Nash v. Minnesota Title Insurance & Trust Co.

• Citation: 34 N.E. 625,159 Mass. 437
• Parties: NASH et al. v. MINNESOTA TITLE INSURANCE & TRUST CO.
• Decision Date: 24 July 1893
• Court: United States State Supreme Judicial Court of Massachusetts

159 Mass. 437

34 N.E. 625

NASH et al. v. MINNESOTA TITLE INSURANCE & TRUST CO.

Supreme Judicial Court of Massachusetts, Suffolk.

July 24, 1893

COUNSEL

R.M. Morse and J.M. Keith, for plaintiffs.

A.A Strout, W.H. Coolidge, and E.L. Rand, for defendant.

OPINION

KNOWLTON, J.

This is an action for deceit, which was one of thirteen cases tried together, founded on alleged false representations of the defendant contained in a letter as follows: (Printed heading of the corporation.) "Minneapolis, Minn., Feb. 16 '90. Mr. George W. Davis, Minneapolis, Minn.--Dear Sir: We have in our possession the original documents printed in the advertisements of your bonds secured by mortgage to this company as trustee upon the Hedderly tract in this city. We indorse the estimates of value contained therein made by Messrs. Marsh and Bartlett, I.C. Seeley, Jones, McMullen & Co., and E.A. Harmon, all of whom are known as men of integrity and sound judgment touching local real-estate value. That we consider the title good in you will appear from the fact that we have engaged to issue our policies of title insurance to the several holders of your mortgage bonds to the aggregate amount of $150,000, fully protecting such holders against loss or damage arising from any defect in said title or prior incumbrance thereon. From our knowledge of the mortgaged property, and from its situation and prospects, we are of the opinon that the mortgaged property is adequate security for the amount of your proposed loan. Yours, very truly, Minnesota Title Insurance & Trust Company. J.U. Barnes, President." Mr. George W. Davis, to whom the letter was addressed, made a mortgage to the defendant as trustee to secure the payment of 200 bonds signed by himself, and amounting in the aggregate to $150,000. These bonds were designed to be sold in the market for the benefit of one Hedderly, who had conveyed to Davis the land covered by the mortgage for an expressed consideration of $300,000, and the defendant was to hold the mortgage as security for the benefit of bondholders. The documents referred to in the first sentence in the letter were certificates giving estimates of the value of the mortgaged property, signed by Marsh and Bartlett and the other persons mentioned in the next sentence. These estimates gave the value of the land as about $250,000. There were nearly 10 acres of this land, situated on the Mississippi river in the city of Minneapolis. About one acre of it was on the grade of a street adjacent to it, and of the remainder about one-half was the bed of a quarry which had been excavated 50 feet below the level of the street, and the other half was low land along the river, which was covered with water in times of flood. On this low land were some very cheap houses, occupied by tenants. There was evidence tending to show that the whole tract was not worth more than from $20,000 to $50,000; that Davis was a person of no pecuniary responsibility; and that the making of the bond and mortgage was part of a scheme of Hedderly and Davis to defraud such persons as might purchase the bonds. Each of the several plaintiffs bought some of these bonds, having first read the letter above quoted, and an advertisement, printed by Davis, recommending the property, and containing copies of the several certificates of value referred to in the letter. This letter was prepared by one Fish, who was counsel and trust officer of the defendant, and was signed by the defendant's president, who also had the general supervision of its business. There was much evidence tending to show that these officers did not believe that Hedderly and Davis were acting otherwise than in good faith, or that the property was insufficient security for the bonds. On the other hand, there was evidence on which the plaintiffs relied as tending to show that the defendant's officers Fish and Barnes must have believed that the land was of much less value than the amount of the bonds, and that the most important statements of the letter were untrue.

In actions of this kind it is a familiar rule that there can be no recovery unless the representations were known by the defendant to be false, and were made with intent to deceive, or were made as of the defendant's own knowledge, when he did not know them to be true. It is also a well-established rule that statements which purport to be mere opinions, as distinguished from statements of facts, cannot be made the foundation of a recovery. Furnace Co. v. Moffatt, 147 Mass. 403, 18 N.E. 168; Carroll v. Hayward, 124 Mass. 120, 122; Holst v. Stewart, 154 Mass. 445, 28 N.E. 574; Belcher v. Costello, 122 Mass. 189; Gordon v. Butler, 105 U.S. 553; Derry v. Peek, L.R. 14 App.Cas. 337; Le Lievre v. Gould, [1893,] 1 Q.B.Div. 491; Holbrook v. Connor, 60 Me. 578. One of the false representations contained in this letter purports to be a statement of a fact, and it was known by the defendant's officers to be untrue. The statement in regard to the title, while it was not a direct affirmation that there was no incumbrance on the property, was intended to produce the belief among purchasers of the bonds that the title was perfect, and it was rightly understood as a representation to that effect. Powers v. Fowler, (Mass.) 32 N.E. 166. The bonds secured by the mortgage on their face purport to be first mortgage bonds. The representation was false, for there was a prior mortgage of $30,000 on the property, as the defendant's officers well knew. It had been arranged that the defendant should reserve in its own hands bonds to the amount of $40,000 as a protection against this mortgage until it should be paid, and very likely the defendant's president and trust officer regarded the policies of title insurance which were to be issued as a perfect protection to the bondholders. But a bond secured by a second mortgage with a policy of title insurance is not the same as a bond secured by a first mortgage. Through the insolvency of the insurer, or for some other reason, the bond may prove to be of little or no value. This representation was evidently intended to mislead upon a material point, and it can be availed of by any one to whom it was made who was induced by it to make a purchase.

The other representations contained in the letter purport to be merely expressions of opinion. The defendant, by its president, concurred in the estimates of value contained in the certificates, and said that the makers of the certificates were "known as men of integrity and sound judgment touching local real-estate value." There was no evidence at the trial that these persons were not known as men of integrity, and the weight of the evidence was that they were of good repute in regard to their judgment upon the value of ordinary real estate. But the plaintiff must have known that an estimate of value of land, or a statement in regard to the reputation of a real-estate expert, was a mere matter of opinion upon a subject about which absolute knowledge could not be expected. In most cases it would be impossible to prove that one was knowingly and willfully false in giving such an opinion, and this is one of the reasons for refusing to enter...