an order and decree of the circuit court of Will county, sustaining a demurrer to and dismissing the complainant's bill for want of equity, in a certain suit therein pending, wherein Andrew Dillman and Edward R. Knowlton were plaintiffs, and John W. Nadlehoffer was defendant. The bill charges, in substance, that in the fall of 1882 the plaintiffs and defendant entered into copartnership under the firm name of John W. Nadlehoffer & Co. for the purpose of carrying on the business of manufacturing and selling barbed fence wire at Joliet, in said county; that defendant contributed, as his share of the capital in said business, the use of three certain improvements in barbed wire, of which he claimed to be the owner and inventor, and which constituted the chief inducement to the formation of the partnership; that defendant had already received a patent for one of said improvements, and had applications pending for the other two; that the partnership business thus established was successfully carried on, with defendant as superintendent of the factory, until the eighteenth of April, 1883, when defendant refused to carry on the business any longer, and was threatening to sell his patents, he having in the mean time obtained another on said improvements; that he represented and assured plaintiffs that he was already offered by others $25,000 for the two patents, and that he should accept the offer if plaintiffs declined to purchase them; that under these circumstances, on the eighteenth day of April, 1883, defendant, by a written contract, signed and sealed by all the parties, for the consideration of $23,000, sold and transferred to the plaintiffs all his interest in the partnership, its business and effects, including machinery, tools, fixtures, goods manufactured and not manufactured, stock on hand, and all debts and claims due the firm; that before and at the time of the sale and transfer to plaintiffs by defendant of his interest in the partnership, its business and effects, as just stated, as well as before and at the time of the commencement of the partnership itself, the defendant represented to plaintiffs that said improvements were his own invention, and that the patents issued thereon were genuine and valid; and that they did not conflict with or infringe upon the patents or inventions of any one, and particularly those controlled by the Washburn & Moen Manufacturing Company and I. L. Ellwood, or their licensees. The truth of all these representations and statements is positively denied, and it is expressly charged in the bill they were made with intent to deceive and defraud plaintiffs; and that, confiding in their truth, they were induced to act upon them, to their injury. The object of the bill is to restrain the collection of a balance due defendant on the sale of the patents and his interest in the partnership effects, and to recover back the amount received by him from plaintiffs under said sale and transfer.
While the bill seeks to set aside and rescind the contract of sale of the eighteenth of April, 1883, which operated, not only as a transfer to plaintiffs of the patents, but also as a dissolution of the partnership, and as a conveyance to them of defendant's active interest in the partnership, as already seen, yet it does not offer to reconvey the patents, nor does it seek an accounting or settlement of the partnership business, or in any manner to restore him to his rights as they existed before and at the time of the dissolution of the partnership. Nor is it claimed by the bill that the complainants have ceased to use the patents in conducting their business, or that their right to do so has ever been questioned by any one, although a year and nine months and a half elapsed between the date of the transfer and the filing of the bill. As the complainants do not offer to reconvey the patents, it may be, for aught that appears from the bill, they have sold, in whole or in part, their rights in them to others, and possibly realized therefrom large profits. We do not think, in the light of all the facts disclosed by the bill, the simple averment that the patents were infringements upon other patents and worthless is a sufficient answer to the defects in the bill here pointed out. But, as we do not intend to rest our decision upon the insufficiency of the bill in this respect, it is unnecessary to enter upon a discussionof this phase of the case. We prefer that the conclusion to be reached shall turn upon the main question discussed by counsel in the briefs, namely, whether the representations relied on, in the light of all the circumstances appearing on the face of the bill, are such a fraud as constitutes an actionable injury cognizable in a court of equity. The particular statements imputed to the defendant, and mainly relied on as a ground of relief, are but two, and, as expressed in the bill, are as follows: (1) ‘That said letters patent were valid, and the invention therein described and claimed was new, useful, and had not been in use before,’ etc.; (2) that defendant ‘had then already been offered upwards of twenty-five thousand dollars in cash for said two letters patent.’
Much of the argument seems to proceed upon the theory that a false representation, made in a given form, for a fraudulent purpose, must necessarily be followed by the same legal consequences under all circumstances. Acting upon this idea, appellee collates and presses upon the attention of the court a certain line of authorities recognizing the rule that general statements of a vendor, pending negotiation of sale, as to the value or price of the property, or as to what he has been offered for it, though false and made with an intent to deceive, and as an inducement to the sale, will afford no ground of action, for the reason it is the purchaser's own folly to rely on such statements. This general rule is founded mainly on two maxims of the law, namely, caveat emptor and simplex commendatio non obligat. On the other hand, appellant has collected and presented, in a very able and elaborate argument, another line of authorities, where like representations with respect to value or price, made under different circumstances, have been held to vitiate the sale, and entitle the injured party to relief. The latter class of cases establish and illustrate the exceptions and limitations to the general rule announced in the first.
Ordinarily, statements of an indefinite or general character made by either of the parties pending a negotiation for the sale of property, relating to its cost or value, or offers made for it, and the like, will not, in the absence of special circumstances, afford any ground for avoiding the sale, although false and made with a fraudulent intent. Cooper v. Lovering, 106 Mass. 77;Mooney v. Miller, 102 Mass. 217;Hemmer v. Cooper, 8 Allen, 334;Holbrook v. Connor, 60 Me. 578; Jennings v. Broughton, 5 De Gex, M. & G. 134; Drysdale v. Mace, Id. 103; Ellis v. Andrews, 56 N. Y. 83;Noetling v. Wright, 72 Ill. 390;Walker v. Carrington, 74 Ill. 446;Allen v. Hart, 72 Ill. 104;Clement v. Boone, 5 Bradw. 109;Fauntleroy v. Wilcox, 80 Ill. 477;Eames v. Morgan, 37 Ill. 260;Miller v. Craig, 36 Ill. 109;Banta v. Palmer, 47 Ill. 99;Kenner v. Harding, 85 Ill. 264;Bond v. Ramsey, 89 Ill. 29;Tuck v. Downing, 76 Ill. 71. Yet it is just as well settled that where the contracting parties for any cause are not on equal terms, and such representations are gross exaggerations, resulting in an unconscionable bargain, equity will not hesitate to interpose in favor of the injured party. Jackson v. Armstrong, 50 Mich. 65;S. C. 14 N. W. Rep. 702;Haygarth v. Wearing, L. R. 12 Eq. 320.
The case last cited well illustrates the subject under discussion. Miss Haygarth inherited from her brother, James Haygarth, an estate worth about £>>500. The first intimation she had of the fact was from the defendant, Wearing, who was quite familiar with the estate and its value, while the plaintiff knew nothing whatever about it. Wearing called on her at her own house, and, after having informed her of her succession to the estate, he asked what she was going to do with it. She replied ‘she did not know.’ He then told her that there was an understanding between him and her brother that he was to make over the land to him, but that he had neglected to do so. She then asked him what the land was worth, to which he replied £100, may be a trifle more or less. Believing what he said to be true, and having no other knowledge or information on the subject, she told him she would let him have the property for the £100, and some time afterwards conveyed it to him, or rather to his daughter, at his request, for the £100. On learning the true value of the land, Miss Haygarth filed a bill against Wearing and his daughter to set aside the sale and conveyance, and the court decreed accordingly, holding that the representation was fraudulent, notwithstanding it related to the value of the premises, and this decree was affirmed on appeal. We have no doubt of the correctness of the decision in that case. Several important matters entered into the question involved in it, which are worthy of special notice, as they are frequently to be met with in that class of cases: First, the parties were not contracting on equal terms,-that is, the purchaser knew all about the property and the seller knew nothing about it; second, the vendor's ignorance on the subject was well known to the purchaser; third, the statement as to the value of the land was made by him in response to a direct question asked him by her on that subject, and he was therefore bound to answer truly, if at all; fourth, the value as fixed by him was...
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