May v. Loomis

• Decision Date: 15 December 1905
• Citation: 140 N.C. 350,52 S.E. 728
• Court: North Carolina Supreme Court
• Parties: MAY. v. LOOMIS et al.

52 S.E. 728

140 N.C. 350

MAY.

v.LOOMIS et al.

Supreme Court of North Carolina.

Dec. 15, 1905.

1. Fraud—Sales—False Representations.

In an action on notes given for the purchase price of timber, a judgment dismissing defendant's counterclaim is erroneous, where the evidence discloses deliberate fraud, consisting in false representations as to material facts, knowingly and willfully made as an inducement to the sale and by which it was effected, reason ably relied on by defendant and causing him pecuniary damages.

[Ed. Note.—For cases in point, see vol. 23, Cent. Dig. Fraud, §§ 8-14.]

2. Same—Reliance on Representations-Negligence.

Where a sale was induced by the sellers' false representations, and they used artifice to induce the buyers to forbear making inquiry, the buyers' claim for relief is not barred because of alleged negligence in relying on the representations.

[Ed. Note.—For cases in point, see vol. 23, Cent. Dig. Fraud, §§ 19-23.]

3. Same—Expression of Opinion.

Where the sellers of timber assured the buyers that they had the timber carefully estimated and such estimates showed certain quantities, such representations were not mere matters of opinion.

[Ed. Note.—For cases in point, see vol. 23, Cent. Dig. Fraud, § 12.]

4. Sales — Fraud — Rescission—Counterclaim.

Where buyers of timber made payments in recognition of the contract and have manufactured and sold the timber, they cannot rescind the trade and plead fraud in the sale in bar of recovery on purchase-money notes, but may set up the fraud by counterclaim and recover for damages sustained.

[Ed. Note.—For cases in point, see vol. 43, Cent. Dig. Sales, §§ 296, 299, 975.]

Appeal from Superior Court, Haywood County; Ferguson, Judge.

Action by Frank May against G. C. Loomis and others. From a judgment for plaintiff, defendants appeal. Reversed.

The plaintiff declared on two notes, each for $750, bearing date December 13, 1902, due, respectively, 9 and 12 months after date. The notes were drawn by defendant Loomis to defendant Dotson and indorsed to plaintiff before maturity. The defendants answered, admitting the execution and indorsement of the notes, and alleging that the same were executed in part payment of the purchase of a sawmill plant and the standing timber on two tracts of land situated in Haywood county, one of 250 and the other of 750 acres, and that said sale was effected and the notes were procured by false and fraudulent representations on the part of the plaintiff and his partner, one W. H. Cole, who were vendors in the sale, and setting up such fraud in bar of any liability on the notes. There was further answer, setting up the alleged fraud and deceit by way of counterclaim, which is in part as follows: (1) That on December 13, 1902, the defendant bought 3, 000, 000 feet of merchantable hardwood timber from the plaintiff and W. H. Cole, trading under the firm name of May & Cole, at the rate of $1 per 1, 000 feet, on a tract of land on Pigeon river in Haywood county, and also at said date, in connection with the purchase of said timber, bought of the plaintiff and his said copartner the steam sawmill, boilers, and engine located on said premises, valued at $2,500, and likewise horses, mules, and wagons, valued at $500. (2) That at the time of making said sale, and pending negotiations for the same, the said May & Cole represented that this was a picked tract of timber land which the said W. H. Cole had especially selected out of a large tract of land belonging to Crary, Young & Co., and that they had made two careful estimates of the merchantable hardwood timber thereon, one by W. H. Cole individually and the other by May & Cole, resulting in 3, 000, 000 feet, and that they guarantied that there was 3, 000, 000 feet of merchantable timber thereon, 1, 000, 000 feet of poplar, 1, 000, 000 feet of chestnut, and 1, 000, 000 feet of oak, lynn, and other merchantable hardwood, outside of spruce and hemlock, which were not considered in the contract; and the defendants, relying on the representations and guaranty of May & Cole as to the quantity and kind of timber, which were knowingly false and fraudulent and a material inducement to the contract, purchased the said 3, 000, 000 feet of timber at the rate of $1 per 1, 000 feet, for the sum of $3,000, and at said time, relying upon the said false and fraudulent representations, intending to deceive, and which did deceive, the defendants, were induced to execute a note set out in the complaint, together with other notes, and have paid off all of the said notes, except the aforesaid, when in truth and in fact there was only 464, 728 feet of poplar on said boundary of land, 208, 377 feet of chestnut, and 240, 121 feet of oak, lynn, and all other timber, considered in said contract and guaranty, and the plaintiff, both as an individual and member of the firm of May & Cole, is due the defendants the sum of $2,036.77 as shortage on the 3, 000, 000 feet of timber purchased as aforesaid, as damages. There was further allegation of similar import to false and fraudulent representations in regard to the other property, machinery, etc., conveyed. The plaintiff replied, denying all charges of fraud and deceit. The defendants in apt time tendered issues addressed to each phase of their defense, and on refusal to submit them excepted, and requested his honor to settle the issues deemed by him pertinent and raised by the pleadings. There was evidence on the part of the defendants tending to show that at the time of the trade, and as an inducement thereto, both the plaintiff and his partner stated that there were 3, 000, 000 feet of merchantable hardwood timber on the two tracts of land, ascertained by two careful estimates made at different times, and that the same had been picked out of 20, 000 acres as 1, 000 acres of choice timber land; that the machinery and other property used in connection with the same were practically new, having been in use only six months, and were in good condition; that as a matter of fact there was only about 1, 000, 000 feet of hardwood timber on the land, and this was well known to the plaintiff at the time, having been ascertained by them by the estimates previously made, and to which the plaintiff referred, and was unknown to the defendants, who relied on the positive assurance and statements of the plaintiff as to the quantity of timber; that the machinery was old and worn and the boilers had many patches on the inside, and were old worn-out boilers when brought there the year before, and so defective that they had to be immediately removed as being dangerous, and replaced at an additional cost to the defendants of something like $600.

A witness by the name of William Quiett testified, among other things, that about a week before the trade Cole came to the witness and asked him how much timber was on the boundary, that the witness told him there was 1, 000, 000 or 1, 100, 000 feet, and Cole replied that he thought there were 2, 000, 000 or 3, 000, 000 feet. Cole then said not to say anything about the estimate which had been made of the timber; that he had a chance of a sale, and it might interfere with his deal. There was also testimony to the effect that the defendant Loomis was without any experience in milling or stumpage, and Dotson alone of defendant firm had any knowledge or experience in estimating timber or manufacturing it, and that just prior to the trade, and when negotiating thereon, the parties went out to the land to take a look over it, when Dotson, who had consumption and was very weak, gave out and was unable to proceed, and that Loomis was taken by one of the plaintiffs through a small portion of the smaller tract (was gone about 15 or 20 minutes) and when they returned to Dotson, who had built a fire and was resting by the roadside, Cole said: "I will guaranty 1, 000, 000 feet of poplar, 1, 000, 000 feet of chestnut, and 1, 000, 000 feet of oak, and other kinds of hardwood sufficient to make up another 1, 000, 000 feet." That he and May had the timber estimated when they made the deal together, and also had it carefully estimated afterwards. During the negotiation Dotson said: "I have been physically unable to look over this property at all, and we have not seen the horses and mules, and do not know the value of the machinery you are offering us, and so far as the timber on the land is concerned we have simply to take your representations and guaranties about that. We believe you gentlemen are honest business men, and if you will guaranty it to be as you have represented it, we will close the deal." This...