The Connecticut Mutual Life Insurance Company v. Carson

• Decision Date: 12 December 1914
• Parties: THE CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Appellant, v. ARTHUR P. CARSON, Respondent
• Court: Missouri Court of Appeals

172 S.W. 69

186 Mo.App. 221

THE CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Appellant, v. ARTHUR P. CARSON, Respondent

Court of Appeals of Missouri, Springfield

December 12, 1914

Appeal from Stoddard County Circuit Court.--Hon. W. S. C. Walker Judge.

Judgment affirmed.

Wammack & Welborn and Chas. Liles for appellant.

(1) The respondent visited and inspected the land, and there is no testimony that he was in any way hindered from making as extensive an investigation of it as he desired. Under the circumstances he cannot allege that he was defrauded. Morse v. Rathburn, 49 Mo. 91; Judd v Walker, 215 Mo. 337; McFarland v. Carver, 34 Mo. 195; Dunn v. White, 63 Mo. 181; Wade v Ringo, 122 Mo. 322; Bradford et al. v. Wright, 145 Mo.App. 623; Holland v. Anderson, 38 Mo. 55; Ordway v. Ins. Co., 35 Mo.App. 434; Slaughters, Adm. v. Gerson, 13 Wallace, 379. (2) Mere expressions of opinion or trade talk do not constitute fraud. Nor do mere loose talk and brag about the value of property. Franklin v. Holle, 7 Mo.App. 245; Anderson v. McPike, 86 Mo. 300; Chase v. Rusk, 90 Mo.App. 29. (3) One who claims the right to rescind a contract on the grounds of fraud, must act promptly. Lewis v. Brookdale Land Co., 124 Mo. 672; Harms v. Wolff, 114 Mo.App. 395; Lierheimer v. Life Ins. Co., 122 Mo.App. 381. (4) A broker who takes an option to purchase real estate at a stated price, is not the agent of the owner for making the sale. Benedict v. Pell, 70 A.D. 74, N.Y.S. 1085; Dilworth v. Bostwick, 1 Sweeny, 581; Southack v. Land, 23 Misc. 515, 52 N.Y.S. 687.

Fort & Green and Mozley & Woody for respondent.

(1) Where, in a negotiation between two parties, one of them induces the other to contract on the faith of the representations made to him, any one of which has been untrue, the whole contract is in this court considered as having been obtained fraudulently. Burnham v. Ellmore, 66 Mo.App. 621; Hardwood v. Dent, 121 Mo.App. 108. (2) Nor is respondent barred from recovery because he visited the land, at appellant's request, before he bought it. Kendrick v. Ryus, 225 Mo. 166. (3) There is a distinction between actions at law for damages based upon fraud, and suits in equity for rescission of the contract based upon fraud. In a suit for rescission it is not necessary to show that defendant was guilty of willful and intentional fraud. All that is necessary is to show that defendant made representations which were in fact false, and that plaintiff relied upon them and believed them to be true and suffered damages in consequence thereof. Peters v. Lohman, 171 Mo.App. 482-3; Lynch v. Company, 135 Mo.App. 672. (4) Respondent promptly rescinded the contract when he discovered the fraud of appellant which led him into it. Taylor v. Short, 107 Mo. 393; Paquin v. Miller, 163 Mo. 102.

FARRINGTON, J. Sturgis, J., concurs. Robertson, P. J., dissents.

OPINION

FARRINGTON, J.

--The plaintiff is a foreign corporation authorized to do business in Missouri. The defendant for the past three years has resided in Stoddard county in this State. In December, 1910, the plaintiff owned several thousand acres of land in Stoddard county and surrounding counties in southeast Missouri. On December 31, 1910, the defendant paid to one W. Ross McKnight one hundred dollars as a part payment for eighty acres of land in Stoddard county which was then owned by the plaintiff, and took a receipt so stating, which receipt also contained a memorandum of purchase. The total price to be paid was thirty-seven dollars and fifty cents per acre. The vendor, the plaintiff, according to the memorandum, agreed to clear twenty acres of the tract at seven dollars and fifty cents per acre, this amount to be added to the purchase price. The first payment was to be one-tenth of the entire purchase price and was to be paid on or before January 10, 1911, and the remainder of the purchase price was to be paid in eight equal annual installments, evidenced by notes payable on the first day of each January beginning January 1, 1913, drawing interest at the rate of five per cent per annum, to be secured by a deed of trust. The memorandum further evidenced that during the year 1911 a slough on the land would be drained. On January 2, 1911, the plaintiff by its proper officers executed a warranty deed to the defendant for the land. This deed was delivered to defendant by W. Ross McKnight who received the first payment in cash and the notes for the balance together with a deed of trust in which William Collins (the general agent for plaintiff in Missouri concerning lands) was trustee. The notes were made payable to the order of the plaintiff, and they were accepted and held by plaintiff until default in their payment, when foreclosure proceedings occurred whereby plaintiff became the purchaser of the land at the price of two thousand dollars. Plaintiff then brought this suit to eject defendant from the land and for damages alleged to have been occasioned by defendant unlawfully withholding possession.

Defendant's answer admitted plaintiff's right to possession but denied that plaintiff was entitled to any damages, and set up a ground for affirmative relief, asking that the unpaid notes and the deed of trust be canceled, and further, that he be given damages sustained by him on account of certain fraudulent representations made to him by W. Ross McKnight through whom he was induced to purchase the land from plaintiff.

The court gave plaintiff judgment for possession, and on defendant's behalf ordered a cancelation of the unpaid notes and deed of trust and gave him judgment for $ 586.10 which represented the amount defendant had paid on the purchase price together with the taxes he had paid and interest on such amount.

A brief statement of the facts will suffice to dispose of the case. The evidence showed without controversy that on January 2, 1911, the plaintiff owned the land in question and made a warranty deed therefor to the defendant and received from him the notes and deed of trust. These instruments were delivered by the parties through W. Ross McKnight, a resident of St. Louis. Plaintiff owned this tract together with thousands of acres that it was selling on the market. W. Ross McKnight and one Weeks undertook to carry through a colonization scheme by which they would sell forty to eight-acre tracts and locate the buyers around a central model or demonstration farm to be in charge of an expert. To do this required that they get a body of land comprising from a thousand to fifteen hundred acres and then to find purchasers for the tracts. To accomplish the scheme, which, from the advertisements and prospectus introduced in evidence, was Utopian in character, they (W. Ross McKnight for the most part) took up the matter with one Collins, a resident of St. Louis, who was the agent of the plaintiff having general control of plaintiff's unsold land. An arrangement, not necessary to detail in this opinion, was perfected whereby W. Ross McKnight could dispose of the plaintiff's land to buyers on certain terms, and Collins, after negotiating with the plaintiff, agreed to make conveyances to such buyers.

The defendant saw the advertisements of W. Ross McKnight's scheme printed in one of the St. Louis daily newspapers. He was a clerk working in East St. Louis on a salary and was not familiar with farming or agricultural land and so informed McKnight. He called on McKnight after reading the advertisement and received a prospectus of the scheme and a circular with McKnight's name stamped upon it. This circular was one put out by the plaintiff, a number of them having been turned over to McKnight by Collins when they perfected the arrangement to deed the lands. The prospectus issued by McKnight contains many things contained in the circular issued by the plaintiff. It covers ten pages of the printed abstract, and under heavy headings it takes up, first, a description of the general nature of the scheme, then a description of southeast Missouri, and Stoddard county, followed by headings such as, "Soil, Water and Rainfall," "Crops and Stock Growing," "Climate," "Topography," "Tract Selected," "The Colony," and lastly, the terms of settlement. It contains many representations which are promissory in nature and many that might come under the term "puffing," and others that border closely on representations of existing facts. The defendant was given an application to sign, entitling him to become a purchaser in the colonization scheme.

Defendant went with McKnight and looked over the land on a rainy day when the soil appeared black or dark. The natural color of the soil when dry was light. Defendant says, and we have no reason for doubting him, that W. Ross McKnight made the following representations which were relied on by him and which induced him to become a purchaser: That the lands were all well drained, and that this was not true. That arrangements had been made with the Iron Mountain Railway Company to place an agency at Reeds Spur which was very near plaintiff's property, and that at the time of the trial, which was several years after the representation was made by McKnight, no such agency had been established. That this land would not overflow, and that it does overflow.

We are convinced after reading the evidence that these representations were untrue and were false and that McKnight knew they were false or did not have sufficient knowledge on the subject to warrant him in asserting that they were true. This brings his conduct within the rule laid down in Ray County Savings Bank v. Hutton, 224 Mo. 42, 123 S.W. 47 that a statement made carelessly without caring whether it be true or false which proves to be untrue, is fraud, and such as that an action for fraud and deceit can be maintained by one...