Steele v. Banninga

• Court: Michigan Supreme Court
• Writing for the Court: WIEST
• Citation: Steele v. Banninga, 225 Mich. 547, 196 N.W. 404 (Mich. 1923)
• Decision Date: 19 December 1923
• Docket Number: No. 149.,149.
• Parties: STEELE et al. v. BANNINGA.

225 Mich. 547

196 N.W. 404

STEELE et al.

v.BANNINGA.

No. 149.

Supreme Court of Michigan.

Dec. 19, 1923.

Error to Circuit Court, Muskegon County; John Vanderwerp, Judge.

Action by Frank M. Steele and another against John H. Banninga. Judgment for plaintiffs, and defendant brings error. Reversed, and new trial granted.

Argued before WIEST, C. J., and FELLOWS, McDONALD, CLARK, BIRD, SHARPE, MOORE, and STEERE, JJ. John M. Dunham, of Grand Rapids, for appellant.

F. E. Wetmore, of Hart, for appellees.

WIEST, C. J.

This is an action for fraud and deceit, based on the claim that defendant falsely and fraudulently represented to plaintiffs that Mrs. Orla Swanson was the owner of certain premises in the city of Muskegon, and Sidney L. Stamp had no rights therein, and they relied thereon and purchased the premises from Mrs. Swanson and paid her therefor, when in truth and fact Mrs. Swanson had no title and Sidney L. Stamp was owner thereof.

An examination of the opinions in Re Keene's Estate, 189 Mich. 97, 155 N. W. 514, Ann. Cas. 1918E, 367;Stamp v. Steele, 209 Mich. 205, 176 N. W. 464, and Stamp v. Banninga, 221 Mich. 268, 191 N. W. 25, will materially help to a full understanding of some of the issues in this case.

Defendant was employed by plaintiffs to communicate with Mrs. Swanson, who lived out of the state, and ascertain the price she wanted for the premises. During the course of the negotiations plaintiffs found Stamp in possession of the premises and asserting ownership, and they went to defendant and claim he assured them that Stamp had no rights and he would see that he was put out. Plaintiffs paid defendant $200 for his services, and also employed attorneys to procure and examine an abstract of title to the premises.

Plaintiffs had judgment, and the case is here by writ of error.

The premises formerly beloged to Alice Keene, Stamp's sister, and at her death were inventoried and appraised as a part of her estate, and sold to Mrs. Swanson by defendant, who was executor of the estate; the sale being made under order of the probate court and the proceeds accounted for by the executor.

For some time after the sale by the executor, Stamp made no claim to own the premises by virtue of any writing, but later he stated to defendant that he owned the premises and had papers to show it. Defendant denied Stamp's ownership and asked to see the papers under which he claimed, but was not shown any. Some time after plaintiffs purchased the premises, Stamp brought an action of ejectment against them, lost his case in the circuit, removed it to this court where the judgment of the circuit was reversed and a new trial granted, and, upon the second trial in the circuit, Stamp recovered the premises.

It seems Mrs. Keene wrote out, on a piece of paper torn from the leaf of a book, what this court decided was a deed to Stamp. Stamp never showed this deed to defendant or to plaintiffs until the trial of the ejectment case, and his participation in the administration of his sister's estate, his silence until long after the sale of the premises under the order of the probate court, and his refusal to let defendant later see the paper, all tended to show that defendant had no good reason to believe Stamp when he claimed title. Of the errors assigned, two possess merit.

Plaintiff Heethius was asked by his counsel:

‘Q. Mr. Heethius, if Mr. Banninga had communicated to you the fact that Mr. Stamp claimed to have a deed or a paper giving him the right to that property down there on Webster avenue, would you have bought it? A. I would not; I would object to it.’

This was objected to as having been covered and as improper rebuttal. Neither reason was any good. It was within the discretion of the court to permit repetition and evidence out of order. But had the proper objection been made, it would not have been reversible error, although improper, to attempt proof of reliance upon the representations in that way. Plaintiffs claimed fraudulent representations by defendant, on which they relied to their damage, and this necessarily depended upon what defendant said, and not upon what he did not say. But we do not see how defendant was harmed thereby. The witness before that had testified:

‘Q. Did he (Banninga) tell you that Mr. Stamp claimed to own that property? A. I told him, if I remember right, that Mr. Stamp claimed he owned it and had a paper to that effect.’

It seems to us that, if he would not have bought the property if defendant had communicated to him the fact that Mr. Stamp claimed to have a paper giving him the right to the property, and yet during the course of the negotiations he informed defendant of that very fact, it must have hurt plaintiffs' case more than defendant's, unless it went over the heads of the jury or was not called to their attention in argument. It probably will not happen again.

We are asked to apply the rule of caveat emptor to plaintiffs in making the purchase with knowledge that Stamp was in possession and claiming ownership.

In Yanelli v. Littlejohn, 172 Mich. 91, 137 N. W. 723, this court said:

‘A defrauded party does not owe to the party who defrauds him an obligation to use diligence to discover the fraud, * * * The question is not, was he warned? but, was he deceived and defrauded by the defendant?’

See cases there cited.

It is claimed there was no reliance by plaintiffs upon the representations. This touches the investigation of the record title by way of an abstract and advice of attorneys. The record did not disclose Stamp's claim.

In the Yanelli Case, supra, an attorney was employed by plaintiff to investigate and warned plaintiff against the representations, and the court said:

‘Had his attorney advised him to purchase the land, and had he relied upon such advice, then the defendant would not have been liable; but the fact that Barassa advised him not to purchase, and that he did not follow the advice, might be urged as evidence of the strength of the representations claimed to have been made by the defendant.’

See, also, Smith v. Werkheiser, 152 Mich. 177, 115 N. W. 964, 15 L. R. A. (N. S.) 1092, 125 Am. St. Rep. 406;Kefuss v. Whitley, 220 Mich. 67, 189 N. W. 76.

Plaintiffs were given a quitclaim deed by Mrs. Swanson, and it is claimed:

‘The grantee under a quitclaim deed acquires only such title as his grantor has, and takes it charged with notice of any outstanding equities.’

Accepting this as good law, we fail to see the application. We are also asked to hold plaintiffs charged with notice of outstanding titles and unrecorded deeds and--

‘Being so charged with such notice, they cannot be heard to say that they were ignorant of any defects in the grantor's title, and so are precluded from predicating fraud upon something they knew.’

We cannot so hold. The fact a quitclaim deed was given is of no consequence. The law fixes liability for fraud and deceit practiced, and the form of conveyance employed neither aggravates nor condones the fraud. Ballou v. Lucas, Adm'x, et al., 59 Iowa, 22, 12 N. W. 745; Atwood v. Chapman, 68 Me. 38, 28 Am. Rep. 5.

Consturctive notice of Stamp's rights, he being in possession of the premises, prevented plaintiffs from being bona fide purchasers as to Stamp, but constitutes no defense to this action.

Plainti...