McCabe v. Kelleher

• Decision Date: 15 October 1918
• Citation: 90 Or. 45,175 P. 608
• Parties: MCCABE ET UX. v. KELLEHER.
• Court: Oregon Supreme Court

175 P. 608

90 Or. 45

MCCABE ET UX. v. KELLEHER.

Supreme Court of Oregon

October 15, 1918

Department 1.

Appeal from Circuit Court, Douglas County; J. W. Hamilton, Judge.

Action by C.J. McCabe and wife against William J. Kelleher. Judgment for plaintiffs, and defendant appeals. Reversed and remanded.

The plaintiffs bought from the defendant an undivided half of 253 acres of land in Douglas county, paying part cash and giving their notes and mortgage on the land for the balance of the price. They have brought this action to recover damages from the defendant on account of alleged fraud on his part inducing them to purchase. They claim that they were ignorant of land values in the state of Oregon and were without any knowledge or experience concerning the nature of the soil and the value of land in Douglas county, all of which was well known to the defendant. The fraudulent representations complained of are thus narrated in the complaint:

"That in order to induce the plaintiffs to purchase an undivided one-half interest in and to the above-described real property, the defendant on or about the 14th day of October, 1914, stated and represented to the plaintiffs that there were 160 acres of plow land in said tract upon which he could raise two tons of hay per acre, which would net him at least $8 per ton; that he, the defendant, had cleared from $1,000 to $2,000 per year from said above-described real property; that there was good pasturage for ten months in the year on that part of said land adapted exclusively to pasturage; that the said above-described land was worth the sum of $75 per acre that it was the finest land out of doors and would grow everything."

The alleged falsity of these statements is pointed out in detail in subsequent averments, as well as the defendant's knowledge that they were untrue, and it is stated that the plaintiffs relied upon them and were thereby induced to purchase the land. The charges of fraud are traversed by the answer. Further pleading, the defendant gives a history of the transaction from his viewpoint and says that the plaintiff C.J. McCabe sought him with a view of purchasing the land and had ample opportunity to learn completely its condition, area of plowland, and all other matters giving rise to the grievance of the plaintiffs, prior to entering into the contract; that they resided on the premises from August 24, 1914, to October 14th of the same year, at which latter date they took the deed, paying part of the purchase price and giving the notes and mortgage mentioned. A second further and separate answer is to the effect that the defendant sold to the plaintiffs an undivided half interest in the property and leased to them the other moiety for five years, all for the consideration of $9,487.50 and the payment of the taxes on the leased portion; and that they paid to him on account thereof $3,507.50 and "delivered their promissory notes secured by a mortgage on said real property for the remainder of the purchase price." The pleading goes on to say in substance that ever since October 14, 1914 the plaintiffs have been in possession of the property, knew all about it and its productivity, and with full knowledge of all the circumstances connected with the transaction have continued to make payments on account of principal and interest of the note, whereby they "waived all claim for damages, if any they ever had, and are estopped from asserting that the contract was induced by fraud or misrepresentation." The circuit court sustained a general demurrer to this second further and separate answer and the defendant complains of this ruling on appeal. The remainder of the new matter in the answer was traversed by the reply in material particulars. The defendant also assigns as error the refusal of the court to give the following instructions:

"I further instruct you that the expression of an opinion is not a representation and does not amount to a fraud, although false. So if the purchasers had an opportunity to examine the property and ascertain its value, and no fiduciary relationship existed between them and the defendant, the defendant's representation as to the value of the property, if any he made, is but the expression of an opinion and not actionable, even though false and fraudulent.

"I further instruct you that general assertions or expressions of a seller in commendation of his land and bragging upon it commonly called 'dealers' talk,' do not constitute any ground for an action of deceit or fraud; such statements are generally regarded in the law as mere expressions of opinion, upon which a purchaser cannot safely rely."

He contends likewise that the court was wrong in giving an instruction numbered 9, which, after recital of the charge of fraud as made in the complaint, continues with this statement:

"Now if you find from the evidence that the defendant made such representations to the plaintiffs and said representations were false, and that plaintiffs believed them to be true and relied upon them and were induced thereby to purchase said premises to their injury, and defendant knew them to be false and plaintiffs were thereby induced to forbear from inquiry, the plaintiffs would be entitled to recover some damages; but first it would be necessary for you to determine what damages the plaintiffs should recover."

The defendant also complains of instruction No. 10:

"I also instruct you that if you find that the representations alleged in plaintiffs' complaint were made, and that they were false, and that the defendant knew them to be false, and that the defendant made them recklessly without knowledge of the truth or falsity of such representations, and that the plaintiffs relied upon such representations to their injury, as I have already instructed you, he will not be heard to say that the plaintiffs were guilty of such negligence to preclude them from recovering compensation for such injuries as were inflicted upon them under cover of such falsehoods, if such false statements were actually made."

The court gave instruction No. 11, as follows:

"I further instruct you, gentlemen, as follows: That the law imposes upon one purchasing property the duty to exercise due diligence to protect himself from fraud. By 'due diligence' is meant such diligence as ordinarily prudent men would use; and if you find from the testimony in this case that no confidential relation existed between the parties, that the premises, the subject of the purchase and sale, were shown the plaintiffs and were open to their inspection, and no deceit or artifice was practiced upon them by the defendant to prevent a full examination of and independent inquiry concerning the same, and plaintiffs failed to make such examination and inquiry, then they would have been negligent and not entitled to recover any damage."

No complaint is made of this part of the charge.

Dexter Rice, of Roseburg (Rice & Orcutt, of Roseburg, on the briefs), for appellant. O. P. Coshow, of Roseburg (Neuner & Wimberly, of Roseburg, on the brief), for respondents.

BURNETT, J. (after stating the facts as above).

According to 39 Cyc. 1997, quoted with approval in Kruse v. Bush, 85 Or. 394, 167 P. 308:

"One who has been induced by fraudulent representations to become the purchaser of property has, upon the discovery of the fraud, three remedies open to him, either of which he may elect: He may rescind the contract absolutely and sue in an action at law to recover the consideration parted with upon the fraudulent contract; he may bring an action in equity to rescind the contract and in that action have full relief; lastly, he may retain what he has received and bring an action at law to recover the damages sustained." In the instant case the plaintiffs have adopted the third remedy

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