Hess v. McCardell

• Decision Date: 16 February 1918
• Docket Number: 32061
• Citation: 166 N.W. 470,182 Iowa 1121
• Parties: JOHN M. HESS, Appellee, v. E. G. MCCARDELL et al., Appellants
• Court: Iowa Supreme Court

166 N.W. 470

182 Iowa 1121

JOHN M. HESS, Appellee, v. E. G. MCCARDELL et al., Appellants

No. 32061

Supreme Court of Iowa, Des Moines

February 16, 1918

Appeal from Jasper District Court.--HENRY SILWOLD, Judge.

ACTION for damages on account of alleged fraudulent representations by defendants in the exchange of real properties. Verdict and judgment for plaintiff. Defendants appeal.

Affirmed.

C. O McLain and Tim J. Campbell, for appellants.

E. J Salmon and McCoy & McCoy, for appellee.

STEVENS J. PRESTON, C. J., LADD and GAYNOR, JJ., concur.

OPINION

STEVENS, J.

This is an action for damages on account of alleged fraudulent representations in the procurement of a contract for the exchange of real properties. Plaintiff alleged in his petition that, prior to the transactions complained of herein, he was the owner of a tract of land in Kossuth County, consisting of 623 acres; that, on or about the 15th of January, 1915, he entered into a contract in writing with the defendant E. G. McCardell, who, with his son, was a part owner of the property the record title to which was in one John W. James, by the terms of which he agreed to exchange said Kossuth County land for Chicago property, which consisted of two lots and a building constructed as a double flat; that all of the negotiations for the exchange of said properties were carried on between the plaintiff and the defendant E. G. McCardell, who, for the purpose of inducing the plaintiff to enter into said contract, and for the purpose of cheating and defrauding him out of his Kossuth County land, "fraudulently and falsely orally represented to the plaintiff that they (defendants) personally knew the cash value of said Cook County property and what the same was actually worth on the market, and that said property then and there was of the fair and actual cash value of $ 80,000 and so rated in the locality where situated; that, if plaintiff became the owner of said Cook County property, he would thereupon be entitled to collect and receive the rentals thereof accruing by reason of such ownership, and aggregating approximately $ 500 per month." Plaintiff further alleged that each and all of the statements and representations were wholly false and untrue, and that the same were, at the time, known to them to be false and untrue, and that plaintiff did not know the facts concerning said property, and that he believed and relied upon the said statements and representations of the defendants.

Plaintiff, by an amendment to his petition, further alleged that the defendants also fraudulently represented to him that the lots upon which the said Chicago flats were constructed cost $ 15,000, and the buildings, $ 65,000; that the said property yielded a gross income of $ 5,600, and a net income of about $ 2,500 per annum; all of which, plaintiff alleges, was false and untrue, except that the gross income was about as stated.

The defendants, for answer to plaintiff's petition, admitted the execution of the contract, and denied all of the remaining allegations thereof.

The plaintiff resided at Oskaloosa, and the defendants, at Newton; but they were not acquainted with each other until the negotiations were begun between them for the exchange of the properties in question.

It appears that the defendant E. G. McCardell, and Fred Brown, a real estate man from Marshalltown, with whom plaintiff had previously talked respecting the sale of his Kossuth County land, and to whom he had offered $ 1,000 if he would sell it, called upon the plaintiff at Oskaloosa on January 13, 1915, when negotiations were opened for an exchange of properties. On the day following, the plaintiff and E. G. McCardell met George D. Brown, Fred Brown's father, at Grinnell, and the three went together to Chicago, examined the flats, and entered into the contract in question. From Chicago, the plaintiff and Brown returned to their respective homes, and the defendant E. G. McCardell went directly to Kossuth County, where he sold the land (which was encumbered for $ 33,000) for $ 53,000. Plaintiff testified that, before they met Brown at Grinnell, the defendants represented to him that they personally knew the value of the Chicago property; that it cost $ 80,000; that they knew that to be its value; and also made the alleged representations regarding the rents of said building. The evidence showed that the Chicago property cost, including the lots, $ 42,000, and, at the time of the transactions in question, was encumbered for $ 35,000 or $ 36,000. The evidence offered upon the trial tended to show the value of the Chicago property to be somewhat more than the cost thereof; whereas the jury, in answer to a special interrogatory, fixed its value at $ 54,000. The defendant Harry McCardell denied having made any statements to the plaintiff relative to the cost or value of said property, or of knowledge thereof.

E. G. McCardell testified that he had formerly resided in Newton, but that, about 1904, he had moved to Zion City, where he resided until 1910. He further denied that he represented the property to plaintiff to be of the value claimed, or that he assumed to know the value thereof.

There is some controversy in the record as to whom George Brown represented, whether plaintiff or defendants. Each claims that he represented the other, and both entered vigorous denials. It also appeared from the evidence that the rents of the Chicago property had been assigned to the holder of a second mortgage, and that a portion thereof monthly was to be applied on said mortgage indebtedness. Plaintiff claims that this matter was not mentioned; whereas E. G. McCardell testified that it was, and that the facts were fully made known to plaintiff. Plaintiff testified that most of his life had been devoted to agricultural pursuits; whereas defendant E. G. McCardell was engaged in the blacksmith business until the last few years, during which time he has followed manufacturing pursuits. The evidence also showed that, while the record title to the Chicago property was in John W. James, and E. G. McCardell acted as his attorney in fact, defendants were the owners of a onehalf interest therein.

I. The principal alleged errors of the trial court relate to instructions given and to the refusal of the court to give certain other instructions requested by defendants. There is, however, some complaint of the court's ruling upon the admission of testimony, and of its ruling upon appellants' motion for new trial. Plaintiff was permitted to offer evidence of the market value of the Kossuth County land, over the objections of defendants that same was immaterial, and calculated to mislead the jury in fixing the amount of the verdict, if it found for plaintiff, and that it did, in fact, cause the jury to violate the court's instructions upon this question. The evidence was clearly admissible, as throwing light upon the question whether the alleged representations were, in fact, made by defendant or relied upon by plaintiff. The court limited the jury, in its consideration of this evidence, to this question, and specifically told them that it must not be considered upon any other question. Vaupel v. Mulhall, 141 Iowa 365, 118 N.W. 272; Skeels v. Porter, 165 Iowa 255, 145 N.W. 332; Ross v. Bolte, 165 Iowa 499, 146 N.W. 31; Hibbets v. Threlkeld, 137 Iowa 164, 114 N.W. 1045; Sutton v. Greiner, 177 Iowa 532, 159 N.W. 268.

II. Exception was taken to numerous instructions of the court, and also to the refusal of the court to give certain requested instructions. The following are among the instructions complained of:

"5. Ordinarily, the statements of a person who is negotiating for the sale or trade of property that the property is of a certain value, is but the statement of an opinion, or commonly known as trade talk, and a claim of fraud cannot properly be based thereon; but if the plaintiff made known in any manner that he was ignorant of the value, and of other matters stated by the defendants, or either of them, and that he would rely upon the statements of the defendants, and thereafter, the defendants, or either of them made the statements as statements of fact, such statement or statements, if established, may be the proper basis for charge of fraud, if the statements were in fact false, and known to the person making them to be false. In order for the plaintiff to recover, it will not be necessary for him to show that he relied exclusively upon the alleged representations of the defendants or either of them. If such alleged representations, or some of them, exerted a material influence upon his mind, although constituting but one of several motives which, acting together, produced the result, it will be sufficient.

"7. Where the plaintiff is ignorant of the value of the property and the defendants know this, and also know that the plaintiff is relying upon defendants' representations as to value, and such representations are not mere expressions of opinion, but are made as statements of fact, which statements the defendants know to be untrue, such a statement is a representation by which the defendants are bound, when such statements are made with an intent to deceive and mislead the one to whom they are made, and he is thus induced to forbear making inquiries which he otherwise would, then they amount to an affirmation of fact, rendering the defendant or defendants liable therefor. An unqualified statement that a fact exists, made for the purpose of inducing another to act upon it, implies that the person who makes it knows it to exist, and that he speaks from his own knowledge. And if the fact does not exist, and the defendant states, as of his own knowledge, that it does, and thereby induces another to act upon his statement to his...