Townsend v. Jahr

• Decision Date: 15 October 1920
• Docket Number: No. 21763.,21763.
• Citation: 147 Minn. 30,179 N.W. 486
• Parties: TOWNSEND et ux. v. JAHR.
• Court: Minnesota Supreme Court

147 Minn. 30

179 N.W. 486

TOWNSEND et ux.

v.JAHR.

No. 21763.

Supreme Court of Minnesota.

Oct. 15, 1920.

Appeal from District Court, Norman County; Andrew Grindeland, Judge.

Action by Robert E. E. Townsend and wife against Hugo Jahr. Judgment for plaintiffs, and defendant appeals. New trial granted, unless plaintiffs assent to a reduction of the verdict.

Syllabus by the Court

Plaintiffs purchased a farm of defendant and gave in part payment a house and lot. There is evidence, sufficient to sustain a finding of the jury, that plaintiffs were induced to make the purchase by misrepresentation on the part of defendant.

Plaintiff, having performed in part before discovering the fraud, did not prejudice his right of action for damages for deceit by affirming the contract.

The measure of damages in such an action is the loss naturally and proximately resulting from the fraud. This will usually be the difference between what the plaintiff parted with and what he got. If the purchase price has been paid, it will usually be the difference between the value of the land purchased and the purchase price. If the purchase price has not been fully paid, and the obligation to pay the balance has been discharged by foreclosure of a purchase-money mortgage, the amount unpaid does not constitute any part of the plaintiff's damage.F. H. Peterson, of Moorehead, and Peter Matson, of Ada, for appellant.

Chas. S. Marden, of Moorehead, and M. A. Brattland, of Ada, for respondents.

HALLAM, J.

[1] 1. Plaintiffs are husband and wife. In March, 1917, plaintiffs and defendant resided in Davenport, Iowa. Plaintiff Robert was a street car operator and had been a rural mail carrier. Defendant was a traveling man. Plaintiffs owned a home in Davenport and defendant owned a quarter section of land in Norman county, Minnesota. Plaintiffs were desirous of acquiring a farm, and, learning that defendant had this land, they sought him out and opened negotiations for an exchange. An exchange was finally consummated on the following terms: Plaintiff's property was subject to a mortgage of $2,340. Defendant's land was subject to a mortgage of $2,000. It was agreed that plaintiffs should take defendant's farm at $7,200, turning in the equity in their home at $1,460, certain furniture at $100, and agreeing to assume the mortgage on the farm and to pay the balance of $3,640 in 10 annual installments. A written contract was entered into.

About the last of March, defendant took possession of the Davenport home and deeds were drawn and executed and left with an attorney for delivery, all before plaintiffs or either of them had seen the land. They went upon the land in April, 1917, built a shack, and lived upon it during that season, leaving in the fall, and returning again in the spring of 1918, and remaining again during the season of 1918.

In the fall of 1917, plaintiffs took up the first mortgage, which had fallen due, paid $136 interest due, and replaced the mortgage by another of the same amount. Defendant released his mortgage for the purpose of permitting the new mortgage to remain a first lien, and plaintiffs then gave him a new second mortgage for the same amount as before. In the summer of 1918, no payments having been made to defendant, he foreclosed his mortgage and bid in the property at the sale for the full amount of the mortgage debt. In December, 1917, defendant exchanged the Davenport home for land in South Dakota.

In August, 1918, plaintiffs brought this action. It resolved itself into an action to recover damages for misrepresentation made by defendant as to the nature and condition of the land. By special findings the jury found the charges of plaintiffs true, found that the land was worth but $4,280, and that the Davenport home was worth $3,800. On this verdict the court made findings of fact and conclusions of law and ordered judgment for $2,880, the full amount claimed by plaintiffs.

Plaintiffs claim that defendant represented that the land was near a schoolhouse, that it was on a rural mail route, that good water could be obtained at a depth of 10 or 15 feet, that there was no sand and no stones upon the land, that it was rich, fertile soil, well drained, and in good condition for farming, and that these representations were false. There is evidence that these representations were made and that they were untrue. The misrepresentations are actionable and the evidence is, accordingly, sufficient to sustain the jury's finding on the question of liability.

[2] 2. Defendant contends that the evidence shows that plaintiffs were fully acquainted with the character, condition, quality and value of the land before they gave a deed for their property in Davenport; in other words, he contends that after knowledge of the facts, plaintiffs ratified the transaction.

The rule is well settled that where a person is induced by fraud to enter into a contract, and after discovery of the fraud, and while the contract is still executory, ratifies and confirms it, he waives the fraud, but the rule is equally well settled that if he has performed the contract, in whole or in part, before discovery of the fraud, he may affirm the contract without prejudice to his right of action for damages for deceit. Humphrey v. Sievers, 137 Minn. 373, 163 N. W. 737. The facts bring this case clearly within the latter principle.

[3] 3. The trial court found that plaintiffs were entitled to recover as damages the difference between the contract price and the value of the land, namely, $2,880. In determining whether this is correct we must bear in mind that no part of the purchase price was paid except the portion represented by the value of the Davenport house and furniture, and $136 of interest money. We think the rule of damages adopted by the trial court...