Holland v. Moreton

Decision Date08 July 1960
Docket NumberNo. 8740,8740
Citation353 P.2d 989,10 Utah 2d 390
Partiesd 390 Rex HOLLAND, Rex Holland, Administrator with the Will Annexed of the Estate of John G. Holland, Deceased, Plaintiffs and Appellants, v. Arthur E. MORETON, Ethel T. Moreton, also known as E. T. Moreton, John R. Moreton, also known as J. R. Moreton, Rose Ann Moreton, Susan Moreton Tevis, Defendants and Respondents.
CourtUtah Supreme Court

Rawlings, Wallace, Roberts & Black, Salt Lake City, Nick C. Spanos, Kansas City, Mo., Wm. Jerome Pollack, Los Angeles, Cal., for appellants.

Gustin, Richards & Mattsson, E. Ray Christensen, Salt Lake City, for respondents.

McDONOUGH, Justice.

In this action Rex Holland and his father John G. Holland (now deceased) sought recovery against Arthur E. Moreton (and members of his family as his transferees) to recover damages suffered because of fraud practiced upon the plaintiffs by Arthur E. Moreton in connection with the sale of certain mining claims to Columbia Iron Mining Company, a subsidiary of United States Steel Corporation. The factual background of this case appears in the opinions in the report of another phase of this case, 1 which we refer to and recite such further facts as are necessary to the disposition of the issues presented on this appeal. In that case we affirmed a determination of the trial court that no cause of action for fraud existed against Columbia Iron Mining Company, but remanded the case for trial against the individual defendants, the Moretons, Arthur E. Moreton, his wife, and adult children. Inasmuch as the transaction was handled by Arthur E. Moreton, he is the only defendant we refer to hereafter in discussing the facts.

Upon further proceeding, the trial court dismissed the action as to the estate of John G. Holland, but after a trial submitted Rex Holland's case to a jury which found in his favor. Thereafter the court vacated the jury verdict and dismissed the action as to plaintiff Rex Holland also, apparently upon the ground that the action has not been brought within the statute of limitations, that is, within three years after the discovery of the fraud. 2

Rex Holland appeals on his own behalf and as executor of his father's estate, contending that the evidence amply supports the jury's finding that defendant Arthur E. Moreton was guilty of fraud; and that the Hollands did not discover it until less than three years before the commencement of the action. It is important to keep in mind that the jury having found for the plaintiffs, they are entitled to have us review the evidence and every reasonable inference fairly to be drawn therefrom in the light most favorable to them and their contentions. 3

The facts in summary are: that John Holland, his son Rex, and one Murie had for many years owned three unpatented mining claims near Iron Mountain west of Cedar City in Iron County. The defendant Arthur E. Moreton, an attorney, knew of the desire of Columbia to acquire iron mining properties to supply its plant, Geneva Steel, in Provo, Utah. He talked to the plaintiffs at Cedar City in 1946 and an agreement was arrived at that he would undertake to obtain patents for the claims and negotiate a sale for them, in return for which he was to receive a one-fourth interest, together with an option to purchase the other three-fourths. The claims were patented and it was determined that there appeared to be about 1,500,000 tons of ore on the properties. Arthur E. Moreton so informed the parties but told them that because of the overburden it could not be expected to bring over 10cents a ton; that he could probably get $133,000 of which the Hollands and Murie would get $100,000, leaving $33,000 for Moreton. It was also shown that he stated that the claims might possibly bring 'a little bit more' than $133,000, but no more than $155,000.

After discussion and consideration of several possible arrangements between the parties a final 'agreement of ownership' was prepared by Moreton by which he was to have one-fourth and the Hollands and Murie were each to have one-fourth. It also recited that if the sale was 'slightly in excess' of $133,000 Moreton could have the excess as compensation for his option to purchase their interests.

Moreton told the Hollands to leave the business of selling the claims to him and cautioned them not to talk to anyone else about the matter. The negotiations for the sale of the claims culminated in the fall of 1948. In two letters, one dated October 16, 1948, and another dated November 20, 1948, which he prepared and presented to the plaintiffs for signature, they offered to sell their three-fourths' interest to Columbia for $100,000. It avoided reference to the total amount which the claims would be sold for but included this idea, as expressed in the first letter:

'Needless to say, Mr. Moreton may offer and sell his interest in said claims for whatever price you and he may agree upon, if he so desires, and the entire proceeds therefrom will, of course, be his sole property, it being his right to determine and to receive whatever amount you may agree upon with him.'

Moreton took this letter to Cedar City and procured the plaintiffs to sign it and mailed it to Columbia.

There are various aspects of the evidence which tend to support the position of the plaintiffs that Moreton was keeping from them information as to the total amount of money involved in the sale of the claims. The evidence is that after the sale had been agreed upon Columbia caused a single deed to be prepared for the parties to sign conveying the claims to it. But without telling the plaintiffs of this fact, Moreton requested of Columbia that his transaction be by a separate deed. His stated reason is that he did not want to join in the warranty of the Holland and Murie share of the claims. The strange thing about this is that their titles all derived from exactly the same source and Moreton had just completed securing the patents.

The transaction was hendled by separate instruments, as Moreton had requested, and was done in his office on the same day, December 20, 1948. The evidence is in sharp dispute as to just how this was accomplished. Moreton claims that the terms of the sale were read aloud in the presence of the plaintiffs and that they thus either should have known what he was getting for his interest; or alternatively, that it was none of their concern. The plaintiffs' evidence is to the contrary: that on looking back at what happened it is obvious that Moreton so managed the affair as to deliberately conceal the true facts from them in this manner: the Hollands and Murie signed first and completed their transaction in one part of the office, receiving $100,000 for their three-fourths' interest. In the meantime, while their attention was absorbed in their part of the transaction, on another desk a short distance away, the Moretons signed a separate deed for which Columbia agreed to pay $287,500 for his one-fourth interest, which fact was not made known to the Hollands.

Notwithstanding Moreton's protestations that the Hollands had full information concerning the business transaction, our review of the evidence leaves no doubt that there is ample support for the jury's acceptance of the plaintiffs' contention to the contrary. The fact is that Moreton has not always taken the position that they had any right to such information. It rather appears that at the time of the negotiations and carrying out of the business under discussion, he entertained the view that he had no duty to make any such disclosure to them and that it was none of their business what he received for his share. In fact some of his testimony indicates that he was possessed of that notion at the time of the trial. On cross-examination he testified:

'Q. Will you now tell me when it was that you told the Hollands and Murie, for the very first time, that Columbia was paying 25 cents a ton for the M & H Claims? A. I never told them that at any time.

'Q. You never told them? A. No.'

At the trial and upon appeal Moreton made much of the fact that his deed to Columbia recited the actual consideration paid and that the correct amount of revenue stamps was affixed. This he states was done at the time of the transaction described above; and also that the deed was recorded, which he claims should have given constructive notice to the plaintiffs of the price paid. This contention is a two-edged sword. In view of the entire picture as to his conduct, the jury could well have believed, as they apparently did, that his taking particular care to do those things may have been part of a preconceived plan to conceal the true facts from the Hollands, and cover up the tracks of his deception by later calling attention to those facts. It is common knowledge that in real estate transactions deeds usually do not state the full consideration but recite only a nominal one. It has long been recognized that zeal to give the external appearance of honesty may be a badge of deceit. 4

The averment that the plaintiffs had notice by the recordation of Moreton's deed is unsound. It imparts notice only to parties who have some duty to search the record, 5 such as purchasers or others acquiring a subsequent interest in the property. 6 There was no such duty on the defendants. Nor were they under any duty to maintain a careful supervisory check on Moreton's actions. He was acting as their attorney and agent and they were entitled to trust him; and it certainly does not lie in his mouth to say that they shouldn't have done so.

Further indication that Moreton's dealing with the Hollands was not consistent with good faith and fair dealing is found in the letter written by him on December 18, 1951, shortly after the Hollands had learned further facts concerning the transaction, Rex Holland wrote to him about the matter. In response thereto he wrote charging Rex Holland with attempting extortion. He stated among other things that:

'The State auth...

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8 cases
  • Biswell v. Duncan
    • United States
    • Utah Court of Appeals
    • August 18, 1987
    ... ... Taylor, 14 Utah 2d 152, 379 P.2d 380 (1963); Smoot v. Lund, 13 Utah 2d 168, 369 P.2d 933 (1962); Holland v. Moreton, 10 Utah 2d 390, 353 P.2d 989 (1960); Evans v. Gaisford, 122 Utah 156, 247 P.2d 431 (1952); Murphy v. Booth, 36 Utah 285, 103 P. 768 ... ...
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    ... ... Noble, 13 Utah 2d 133, 369 P.2d 290 (1962); Nance v. Sheet Metal Workers Int'l Assoc., 12 Utah 2d 233, 364 P.2d 1027 (1961); Holland v. Moreton, 10 Utah 2d 390, 353 P.2d 989 (1960); Ostertag v. La Mont, 9 Utah 2d 130, 339 P.2d 1022 (1959); Sadleir v. Knapton, 5 Utah 2d 26, 296 ... ...
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    ...for accounting actions in Utah. However, where fraud is alleged it must be proven by clear and convincing evidence. Holland v. Moreton, 10 Utah 2d 390, 353 P.2d 989 (1960); Lynch v. MacDonald, 12 Utah 2d 427, 367 P.2d 464 (1962). Fraud and breach of fiduciary duty can be separate bases for ......
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