Ripka v. Gwinn

• Citation: 14 Del.Ch. 101,122 A. 137
• Parties: GUSTAV S. RIPKA, VIRGINIA DEWITT FIELDER and FIELDER & RIPKA, INC., a corporation of the State of Delaware, v. THOMAS M. GWINN and CAROLINE WYATT
• Decision Date: 25 July 1923
• Court: Court of Chancery of Delaware

122 A. 137

14 Del.Ch. 101

GUSTAV S. RIPKA, VIRGINIA DEWITT FIELDER and FIELDER & RIPKA, INC., a corporation of the State of Delaware, v. THOMAS M. GWINN and CAROLINE WYATT

Court of Chancery of Delaware, New Castle

July 25, 1923

STATEMENT OF THE CASE. The amended bill is filed by Gustav S Ripka and Virginia DeWitt Fielder and Fielder & Ripka, Inc. a corporation of this State, against Thomas M. Gwinn and Caroline Wyatt. It complains that a certain real estate transaction between the individual complainants, Ripka and Fielder, on the one side and the defendant, Gwinn, on the other, was induced by the fraud and misrepresentation of the latter, and seeks to undo the consequences of the fraud thus alleged to have been perpetrated by Gwinn. The facts set forth in the amended bill are as follows:

Some time in the spring of 1919 Gwinn, a resident of the State of West Virginia, who however at the time of the occurrences complained of lived at the house of the individual complainants in the City of Wilmington, Delaware, represented to them that he was a large real estate operator owning and developing real estate operations in various states of the United States including Delaware, and that he was a man of large means and was anxious to do something for the complainants that would enable them to make large sums of money in the business of buying, selling and developing real estate in and about the City of Wilmington. In consequence of the influence of Gwinn, Ripka and Fielder became interested in the project of making money out of the development of real estate in said city. Gwinn represented to them that there was a great opportunity to make money in the purchase and development of what was known as the "Thirtieth Street Development," a piece of real estate located in or near the City of Wilmington. Gwinn offered to purchase this piece of real estate for Ripka and Fielder and convey it to them for the price at which he might be able to purchase it without commission or profit of any kind to himself, provided Ripka and Fielder could pay as much as fifteen thousand dollars on account thereof. Gwinn offered to pay the balance of the purchase price out of his own funds and to take a mortgage from the person to whom it might be conveyed. Ripka and Fielder relied upon the experience, honesty and supposed earnest desire of Gwinn to do them a great favor, accepted his offer and immediately took steps to raise the necessary fifteen thousand dollars. A few days later Gwinn reported to Ripka and Fielder that he had made the purchase for the sum of forty thousand dollars in cash, a price which he represented was much less than the real value, stating that he was ready to carry out his agreement to convey the title to Ripka and Fielder for the sum of forty thousand dollars upon the payment of the said sum of fifteen thousand dollars in cash and the execution to him of a first mortgage on the property in the amount of twenty-five thousand dollars to secure to him the balance of the purchase price. On July 10 1919, Gwinn made a conveyance of what purported to be all the property in the "Thirtieth Street Development" to one of the complainants, Ripka, at the request of both Ripka and Fielder. The sum of fifteen thousand dollars was paid by the two complainants mentioned to Gwinn between July 11 and August 7, 1919. This sum was paid partly in cash and partly by the assignment of certain bonds and mortgages accepted by Gwinn in lieu of cash. Among said bonds and mortgages was a bond and mortgage given by the defendant Wyatt to Ripka, which is now held by Gwinn and is still due and unpaid. At the time of the conveyance to Ripka on July 10th, he executed to Gwinn a bond and mortgage for twenty-five thousand dollars to secure the balance of the purchase price, upon which the complainants, one or more of them, have since paid sixteen thousand dollars, leaving a balance due thereon of nine thousand dollars. Altogether Gwinn has received to date something more than thirteen thousand dollars in excess of the eighteen thousand dollars which he paid for the property

Subsequent to the said purchase by Ripka and Fielder, they caused to be formed a corporation, Fielder & Ripka, Inc., one of the complainants, to which Ripka and wife conveyed the property described in the deed of July 10, 1919. The entire capital stock in this corporation was issued in equal amounts to the complainants, Ripka and Fielder, and the latter on the second day of June, 1920, purchased from Ripka all of the stock of the corporation theretofore held by him. Fielder thus became the sole owner of the corporation. The amended bill further alleges that Gwinn purchased the property in question from Edward Atwell and Cornelius Mundy, and represented to the complainants, Ripka and Fielder, that in making the purchase he did so for their sole benefit; that they relied upon his experience, judgment, honesty and avowed desire to assist them in making money out of the development of said property, and accepted without question Gwinn's statements to them and therefore believed, at the time of the conveyance to Ripka, that Gwinn had in fact paid the sum of forty thousand dollars for the property, and that in doing so he had acted solely for their benefit. Within the past few months, the complainants allege, they have discovered that Gwinn paid only eighteen thousand dollars for the property instead of the sum of forty thousand dollars as represented. It is further charged that Gwinn, in conveying the property to Ripka, purposely omitted from the description something over ten lots which were properly included in the "Thirtieth Street Development" and to which he had acquired title in the deed from Atwell and Mundy to himself.

The prayers of the bill are that the bond and mortgage given by Ripka on July 10, 1919, be cancelled; that Gwinn be required to re-assign the bond and mortgage executed by the defendant Wyatt and now held by him; that he be decreed to repay all sums of money thus far received by him on account of the purchase price in excess of the sum of eighteen thousand dollars with interest; and that he be decreed to pay to the complainants, or to such of them as may be entitled, the sum of two thousand dollars as damages for the non-conveyance of the ten or more lots mentioned in the bill.

The defendant, Gwinn, has appeared and filed a demurrer. The grounds assigned are that the amended bill fails to state a case entitling the complainants to the relief prayed for; that the amended bill is without equity; that paragraph 22 of the amended bill sets up a cause of action entirely distinct from the main cause of action; and that the agreement in said amended bill mentioned appears to be one for the sale of real property, was not in writing nor was any note or memorandum thereof signed by Gwinn or by any other person thereunto by him authorized as required by law (statute of frauds).

Complainants entitled to some relief. Demurrer to the whole bill overruled.

Daniel O. Hastings and Clarence A. Southerland, for the complainants.

James H. Hughes, Jr., of the firm of Marvel, Marvel, Layton and Hughes, for the defendant Gwinn.

OPINION

THE CHANCELLOR

The ground of demurrer to the effect that the requirements of the statute of frauds interpose a bar to the relief prayed for has been abandoned.

This leaves two other causes of demurrer assigned on the record viz: That the amended bill is without equity, and that it is multifarious in that paragraph 22 presents a cause of action entirely distinct from that set up as the main cause. Paragraph 22 complains that Gwinn in making the conveyance to Ripka purposely omitted from the description some ten or more lots properly belonging to the "Thirtieth Street Development" and included in the description of the premises acquired by him from Atwell and Mundy. The amended bill is not open to the objection of multifariousness because of this paragraph. If the case presented is one properly cognizable in equity, that is to say if the main transaction in which Gwinn is alleged to have defrauded the complainants is such as calls for equitable relief, then the matter of the withholding of the ten or more lots by Gwinn is clearly related thereto in the most intimate way. The case is one where Gwinn is alleged to have perpetrated a fraud and as the fruits thereof to have secured not only money and securities, but as well ten or more lots of land. The former he obtained out of the possession of the complainants; the latter he held back from them. There is no presentation, therefore, by paragraph 22 of a separate, distinct and unrelated subject-matter. Multifariousness being the only objection raised with respect to paragraph 22, this objection is not sustained.

On his brief, the demurring defendant assigns causes of demurrer not specified on the record. Before proceeding to dispose of the cause of demurrer assigned of record that the amended bill is without equity, these causes of demurrer assigned on the brief will be disposed of. No objection to them as proper to be considered has been made by the complainants, because I suppose they are regarded as properly assigned ore tenus. I shall accordingly treat them as necessary to be disposed of.

The first of these causes assigned on the brief may be embraced within the description of multifariousness. It is argued that because the amended bill states a cause of action which contemplates (a) cancellation of a bond and mortgage given by Ripka, (b) repayment of money procured through fraud, (c) damages based on contract and (d) a restraining order against Wyatt and Gwinn against the payment by Wyatt to Gwinn, and the assignment by Gwinn of the mortgage held by him against Wyatt, the amendment bill is multifarious....