Twin Lakes Land & Water Co. v. Dohner

• Decision Date: 05 June 1917
• Docket Number: 2955.
• Citation: 242 F. 399
• Parties: TWIN LAKES LAND & WATER CO. v. DOHNER.
• Court: U.S. Court of Appeals — Sixth Circuit

242 F. 399

TWIN LAKES LAND & WATER CO. v. DOHNER.

No. 2955.

United States Court of Appeals, Sixth Circuit.

June 5, 1917

[Copyrighted Material Omitted]

C. A Ballreich, of Pueblo, Colo., for appellant.

S. T McPherson, of Cincinnati, Ohio, for appellee.

Before KNAPPEN, MACK, and DENISON, Circuit Judges.

DENISON Circuit Judge.

The appellant is a company owning a large tract of land in Colorado, and a water supply for irrigation purposes. It made a contract with the appellee to sell him a tract of this land upon deferred payments. He took possession, retained it for several years, and paid a part of the purchase price, and then he filed this bill in the court below, asking a rescission of the contract and return of the payments which he had made. He based this demand upon the claim that material facts had been misrepresented to him. The court below gave him a decree of rescission and for restitution, and the company prosecutes this appeal.

1. Upon the ultimate merits, the question whether there was real misrepresentation, we cannot disturb the decree of the trial court. The question was wholly one of credibility. Omitting a good many subjects within the realm of mere opinion or expectation, we find Dohner claiming that the company's agent represented that the company had in storage reserve, in certain lakes and reservoirs, water enough to supply its entire territory for a period of two or three years, even if there should be no rain, and that the land offered for sale was, therefore, absolutely certain of a sufficient supply of water at all times. Defendant's agents deny this statement, but concede that, if it was made, it was not true; indeed, they say that its very absurdity demonstrates that it could not have been made. If these negotiations had been between parties equally familiar with irrigated lands, and the troubles that develop in operating the best of them, we should hesitate to think that such a statement was made and relied upon; but Dohner was brought from Ohio to Colorado for the purpose of interesting him in such a purchase, he was wholly ignorant of irrigation and its problems, several Ohio farmers with him were equally ignorant, and it is not at all improbable that defendant's agents, without any literal misstatement of fact, would have created in Dohner's mind the impression that they were claiming the existence of this quantity of reserve water, and should have known that what they said would create that impression, and so must be deemed to have misrepresented, in this respect, just as much as if they had used the very language charged against them. Dohner and his associates testified in open court before the trial judge; he evidently regarded them as thoroughly credible; and it cannot be doubted that they made their purchase and came away from Colorado with the understanding and belief that this representation had been made. The defendant's agents testified by deposition; but they had the right to testify orally at the trial, and they cannot complain if their deposition testimony did not convince the trial judge that Dohner and his witnesses are mistaken.

2. Defendant insists that there was no sufficient rescission before or in connection with the beginning of suit. The land had been occupied by Dohner's tenant. Dohner brought this suit, and thereupon notified his tenant that this had been done, and that he (Dohner) would have nothing more to do with the land. The tenant remained in possession during the ensuing season, harvested what crops there were, and then abandoned the place. There is no proof that any portion of the crops was turned over to Dohner. The bill of complaint is silent as to possession. It does not tender back possession, or, in terms, offer to do so in connection with the desired decree of recission. It is clear enough that the case lacks that actual return or tender of the property received which is normally an essential prerequisite to an action at law to recover the consideration paid; but the same rule does not apply to an action in equity. By such an action in equity, the plaintiff brings the controversy into court, and must undertake to perform whatever conditions the court may decide to be equitable, if it eventually declares the right of rescission. Where the controversy relates to land, it is not necessary that plaintiff should abandon it pending suit and leave the buildings to destruction and the land to be injured by nonuse. It is enough, if the defendant, on performing his part of the decree of rescission, may receive back what he parted with, subject to any equitable adjustment that may be ordered. Neblett v. McFarland, 92 U.S. 101, 103, 23 L.Ed. 471; Thackrah v. Haas, 119 U.S. 499, 502, 7 Sup.Ct. 311, 30 L.Ed. 486.

The principle stated by this court in Mudsill Co. v. Watrous, 61 F. 163, 186, 9 C.C.A. 415, and in Alger v. Keith, 105 F. 105, 118, 44 C.C.A. 371, and by the Supreme Court in Shappirio v. Goldberg, 192 U.S. 232, 24 Sup.Ct. 259, 48 L.Ed. 419, does not apply at all where the vendee's later dealing with the property is not in silence and in acquiescence, but is after the commencement of a suit to rescind, and is only so far as necessary to prevent avoidable loss. The bill should have expressly averred the plaintiff's willingness to make this return and to accept all equitable conditions; but there was no demurrer or motion to dismiss, and after a trial upon the merits, and the development of no obstacle to the return of the property to the defendant, we cannot deny relief to plaintiff because his bill was insufficient in this respect.

3. It is insisted that Dohner, after discovery of the misrepresentation, reaffirmed the contract, or rather, made a new contract. The fact was that, during the first season, the water almost entirely failed. The defendant's agents explained this failure as due to temporary troubles in the irrigation supply, which troubles would at once be remedied and a new contract of purchase was made, which abated some interest and extended the payments over a longer period. Dohner claims that misrepresentations, similar to the original ones,...