Stoney Creek Woolen Co. v. Smalley

• Decision Date: 24 December 1896
• Court: Michigan Supreme Court
• Parties: STONEY CREEK WOOLEN CO. ET AL. v. SMALLEY ET AL.

69 N.W. 722

111 Mich. 321

STONEY CREEK WOOLEN CO. ET AL. v. SMALLEY ET AL.

Supreme Court of Michigan

December 24, 1896

Appeal from circuit court, Oakland county, in chancery; George W Smith, Judge.

Bill by the Stoney Creek Woolen Company and another against Robert Smalley and another. From a decree for complainants defendants appeal. Affirmed.

Homer H. Colvin (Aug. C. Baldwin, of counsel), for appellant Smalley.

James C. Smith, Jr., and Otto Kirchner, for appellees.

GRANT J. (after stating the facts).

Three defenses are interposed.

1. It is urged that Davis was not an agent of Smalley; that the latter did not authorize Davis to make any representations that he was to have no interest in the corporation; had no partnership relations with Davis; that he was not concerned in and received no part of the purchase money for which the property was to be sold, above his original price of $2,500. This defense cannot obtain. Smalley gave Davis a false paper. He knew if was false, and that it could not be used for any legitimate purpose. He knew that a fictitious consideration was stated in the deed. He testified: "Q. Did you give Davis a receipt? A. He has got a receipt for $2,500. I must have given it. Q. Was that receipt a lie? A. It appears it is. Q. Did you think it was right to give it to him when you gave it to him? A. I did not think it right, but I did it." Mr. MacGurn testified that on one occasion Smalley told him that Davis wanted the receipt to show to parties that he was trying to get interested in forming a company. Mr. Redfield testified that Smalley told him that the consideration was to be stated at $5,000, but the mortgage was to be given for $2,500; and Mr. Redfield asked him if Davis had paid a part of the consideration, to which Smalley replied, "That is a matter between us." Where one deliberately gives another a false statement in writing, knowing the purpose for which it is to be used, which that other uses to deceive a third party, he is a joint wrongdoer, and must be held responsible for the consequences which follow. Smalley cannot defend upon the ground that he received no benefit from the fraud. Weber v. Weber, 47 Mich. 569, 11 N.W. 389.

2. It is also urged that an action for deceit in the sale of real estate does not lie for the fraudulent misrepresentation as to the price paid. In support of this, the learned counsel cite Holbrook v. Connor, 60 Me. 578; Medbury v Watson, 6 Metc. (Mass.) 259; Mooney v. Miller, 102 Mass. 220. In Medbury v. Watson the question now presented was not in issue, and the language of the court upon which the counsel rely was not necessary to a decision of the case. In Mooney v. Miller the representations relied upon referred to the quantity of wood and hay that could be cut from the land, the possibility of acquiring adjoining lands with buildings thereon belonging to third persons, and to the number of acres in the lot, the boundaries of which were truly pointed out. It was properly held that the action would not lie. The case of Holbrook v. Connor appears to sustain the defendants' contention. The court was divided in opinion. The authorities are quite fully referred to and discussed in the majority and minority opinions. We cannot accede to the doctrine of that case as applied to this. MacGurn was a stranger to both the business and the locality, and did not know the value of the property. Smalley was a very old man, and stood high in the community. Davis' reputation was good. Both had asserted in writing that the price at which Smalley agreed to sell to Davis was $5,000, of which...