Max Meadows Land & Improvement Co v. Brady.1

• Decision Date: 08 August 1895
• Citation: 22 S.E. 845,92 Va. 71
• Court: Virginia Supreme Court
• Parties: MAX MEADOWS LAND & IMPROVEMENT CO. v. BRADY.1

22 S.E. 845

92 Va. 71

MAX MEADOWS LAND & IMPROVEMENT CO.

v.BRADY.¹

Supreme Court of Appeals of Virginia.

Aug. 8, 1895.

Equity Rescission of Contract—False Representations.

1. To sustain a bill for the rescission of a contract on the ground of fraud, it must appear that the misrepresentations were positive statements of material facts, made for the purpose of procuring the contract, and that the party to whom they were made relied on them, And was induced thereby to enter into the contract.

2. Representations made, in good faith, by a land-improvement company, in its prospectus and advertisement of lots, that negotiations for a machine shop, foundry, etc., to be located on its property, will probably be concluded within a few weeks, and that these industries will employ a large number of men, are mere expressions of opinion, and will not sustain a bill to rescind a contract of sale on the ground of fraud.

3. Equity will not rescind a contract for the sale of land, on the ground of fraud, where, after the lapse of a year, the vendee, with full knowledge, voluntarily paid the first installment of the purchase money.

4. Equity will not rescind a contract for the sale of land, on the ground of a defect in the title, where it appears that the vendee has been put in possession under a deed containing a general warranty; that such possession has neither been disturbed nor threatened; that the grantor is not insolvent, and has taken no steps to collect the unpaid purchase money; and that the existence of the incumbrance complained of was set forth on the face of the deed.

Appeal from circuit court, Wythe county; Williams, Judge.

Bill by John C. Brady against the Max Meadows Land & Improvement Company for the rescission of a deed. From a decree for complainant, defendant appeals. Reversed.

Boiling & Stanley and J. H. Pulton, for appellant.

Walker & Caldwell and W. S. Poage, for appellee.

KEITH, P. a bill was filed in the circuit court of Wythe county by John C. Brady, asking the rescission of a deed, dated the 25th day of October, 1890, executed by the Max Meadows Land & Improvement Company, for a lot of ground set out and described in said deed. From an inspection of the record, the following facts appear: The Max Meadows Land & Improvement Company, having purchased land from Randal McGavock and others, divided it into lots, which it advertised for sale, representing through its advertisements, and by a prospectus extensively distributed, that a 150-ton blast furnace was under construction; that iron mines were being opened, and connected with the furnace by a railroad; that a brickyard was in active operation, and that certain industries had agreed to locate at its place, to wit, a rolling mill and horseshoe works, a planing mill, and sash, door, and blind factory, and that negotiations were in progress, and would probably be concluded within the next few weeks, for a machine shop, foundry, boiler and engine works; and that these industries would employ from 700 to 1, 000 men, and would insure a population of from 3, 000 to 4, 000. It, in like manner, represented that it had secured the services of a competent manager, having a large acquaintance among the manufacturers of the North, who would make it his especial business to attract other industries; that negotiations were in progress with quite a number, and that there was every reason to believe that, within the next six months or year, many additional manufactories would be secured, and the population would be largely increased. The plaintiff represents that the statements thus set forth in the prospectus were falsely and fraudulently made to induce him to purchase, and that, relying upon these representations, he on the 25th day of October, 1890, did purchase a lot of ground, and agreed to pay $1,730 for it, of which sum he paid one-third cash, and subsequently paid one-half of the balance, leaving the third and last installment of $576.66, with interest thereon, still due and unpaid. It appears that, to secure the deferred payment, the plaintiff, Brady, executed a deed of trust, of even date with the deed from the Max Meadows Land & Improvement Company to him, by which he conveyed the lot so purchased to Joseph S. Clark, trustee, upon trust that, if the deferred installment should not be paid at maturity, the property conveyed was to be sold to satisfy it. He charges that the Max Meadow's Land & Improvement Company, by its officers and agents, and by its handbills and advertisements, made certain other false andfraudulent representations with reference to the growth of Max Meadows, among them that a large hotel would be built, and that the Norfolk & Western Railroad Company proposed to erect a handsome stone passenger station on ground reserved for that purpose, and that its construction would be commenced within the coming year. He alleges that the Max Meadows Land & Improvement Company, by its deed aforesaid, conveyed the lots so purchased, with covenants of general warranty, and that when he made the purchase he supposed that he had purchased an unincumbered property; that Randal McGavock and others, from whom the Max Meadows Land & Improvement Company purchased the tract of land in which is embraced the lot which is the subject of this controversy, prior to their sale to the Max Meadows Land & Improvement Company, executed to S. W. Jamison, as trustee for A. M. and W. M. Puller, a deed of trust to secure to the Pullers the sum of $20,000, and that said lien or incumbrance still remains unpaid and unsatisfied; that the tract so conveyed to Jamison for the benefit of the Pullers is the same land afterwards conveyed by Randal McGavock and others to the Max Meadows Land & Improvement Company; and the deed of trust to Jamison for the benefit of the Pullers is referred to and made part of the deed from McGavock to the Max Meadows Land & Improvement Company. The deed from McGavock and others to the Max Meadows Land & Improvement Company is filed as an exhibit in the cause. The plaintiff avers that he would never have entered into the contract, and made the purchase of the lot named, had it not been for the false and fraudulent representations of the company, or if the company had disclosed to him the incumbrance on the lot and the defect of the title thereto. He makes the Max Meadows Land & Improvement Company, Joseph S. Clark, trustee, A. M. and W. M. Fuller, and S. W. Jamison parties defendant to the bill, and prays for a rescission of the contract, that he may have a decree for the recovery of the money already paid by him, and that the defendants may be enjoined and restrained from collecting the bond for the last installment of purchase money, amounting to $570.66.

The Max Meadows Land & Improvement Company answers the bill. It denies all the allegations of fraud. It admits the purchase by the company of the Max Meadows land from McGavock, and the sale of the lot to the plaintiff upon the terms stated in the bill. It admits the deed of trust in favor of the Fullers. It denies that the defendant ever represented that it would cause a large city to be built at Max Meadows, or that the defendant made any other representations, through its officers and agents, except such as were made in the advertisements and prospectus, which were in the hands of the public for weeks before the sale took place, and by which the public and the plaintiff were fully informed of all that the defendant company had done and contemplated doing in its effort to build a town at Max Meadows; and avers that the public and the plaintiff were honestly put in possession of all facts known to the defendant. It avers that all of the industries and improvements that were promised have been built, and that those which the defendant stated were being negotiated for were, as the defendant fully believed, secured, as stated in the advertisement. The defendant denies that any representations or false statements were made to induce the plaintiff to make the purchase. It points out the fact that the sale was made at public auction, in perfect fairness to all, and that the plaintiff exercised his own judgment and discretion in continuing to bid for the lot until he drove off other competitors, and it was knocked down to him as the highest and best bidder. Without going further into details of the facts, it may be stated that the defendant denies specifically every allegation and charge of fraud and misrepresentation, and especially it denies that the defendant concealed from the plaintiff the fact of the existence of the lien, by deed of trust given by McGavock to S. W. Jamison, trustee, for the benefit of the Fullers. The answer avers that the plaintiff and public were invited to examine for themselves the defendant's title: that the deed of trust, as well as the deed from McGavock to the defendant, were of record in the clerk's office of Wythe county, where they were open to the inspection of the plaintiff, and no representation whatever was made by the defendant with respect to the title.

Upon the issues thus made in the pleadings, evidence was taken, and, the case coming on to be heard before the judge of the circuit court of Wythe county, he rendered a decree against the Max Meadows Land & Improvement Company for the full amount of the cash payment and of the first deferred payment, aggregating the sum of $1,153.34, with interest from the 25th day of October. 1890, until paid, and perpetuated the injunction as to the deferred payment of $576.66; and the case is now before us upon an appeal from that decree.

There is little room for controversy as to the facts. The representations relied upon to sustain the bill, and to justify the rescission of the contract, are all set out in the prospectus and advertisements filed with the bill. The representations relied upon may be divided into two classes, —representations of matters of fact, and representations of matters of opinion. In so far as the...