New Orleans & A. Coal & Min. Co. v. Musgrove

• Decision Date: 02 May 1890
• Court: Alabama Supreme Court
• Parties: NEW ORLEANS & A. COAL & MIN. CO. ET AL. v. MUSGROVE ET AL.

7 So. 747

90 Ala. 428

NEW ORLEANS & A. COAL & MIN. CO. ET AL. v. MUSGROVE ET AL.

Supreme Court of Alabama

May 2, 1890

Appeal from chancery court, Walker county; THOMAS COBBS, Chancellor.

Taliaferro & Smithson and Smith & Lowe, for appellants.

Hewitt, Walker & Porter and Gunter &amp Sowell, for respondents.

CLOPTON J.

No principle is better settled, or more uniformly recognized than that a court of equity will interfere to rescind a contract of sale of land into which the purchaser has been induced to enter by the vendor's false representations of material facts, not patent or open to his inspection, upon which he had a right to rely, and did rely, whereby he was injured, and without the existence of which the contract would not have been made. But the rescission of a contract is not a matter of discretion. The court must be governed by established rules and precedents. Essential elements of misrepresentation, to be rendered available to rescind a contract, are that the party to whom it is made must be justified in relying, and must rely, upon the representation, and it must be an immediate cause of his entering into the contract. If he did not rely upon it, or was not misled by it, or if it was a fact equally open to the inquiries of both parties, and nothing done to prevent or obstruct or lull inquiry, the court will not interfere to grant relief. Crown v. Carriger, 66 Ala. 590. In Slaughter v. Gerson, 13 Wall. 379, it was ruled, where the means of knowledge are at hand, and equally available to both parties, and the subject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means and opportunities, he will not be heard to say that he has been deceived by the vendor's misrepresentations; and that the same rule obtains when the complaining party does not rely upon the representations, but seeks means of verification of the statements from other sources, and acts upon the information thus obtained. And in 2 Pom. Eq. Jur. § 893, the rule is stated as follows: "If after a representation of fact, however positive, the party to whom it was made institutes an inquiry for himself, has recourse to the proper means of obtaining information, and actually learns the real facts, he cannot claim to have relied on the misrepresentation, and to have been misled by it. Such claim would simply be untrue. The same result must plainly follow when, after the representation, the party receiving it has given to him a sufficient opportunity of examining into the real facts, when his attention is directed to the sources of information, and he commences, or purports or professes to commence, an investigation. The plainest motives of expediency and of justice require that he should be charged with all the knowledge which he might have obtained had he pursued the inquiry to the end with diligence and completeness. He cannot claim that he did not learn the truth, and that he was misled."

The deed executed by appellees to Fred Sloss, trustee, expresses the consideration of $100,000, which was intended as the payment for 8,000 acres of mineral lands; but the deed really conveyed more than that quantity. The lands to be accepted were dependent upon the approval of the titles by the attorney of the purchasers; and, the number of acres being unascertained and uncertain, a written contract was entered into by which Sloss agreed that, should the...