Linch v. Carlson

• Court: Nebraska Supreme Court
• Writing for the Court: MESSMORE
• Citation: Linch v. Carlson, 156 Neb. 308, 56 N.W.2d 101 (Neb. 1952)
• Decision Date: 19 December 1952
• Docket Number: No. 33197,33197
• Parties: LINCH v. CARLSON.

Page 101

56 N.W.2d 101

156 Neb. 308

LINCH v. CARLSON.

No. 33197.

Supreme Court of Nebraska.

Dec. 19, 1952.

Syllabus by the Court.

1. To maintain an action for fraudulent representations, it is not only necessary to establish the telling of the untruth, knowing it to be such, or that it was told without knowledge of the facts, but also to prove that the plaintiff had a right to rely upon it, and did so rely, and altered his condition because thereof, and suffered damages thereby.

2. It is a general rule that fraud must relate to a present or preexisting fact, and cannot ordinarily be predicated on unfulfilled promises, or statements as to future events.

3. One of the essential elements of fraud practiced by means of false representations is that the representation must be concerning a matter material to the contract.

4. A person is justified in relying upon a representation made to him in all cases where the transaction is a positive statement of fact, and where an investigation would be required to discover the truth.

5. It is generally held that fraud may be predicated on false representations or concealments, although the truth could have been ascertained by an examination of public records.

6. The purpose of the recording acts is to afford protection not to those who make fraudulent misrepresentations but to bona fide purchasers for value. The party to whom false representations are made is not held to constructive notice of a public record which would reveal the true facts.

7. Generally, communications by telephone are admissible in evidence where otherwise relevant to the fact or facts in issue, provided the identity of the person with whom the witness spoke or the person whom he heard speak is satisfactorily established. However, where it appears the parties to a telephone conversation are not vested with authority to act as attorney or agent by contracting party in whose behalf information is sought, then such telephone conversation is inadmissible in evidence

Mothersead, Wright & Simmons, Scottsbluff, for appellant.

McGinley & Lane, Ogallala, Holtorf & Harris, Gering, for appellee.

Heard before CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

MESSMORE, Justice.

This is an action at law brought by Clyde Linch as plaintiff in the district court for Scotts Bluff County, against Carl H. Carlson, defendant, to recover damages for fraud alleged to have been practiced on the plaintiff by the defendant, based on false representations as a material inducement for the plaintiff to enter into a contract with the defendant for the sale of land and assignment of school land leases. The issues were submitted to a jury resulting in a verdict for the plaintiff, fixing his recovery in the amount of $2,894.07, which is the amount of irrigation assessments on the school land leases in Section 36, less $1,000. The defendant filed a motion for new trial which was overruled. From this ruling the defendant appealed.

The defendant assigns as error that (1) the court erred in overruling the motion of the defendant for a directed verdict made at the close of plaintiff's evidence; (2) the court erred in overruling the defendant's motion to set aside the verdict and to enter a judgment in favor of the defendant notwithstanding the verdict; and (3) the court erred in sustaining objections to the testimony of the witness Paul Rhodes and the offers of proof made by the defendant with reference to telephone conversations had between this witness and attorney Sandhouse of Sterling, Colorado, acting for the plaintiff, touching upon delinquent irrigation assessments against the school land leases involved in this action.

The plaintiff's amended petition, insofar as necessary to consider in this appeal, alleges that the plaintiff was induced to enter into a contract for the purchase of the 4-P ranch near Bridgeport, Nebraska, by reason of representations of the defendant and defendant's agent, Calderwood, that a part of the real estate being transferred to the plaintiff was subject to some delinquent irrigation taxes; that the same would not amount to much, and would not exceed $1,000; further, that the unpaid irrigation taxes were being canceled in any event by the irrigation district as to the land because the land could not be irrigated under the dam; that the representations so made by the defendant were false when made and made with the intention that the plaintiff would rely thereon; and that without the knowledge of the falsity thereof the plaintiff did rely thereon to his damage in the amount of the unpaid irrigation taxes.

The defendant's answer was a general denial.

For convenience we will refer to the parties as designated in the district court. H. M. Calderwood will be referred to as Calderwood, the plaintiff Clyde Linch as Linch, and the defendant Carl H. Carlson as Carlson.

The record discloses that Calderwood, a real estate agent of Sterling, Colorado, was acquainted with Linch and had sold him the Tamarac ranch in 1944. He had heard through a Mr. Johnson that Carlson had a ranch for sale. Johnson and Calderwood went to see Carlson about the ranch. Arrangements were made by Calderwood to represent Carlson as his agent to sell the ranch. This was in the latter part of May 1948. Calderwood knew that Linch was in the market for a ranch. He contacted Linch and they went to the ranch on June 3, 1948. Calderwood priced the ranch at $90,000, and indicated it would be difficult to tell in going over the 6,000-acre ranch in a period of two hours what its value would be. The ranch is described as a prairie ranch with no meadows on it. In addition to the deeded land the ranch consisted of four school land leases in Section 36 which would be assigned under the contract by Carlson to the plaintiff. One of the leases would run 12 years, the second 15 years, the third 16 years from the date of the contract, and the fourth was not involved in this action and not subject to unpaid irrigation assessments. Twenty-five and one-half acres of the school lease land had been leveled and was actually irrigated.

After viewing the ranch Calderwood contacted Carlson in Alliance and informed him he had a buyer, but such buyer did not believe the ranch was worth $90,000. He suggested that Carlson talk the matter over with Linch, which was done, and they arrived at a figure of $87,500 and went over the terms of the sale. Calderwood then asked Carlson if he desired to close the deal in Bridgeport or Colorado. Carlson desired to close it in Colorado, as he did not want Mr. Beltner, from whom he had obtained the ranch by contract, to know he was selling it until the deal was consummated. Linch and Carlson met in Calderwood's office in Sterling, Colorado, and at Calderwood's suggestion they proceeded to the office of attorney Sandhouse who had represented Calderwood for some time. Calderwood had supplied the data for the contract which he had received from Carlson. Sandhouse drafted the contract. Both Linch and Carlson read it and agreed it was satisfactory. It was handed to Linch who signed it, then handed to Carlson who said he would take it home and have his wife look it over before he signed it. At that time no discussion was had about irrigation taxes on the school lease land in Section 36 within the boundaries of the irrigation district. There was some discussion about delinquent irrigation taxes with reference to Sections 24 or 25. Linch did not employ Sandhouse in any manner in writing up the contract or subsequently when a rider was attached to it. Sandhouse was paid by Calderwood for drafting the contract. It was arranged that Calderwood would go to Carlson's home in the evening and pick up the contract. He went to the ranch and contacted Carlson. Carlson said there was something Sandhouse had left out of the contract; and that there was a definite clause in the contract he had with Beltner that Beltner would not be responsible for unpaid water taxes. He said he would have to have that in this contract.

On his way home from Sandhouse's office Carlson had contacted Paul Rhodes, who acted as his attorney, with reference to a rider to the contract. Rhodes also represented the Northport Irrigation District. The rider to the contract provided that Carlson was not bound by the terms of the contract to pay any delinquent irrigation assessments there might be on school lease land in Section 36, Township 21, Range 50, and the same should not be considered a defect or cloud on the title pursuant to the terms of the contract. The rider then provided: 'I am signing this contract providing that Clyde A. Linch of Big Springs Nebr., Will acknowledge this rider pretaining to th unpaid delinquent irregation assessments in Section 36 Township 21 North Range Fifty, West of the Sixth Principal Meridian, in Morrill County, Nebraska, on the School Lease land that is not under cultivation but is under these assessments.' The rider was signed by Carlson and witnessed by Calderwood. In addition, the rider provided that if the contract was not signed by Linch it would then be null and void and the check for $2,500 paid down by Linch would be returned to him.

Calderwood informed Carlson he did not believe Linch would sign the contract with the rider attached, but he would try and see what he could do. Carlson then told Calderwood that the taxes would never have to be paid, and they would not amount to much, not to exceed $1,000. He said the ground could not be irrigated, and that these taxes had not been paid for 20 years. Calderwood saw Linch the next day, June 8, 1948, in Ogallala, and told him Carlson would not sign the contract without attaching a rider to it, and Calderwood repeated what Carlson had told him, in substance as follows: That this land probably would not be taxed, and that they had a man down in Washington (it appears that this man was Paul Rhodes who represented the Northport Irrigation District) to try and...