Tysk v. Griggs

• Decision Date: 27 June 1958
• Docket Number: No. 37392,37392
• Citation: 91 N.W.2d 127,253 Minn. 86
• Parties: Robert J. TYSK, Respondent, v. James W. GRIGGS et al., Defendants, James W. Griggs, Appellant.
• Court: Minnesota Supreme Court

Page 127

91 N.W.2d 127

253 Minn. 86

Robert J. TYSK, Respondent, v. James W. GRIGGS et al., Defendants James W. Griggs, Appellant.

No. 37392.

Supreme Court of Minnesota.

June 27, 1958.

Syllabus by the Court

1. The trial court may properly, in the construction of a contract, put itself in the place of the contracting parties and then, in view of the facts and circumstances surrounding them at the time the instrument was executed, consider what they intended by the terms of their agreement.

2. The rule of practical construction applies only in cases where the contract is indefinite, uncertain, or susceptible of different interpretations. There is nothing in the record on this appeal indicating that either the defendant or his agents and representatives intended to dispose of the property sold except by making a sale thereof and accepting the contracts assigned as a part of the downpayment at their principal face value in lieu of cash.

3. The price agreed upon is strong evidence of the value as represented and is sufficient to support a verdict when there is no evidence of the market value of what plaintiffs would have received if defendant's representatin had been true.

4. Minnesota has adopted and consistently applies what is called the 'out-of-pocket-loss' rule in actions for false representations and deceit. Under this rule it is not a question of what plaintiff might have gained through the transaction but what he lost by reason of defendant's deception.

5. It appears conclusively in the instant case that the three contracts assigned as a part of the downpayment were exactly as plaintiff represented them to be and that defendant makes no claim of misrepresentation against the plaintiff.

6. Where, as here, the property that the plaintiff parted with was two possible different values due to claimed different methods of valuation, the method agreed upon by the parties at the time of the transaction will govern.

7. It is not for the wrongdoer to dictate the remedy to be pursued by his victim in order to secure redress.

8. In accordance with the cardinal principle that compensation should be commensurate with the loss, the rule is, and always has been, that in actions of deceit, or for fraudulent representations, the damages recoverable are all those which naturally and proximately result from the fraud. The statement of the rule must, however, always be construed in the light of the facts of the case then being considered.

9. It is well settled that the value of what the plaintiff received, herein, under the circumstances of this transaction, is to be determined by its value at the time of the sale, and under the usual standard the market value would be looked to.

10. The question whether the expert witnesses were sufficiently acquainted with the property at the proper time and place to qualify them to give their opinions as to its market value was, based upon the record in the instant case, a question for determination by the trial court, and admission or exclusion of their testimony was within its discretion.

Vennum, Newhall & Ackman, N. L. Newhall, Jr., Minneapolis, for appellant.

Strong, Strong & Tully, Minneapolis, for respondents.

NELSON, Judge.

Action for money damages for deceit and misrepresentation in a transaction wherein defendant sold plaintiff certain apartment buildings in Minneapolis known as Westbank Halls for the stated price of $79,000 under contract for deed dated March 25, 1954. The contract provided for a downpayment of $25,900 made up of the following items: The sum of $1.91 in cash; the further sum of $25,898.09 by the plaintiff transferring to the defendant by absolute assignment the vendor's interest in each of three contracts for deed, fully described therein as to dates, parties, premises, interest rate, and amount of unpaid principal. The contract further provided that the balance of the purchase price, namely $53,100, should be payable at the rate of $535 monthly beginning April 15, 1954, continuing up to and including March 15, 1957, at which time plaintiff agreed to pay the difference between the amount then owing on the contract for deed and the amount of the first mortgage on the property due April 15, 1957, at which time the defendant would execute and deliver to plaintiff a warranty deed free and clear of all encumbrances except said first mortgage, together with a bill of sale transferring certain personal property to plaintiff as provided in the contract. The contract also provided that should plaintiff default in the payment of principal, interest, taxes and assessments, or premiums upon insurance or fail to perform any of the terms and conditions of the contract to be performed by him, the defendant might, at his option, declare the contract canceled and plaintiff's rights terminated with the result that all improvements, and all payments made would belong to defendant as liquidated damages. Following the aforesaid provisions the contract provided:

'It Is Mutually Agreed, By and between the parties hereto, that the time of payment shall be an essential part of this contract; and that all the covenants and agreements herein contained shall run with the land and bind the heirs, executors, administrators, successors and assigns of the respective parties hereto.'

The contract for deed was preceded by a purchase agreement signed by plaintiff and defendant dated February 26, 1954, and an agreement in modification of the terms of the purchase agreement signed March 22, 1954.

The action was commenced against James W. Griggs; Helen C. Griggs, his wife; Calhoun Realty Company, a corporation; and Winton R. Peterson. Calhoun Realty Company and Winton R. Peterson had been employed by James W. Griggs as real estate brokers and had acted on his behalf in all of the negotiations terminating in the sale. Plaintiff alleged deceit and misrepresentation in the following respects:

'That prior to the date of said Agreements and Contract for Deed above, the defendants herein, and each of them, made numerous representations to plaintiff with reference to said property hereinbefore referred to, and among said representations were the following:

'(a) That the annual income from said premises was in excess of Eighteen Thousand Dollars ($18,000).

'(b) That defendants represented to plaintiff that the heating plant and water system of the premises at 243 and 235 20th Avenue South were adequate for the premises and met the requirements of the occupancy.

'(c) That defendants represented to plaintiff that the rear apartment in the basement of 235 20th Avenue South was rented for $15.00 a week.

'(d) That defendants represented to plaintiff that the auditorium in 243 20th Avenue South could be rented and that the annual income therefrom was between $1,000.00 and $1,500.00 a year.SU '(e) That defendants represented to plaintiff that the restaurant in the premises at 243 20th Avenue South was rented at a rental of $60.00 cash per month, plus 3% Of the gross sales, and that the sales produced an additional average income of $60.00, making a total of $120.00 per month.

'(f) That the premises complied with all Minneapolis City Ordinances and building code.'

He further alleged that such fraudulent representations were made to induce him to purchase the property; that he believed and relied upon defendants' representations in making the purchase; that they were false and untrue; and that he thereby suffered damages in the sum of $17,500.

Defendants filed a joint answer to the complaint admitting all allegations except those alleging deceit and misrepresentation, which were denied. The action was later dismissed as to Helen C. Griggs who had no present interest in the property and as to the real estate brokers. The trial resulted in a jury verdict of $11,550 against defendant James W. Griggs.

The record submitted on appeal only includes, so far as testimony is concerned, partial testimony on cross-examination of plaintiff and the direct testimony of Fred L. Chapman called by defendant to give expert testimony as an appraiser and realtor. Plaintiff and defendant entered into a stipulation settling the case, agreeing that the import of certain omitted parts is as follows:

'c. There was no testimony of any witness to any conversations or other dealings varying, interpreting or restricting in any way the terms of the earnest money contract * * *, the modification agreement * * * or the contract for deed * * *. At the time of the sale defendant Griggs was fully aware of the terms of the sale as set forth in the earnest money contract and the contract for deed and agreed to the said terms.

'd. The three contracts for deed which were transferred from Tysk to Griggs in part payment of the purchase price, had principal balances remaining of $18,492.98, $1,739.79 and $5,665.32, as recited in the basis contract * * *. No claim was made by Griggs that there was default in any of these three contracts nor that the security for any of them was inadequate, nor that they were not in all respects as represented by Tysk. The principal balances of these contracts were accepted by Griggs at face value to apply against the sale price of $79,000.

'e. Tysk testified that he paid the 1953 real estate taxes in an amount of approximately $1,000 and that this constituted in effect an additional element of the consideration.

'f. The mortgage referred to in Griggs offer of proof regarding the laws and regulations governing Twin City Federal Savings and Loan Association is a mortgage dated September 4, 1952, executed by James W. Griggs to Thorpe Bros. in a face amount of $53,000 due in ten years and bearing interest at 5 1/2% Per annum. Thereafter by written assignment dated September 23, 1952, the said mortgage was assigned to Twin City Federal Savings and Loan Association.

'g. A real estate expert for plaintiff testified that in 1952 mortgage money was readily available, the average term of mortgages of...