Fitch v. Ingalls

Decision Date31 March 1930
Citation271 Mass. 121,170 N.E. 833
PartiesFITCH v. INGALLS et al.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

OPINION TEXT STARTS HERE

Appeal from Superior Court, Suffolk County; Cox, Judge.

Suit by Warren Fitch against George M. Ingalls and others. By an interlocutory decree, the bill was dismissed against all defendants except the defendant named. From the final decree, both parties appeal.

Affirmed.

M. C. Taylor, of Boston, for plaintiff.

T. F. Callahan, of Boston, for defendants.

CROSBY, J.

This is a bill in equity to reach and apply certain corporate stock in satisfaction of a claim based upon the alleged fraud of the defendant Ingalls. Robert E. Erskine and Robert S. Erskine were made parties defendant in the bill, but by an interlocutory decree entered January 10, 1927, the bill was dismissed as to them. Thereafter a stenographer was appointed to take the evidence. The trial judge filed ‘Findings and Rulings,’ and in accordance therewith a final decree was entered for the plaintiff in the sum of $5,900. Both parties appealed from the final decree.

It appears from the findings of the trial judge that for several years before 1921 the defendant Ingalls, who will hereafter be referred to as the defendant, was a wholesale dealer in fish, in Boston, and was active in many organizations connected with that trade. He sold his business in 1921 and thereafter spent each winter in Florida and made investments in real estate there. In some of these transactions the firm of R. E. and R. S. Erskine of Lake Worth, Florida, acted as his broker. With the members of this firm, who were father and son, the defendant was also socially intimate.

In the spring of 1925 the defendant returned to Boston and made several visits to his old associates at the Fish Pier and discussed with them the profits which investors in Florida real estate were reputed to be making. Several of his former associates expressed the desire to invest if a suitable opportunity offered. On or about August 8, 1925, Robert S. Erskine, the junior member of the firm, obtained from one Watson a written option for the purchase of a tract of land in Florida containing about fifty-five acres, having an ocean frontage of three thousand, three hundred and fifty feet, at $75 per front foot. He telegraphed his father, who was in Boston, informing him of the option and offering the land for sale at $85 per front foot, representing a total of $284,750. On receipt of this telegram Robert E. Erskine showed it to the defendant and the latter showed it to his associates at the Fish Pier and conferred with them in regard to the purchase of the property. After some negotiations a syndicate of ten persons was organized including the defendant, the Erskines and seven others including the plaintiff. A ‘Syndicate Agreement and Declaration of Trust’ providing for the purchase of the property for $284,750, of which $117,250 was payable in cash, was signed by all the members of the syndicate and by R. S. Erskine as trustee. The price agreed upon for a sale of the property was on a basis of $85 a front foot.

Before the execution of the syndicate agreement and in contemplation thereof, each member, except the Erskines, made an initial deposit of $1,000 as a ‘binder’ and subsequently made a payment of $10,800. These sums were all given to the defendant who handed them to the Erskines. At the same time the defendant tendered to R. E. Erskine as his share of the second payment a certified check for $10,800. Erskine returned the check to the defendant stating that there would be something coming to him out of the commission on the sale of the property. The defendant's commission as finally determined and received by him was $11,829.68, a sum slightly in excess of his share of the ‘binder’ together with his share of the first payment.

In October, 1925, the property was conveyed by Watson to R. S. Erskine pursuant to the terms of the option which the latter had secured from Watson, namely, $251,250, or at the rate of $75 per front foot. Soon thereafter the valuation of Florida real estate showed a rapid and continuous decline, and in March, 1926, the Boston members of the syndicate became apprehensive about the situation and sent a representative to examine the property and the condition of the market. As a result of this examination the plaintiff and the other Boston members of the syndicate refused to make a third payment which had previously been requested, and repudiated the entire transaction. The plaintiff seeks to have the syndicate agreement rescinded for fraudulent misrepresentations and misconduct of the defendant, and to recover the $11,800 which he paid, with interest, and for such further relief as may be proper.

The trial judge found ‘that the defendant represented to the plaintiff that he was coming into this Syndicate upon an equal basis with the other members; that the defendant, during the whole course of the negotiations, knew that he was acting as a broker and would receive a commission if the sale were effected; that, while he did not know the exact amount of the commission he was to receive, he was well aware that it would be a substantial amount; and that the defendant did not disclose to the plaintiff and the plaintiff did not then know any of these facts * * * that the defendant's representation that he was coming into the Syndicate upon the same basis as his fellow members was a false and fraudulent representation upon which the plaintiff justifiably relied with respect to a matter that must have been, as the defendant intended it should be, a material, if not the controlling, factor in inducing the plaintiff to make his investment.’ The judge ruled as matter of law that the plaintiff and defendant were joint adventurers; that the latter owed to the former the duties of a fiduciary; that the defendant's employment as a broker was inconsistent with, and in violation of, his fiduciary duty and was a material fraud for which he was liable. These rulings were amply supported by the findings and entitle the plaintiff to damages. Goldman v. Cosgrove, 172 Wis. 462, 179 N. W. 673;Selwyn & Co. v. Waller, 212 N. Y. 507, 106 N. E. 321, L. R. A. 1915B, 160;Sander v. Newman, 174 Wis. 321, 181 N. W. 822;Jackson v. Hooper, 76 N. J. Eq. 185, 199, 200, 74 A. 130;Jordan v. Markham, 130 Iowa, 546, 107 N. W. 613;Gamble v. Loffler, 28 S. D. 239, 133 N. W. 288;Church v. odell, 100 Minn. 98, 110 N. W. 346. The judge further ruled that the plaintiff was entitled to recover as damages the loss which he had sustained rather than the profit obtained by the defendant resulting from his fraud; and ruled that there could not be a rescission, because the plaintiff had neither made nor tendered to the defendant an assignment of his interest in the property under the syndicate agreement.

It is the contention of the plaintiff that he should be permitted to recover on the fround of rescission, thus entitling him to received all that he had invested. The defendant contends that he is not liable in damages; and in any event, if he is liable, damages should be on the basis that the commission received by him was a secret profit in which the plaintiff as a joint adventurer is entitled to share. The defendant contends that the findings of the trial judge upon the issue of false representation are not supported by the evidence which is reported in full. ‘The familiar rule in such cases in equity is that, while it is the duty of this court on appeal to examine the evidence and decide the case according to its judgment, giving due weight to the finding of the trial court, yet since the trial court has had the advantage of seeing the witnesses and thus of weighing their testimony, his finding will not be reversed unless plainly wrong.’ Donnelly v. Alden, 229 Mass. 109, 114, 118 N. E. 298, 301. The finding that the defendant represented to the plaintiff that he was coming into the syndicate upon an equal basis with the other members is amply supported by the evidence. Indeed, the defendant testified that such was his understanding.

The trial judge further found that the defendant, during the whole course of the negotiations, knew that he was acting as a broker and would receive a commission if the sale were effected. We are of opinion that this finding was not without evidence to support it. Under examination by counsel for the plaintiff, the defendant testified that late in October, 1925, he had received a statement from the Erskines, that a letter accompanied the statement, and that the...

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  • Northern Heel Corp. v. Compo Industries, Inc.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • March 8, 1988
    ...... Nevins v. Ward, 320 Mass. 70, 67 N.E.2d 673, 675 (1946); see Fitch v. Ingalls, 271 Mass. 121, 125, 170 N.E. 833 (1930). Succinctly put, for misrepresentation to warrant repudiation or rescission, the would-be ......
  • Davidson v. Robie
    • United States
    • United States State Supreme Judicial Court of Massachusetts
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    ...... Cf. Cardullo v. Landau, 329 Mass. 5, 8, 105 N.E.2d 843; Williston, Contracts (3d ed.) §§ 318-319C; annotation, 138 A.L.R. 968. Cf. also Fitch v. Ingalls, 271 Mass. 121, 125, 170 N.E. 833. 6 In the Cray, McFawn & Co. case, Judge Woolsey quoted, with approval, Berle, Cases and Materials on ......
  • McGrath v. C.T. Sherer Co.
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • May 14, 1935
    ...Although generally it is true that, where the right to rescind is exercised, both parties must be put in statu quo, Fitch v. Ingalls, 271 Mass. 121, 129, 170 N. E. 833, it is also true that ‘When a party seeking to rescind a contract on the ground of fraud acts without unnecessary delay and......
  • McGrath v. C.T. Sherer Co.
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • May 14, 1935
    ...... purpose. Although generally it is true that, where the right. to rescind is exercised, both parties must be put in statu. quo, Fitch v. Ingalls, 271 Mass. 121, 129, 170 N.E. 833, it is also true that ‘ When a party seeking to. rescind a contract on the ground of fraud acts ......
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