Oregon Mortgage Co. v. Renner

• Decision Date: 21 April 1938
• Docket Number: No. 8663.,8663.
• Citation: 96 F.2d 429
• Parties: OREGON MORTGAGE CO., Limited, v. RENNER et ux.
• Court: U.S. Court of Appeals — Ninth Circuit

96 F.2d 429 (1938)

OREGON MORTGAGE CO., Limited, v. RENNER et ux.

No. 8663.

Circuit Court of Appeals, Ninth Circuit.

April 21, 1938.

W. G. Bissell and Branch Bird, both of Gooding, Idaho, for appellant.

S. T. Lowe, of Burley, Idaho, for appellees.

Before GARRECHT, HANEY, and STEPHENS, Circuit Judges.

HANEY, Circuit Judge.

Appellant filed an amended bill of complaint praying for judgment determining an amount allegedly due under a contract to purchase real property made by appellees, fixing a reasonable time for payment of the same, and, upon default in such payment, foreclosure of the contract. Appellees filed a cross-complaint alleging rescission of the contract because of false representations, and praying judgment for the money they had expended in connection with the property. The decree dismissed the bill and gave judgment for appellees in the sum of $4,767.19 with interest, from which this appeal is taken.

Appellant is a corporation organized under the laws of Great Britain and Ireland. Appellees are husband and wife. On and prior to August 1, 1927, appellant was the owner of 180 acres of land in Cassia county, Idaho. The land included 3 parcels in one section: (1) the N.½ of the N.W.¼; (2) the N.½ of the S.E. ¼; and (3) the N.½ of the S.E.¼ of the S.W.¼.

On that date it entered into an agreement with appellees, by which appellant agreed to sell appellees the land "Together with any and all water rights decreed or otherwise appurtenant thereto, for the sum of * * * $8200.00 * * * payable as follows: $800.00 in cash on the delivery of this agreement, and the balance in accordance with the terms of eight promissory notes of even date herewith. * * *" The notes bore interest at the rate of 7 per cent. per annum and were in the principal sum of $1,000 each, except two which were in the principal sum of $700 each. One of the notes for $700 became due on December 1, 1927, and each of the $1,000 notes became due on the same day but in successive years. The last note was for $700 and became due on December 1, 1934. The agreement also obligated appellees to pay the taxes and insurance on the property. The agreement provided that, upon default in the payment of the notes, appellant might declare the agreement forfeited, terminate its obligations, in which event it was entitled to any improvements on the premises, the growing crops and produce, and all sums theretofore paid on the contract by appellees as "liquidated damages."

Appellees took possession of the premises about February 1, 1927. Prior to February 28, 1936, they had paid $2,500 on the purchase price, $1,543.92 as interest on the unpaid portions thereof, and taxes for the years 1927 and 1928 in the sum of $475.47, the total of these payments being $4,519.39.

On February 28, 1936, the amended bill was filed. It alleged execution of the contract, and default in payment of the notes due on and subsequent to December 1, 1929, of interest, of premiums due on insurance, and taxes.

Appellees answered, alleging an affirmative defense that in entering the contract, they relied upon representations made by appellant "that the said real estate had a water right of 35 inches of the waters of Howell Creek with date of priority of 1876, 50 inches of the waters of Howell Creek with date of priority of 1880, and 130 inches of the waters of Howell Creek with date of priority of 1892; that the 35 inches of water of Howell Creek with date of priority of 1876 was a second right in Howell Creek in date of priority and that the water rights that were appurtenant to said real estate were ample and sufficient to properly irrigate the same, and the whole thereof." They further alleged that appellant prevented inquiry into the nature of the water rights, that the amount of water appurtenant to the property was not shown of record, and that "the said real estate has a right to the waters of Howell Creek for 35 inches with date of priority of 1876 but the said right is not a second right in Howell Creek; that there is not appurtenant to the said real estate a decreed water right of 50 inches of the waters of Howell Creek with date of priority of 1880 or any other number of inches of the water of Howell Creek with date of December 1, 1880, in excess of 30 inches; that the water rights that are appurtenant to said land are not sufficient or ample to irrigate the said real estate or to produce profitable agricultural crops thereon."

Appellees also alleged that they did not discover that the representations were false and fraudulent until May 21, 1934, that thereafter appellant agreed to adjust the agreement and procure a water right sufficient to properly irrigate the property, and that on January 13, 1936, appellees rescinded the agreement, executed and delivered a quitclaim deed to the property, and offered to surrender the premises upon reimbursement to them of the sums expended. As a cross-complaint appellees alleged the same facts, failure of appellant to make reimbursement of, and demanded judgment for amounts paid on the purchase price and for improvements.

The trial court found the facts to be substantially as alleged by appellees. Specifically, the trial court found that appellant had made the representations concerning water rights as alleged by appellees. It found the actual facts, at the time the representations were made, to be that there was appurtenant to the second parcel not alone as represented but also to an additional 80 acres of land, 35 inches of the waters of Howell creek with date of priority of March 31, 1876; that such right was not the second right in Howell creek as represented, but was the ninth right; and that the eight prior rights aggregated 804 inches of water. It found that there was appurtenant to the third parcel, not alone as represented but also to an additional 20 acres, 15 inches of the waters of such creek, with date of priority of December 1, 1880. It also found that there was appurtenant to all three parcels, 130 inches of the waters of such creek, with date of priority of April 21, 1892, but that "there is never water to fill the 1892 right, excepting during extreme high water years, and the said right has no value for irrigation purposes." Finally, it found, with respect to the water, that the available amount was "not sufficient to properly irrigate the land or to produce profitable agricultural crops thereon."

The trial court also found that appellant led appellees to believe, and appellees did in fact believe, that other persons were using the water to which appellees were entitled; that appellees did not discover the falsity of the representations made at the time of the execution of the contract, until May 21, 1934; and that thereafter appellant induced appellees to remain in possession of the land under representations that it would procure water sufficient to properly irrigate the land. Finally, the court found that the property in question had no rental value during the time appellees occupied it, because of lack of water to irrigate the same, that appellees derived no profits therefrom, and that appellees were not liable for any rents, issues, and profits.

The decree dismissed the bill and granted a judgment to appellees for the amounts they had paid on the purchase price, as interest, and for taxes, in the sum of $4,519.39 and costs.

This appeal was taken from that decree.

Appellant contends that the trial court's finding, that the representations were made as alleged, is erroneous. Appellee John Renner testified positively that such representations were so made. There was evidence from which it might be inferred that such representations were not made. However, the solution of the question rests primarily on the credibility of witnesses, and the weight of evidence. In considering this evidence, the findings of the trial court on conflicting evidence are presumptively correct and will not be set aside unless a serious mistake of fact or law appears.¹ The credibility of witnesses being here involved, there being no question of law involved, and it appearing that the trial court's finding is not contrary to the great weight of evidence,² unless...