Healy v. Ginoff

• Decision Date: 28 November 1923
• Docket Number: 5312.
• Citation: 220 P. 539,69 Mont. 116
• Parties: HEALY v. GINOFF ET AL.
• Court: Montana Supreme Court

220 P. 539

69 Mont. 116

HEALY v. GINOFF ET AL.

No. 5312.

Supreme Court of Montana

November 28, 1923

Appeal from District Court, Powell County; Geo. B. Winston, Judge.

Action by John J. Healy against Nick E. Ginoff and another. Judgment for plaintiff, and defendants appeal. Reversed and remanded.

Russell Madeen & Clarke, of Missoula, for appellants.

S. P Wilson, of Deer Lodge, and Charles E. Avery, of Anaconda, for respondent.

GALEN J.

In this case it appears that the defendants were desirous of making purchase of lands for agricultural purposes, and that the plaintiff through his agents, on September 16, 1916, induced them to contract for the purchase of certain land in Powell county, comprising 138 acres, said to have an adequate supply of water with which to irrigate the same. Defendants made purchase of such land, agreeing to pay therefor $6,200, $500 of which was paid in cash. The premises, together with a water right of 138 miner's inches from the north fork of the Big Blackfoot river for irrigation and domestic purposes was conveyed to the defendants by warranty deed. As evidence of the defendants' indebtedness for the balance of the purchase price, on January 1, 1917, they executed and delivered six promissory notes to the plaintiff's agent C. H. Muckler, as follows: One for $1,000, due January 1, 1918; two for $500 each, due respectively January 1, 1919, and January 1, 1920; two for $1,000 each, due respectively January 1, 1921, and January 1, 1922, and one for $1,700, due January 1, 1923. All are interest bearing at the rate of 6 per cent. from date. As security for the payment of these several notes, the defendants executed a mortgage upon the lands and water right purchased by them from the plaintiff in favor of C. H. Muckler, plaintiff's agent. The first of the notes above described was fully paid in due course, and the remaining notes, together with the mortgage security, were regularly indorsed and assigned by C. H. Muckler, without recourse, to the plaintiff October 3, 1917. The defendants having defaulted in the payment of the principal and interest on their indebtedness, this action was brought to foreclose the mortgage.

The complaint is in usual form, alleging the assignment of the notes and mortgage to the plaintiff, and defendants' default in the payment of the principal and interest due on such notes. Judgment was prayed for $4,700 as principal, $1,433.50 as interest due, making a total of $6,133.50. By their answer, the defendants admit the execution and delivery of the notes and mortgage, and affirmatively plead two counterclaims against the plaintiff. The first is for damages to the alleged amount of $5,748, because of the false and fraudulent representations made by the plaintiff's agents, C. H. Muckler and W. N. Glasscok; it being alleged that the lands purchased from the plaintiff are arid in character, and that it is necessary to irrigate them in order to successfully grow and produce crops thereon, and that without water for irrigation the lands are of little value. Further it is alleged that these agents of the plaintiff, while acting within the scope of their authority in the sale of such lands and in order to induce the defendants to make purchase thereof, and to pay therefor the agreed purchase price with intent to deceive the defendants and induce them to purchase the lands, made false and fraudulent representations to them respecting such lands and water rights, which they had a right to rely upon; that the defendants believed such representations to be true and placed reliance upon them, thereby being induced to make purchase of the land and water rights, with resulting damages in consequence of the total failure of the plaintiff to furnish water for irrigation of the lands as covenanted and agreed. Damages are sought by this counterclaim for the alleged difference in the value of the lands with and without water for irrigation.

The second counterclaim pleaded is for $20,177.20 damages, predicated upon the loss of growing crops in the years 1917, 1918, 1919, 1920, and 1921, respectively, by reason of plaintiff's failure to furnish water with which to irrigate them. Damages are specifically alleged for each year, and are specified as the difference between the amount harvested and what would have been obtained had defendants been provided with sufficient water for irrigation, computed upon the basis of the market value of crops produced for the given year. For instance, as to the loss so sustained by the defendants in the year 1917, it is alleged:

"That at and during the year 1917, at the proper season of said year for sowing and planting crops, defendants properly prepared the ground and sowed and planted 55 acres of said lands to wheat, which properly germinated and commenced to grow and, had water been supplied, or had defendants been able to procure the water aforesaid for irrigating, the same would have for that year yielded and produced 25 bushels per acre, but that, by reason of defendants' inability to procure water for irrigating the same during said season, only 136 bushels of wheat were grown or produced on said 55 acres sowed to wheat. That the market price for the 1917 crop of wheat was $2.50 per bushel, and by reason of the premises aforesaid defendants suffered damages in the sum of $3,097.50.

That at and during the year 1917, at the proper season of said year for sowing and planting crops, defendants properly prepared the ground and sowed and planted 30 acres of said premises to oats, which properly germinated and commenced to grow, and, had water been supplied, or had defendants been able to procure the water aforesaid for irrigating, the same would have for that year yielded and produced 40 bushels per acre, but that by reason of defendants' inability to procure water for irrigating the same during said season, only 370 bushels of oats were grown or produced on said 30 acres sowed to oats; that the market price for the 1917 crop of oats was $.80 per bushel and by reason of the premises aforesaid defendants suffered damages in the sum of $544."

Issue was joined by reply, and the cause was tried to a jury. Objection was by the court sustained to the introduction of any evidence in support of defendants' second counterclaim, and the jury upon the court's direction found a verdict for the plaintiff for the sum of $6,358.30. Judgment was entered on the verdict, and this appeal is from the judgment.

The defendants' assignments of error present two questions necessary to be considered in disposing of this appeal, which will be considered in their order.

1. Did the trial court err in directing a verdict for the plaintiff? It is admitted that after the defendants had been shown the lands in question by plaintiff's agent, Glasscok, an agreement was reduced to writing a short time afterwards, on September 16, 1916, between the plaintiff through "C. H. Muckler, his agent," and Nick E. Ginoff, one of the defendants, whereby the plaintiff agreed to convey to him the lands in question "together with good and valid title to a one-twentieth interest in the Healy ditch, taken out of the north fork of the Blackfoot river, for irrigation and domestic purposes, being approximately 138 miner's inches"; it being further covenanted by the plaintiff in such agreement that he would convey to said Nick E. Ginoff, by good and sufficient warranty deed, a right of way over all lands owned by him for an irrigation ditch or canal to run from the large ditch now upon his lands to the land to be conveyed by him to said Ginoff, "it being understood that the right of way is to be such as is approved and satisfactory to the party of the second part (Ginoff). And it is further covenanted and agreed that the ditch to run (from) the main ditch to the land to be conveyed herein is to be constructed either by the party of the first part at its own cost and expense, or by the party of the second part, and in that event the party of the first part will pay to the party of the second part the actual cost of the construction of said ditch, not to exceed the sum of one hundred and twenty-five dollars ($125.00). It is further covenanted and agreed by the party of the first part that the main ditch constructed by the party of the first part and the ditch to be built from the main ditch to the land to be conveyed as provided for herein will, when completed, convey the water to the land of the party of the second part."

Further it is admitted that the lands and water rights were subsequently deeded by the plaintiff and his wife pursuant to such contract to the defendants Nick E. Ginoff and T. E. Ginoff, on October 30, 1916, and that the mortgage upon which foreclosure is sought in this action was executed to C. H. Muckler, as security for the balance due on the purchase price by the defendants on November 24, 1916. It appears that all negotiations leading up to the purchase of the lands were made by the defendant Nick Ginoff, with both Glasscok and Muckler as plaintiff's agents, and that when Glasscok took Nick Ginoff to inspect the lands in the fall of 1916, before the execution of the contract for the sale thereof, they did not inspect the irrigation system; Glasscok being in a hurry to return to Missoula and assuring Ginoff there was an abundance of water available from the Healy ditch for irrigation of the land. Ginoff, placing reliance upon Glasscok's statements and representations that the main Healy ditch was a fine ditch, and that there was ample water to irrigate the entire flat, did not then inspect the Healy irrigation canal, but returned with Glasscok to Missoula by automobile. Later in Missoula, before Ginoff executed the agreement for the purchase of the land, Muckler said:

" 'For 191

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