Ward v. Jenson

• Decision Date: 05 February 1918
• Citation: 87 Or. 314,170 P. 538
• Parties: WARD v. JENSON.
• Court: Oregon Supreme Court

170 P. 538

87 Or. 314

WARD v. JENSON.

Supreme Court of Oregon

February 5, 1918

Department 1.

Appeal from Circuit Court, Multnomah County; W. N. Gatens, Judge.

Action by Lottie E. Ward against Thomas A. Jenson. Judgment for plaintiff, and defendant appeals. Reversed, and remanded for new trial.

This is an action for damages alleged to have been caused by fraudulent representations inducing the exchange of lands. The plaintiff, Lottie E. Ward, owned, subject to a $1,700 mortgage, real property in Portland, Or. The defendant Thomas A. Jenson, was in the possession of 14.34 acres of land in Orange county, Cal., but he owned only 4.34 acres. He had a contract for the purchase of the remaining and adjoining 10 acres for the price of $9,000, of which only $1,000 had been paid. The complaint alleges that for the purpose of inducing her to exchange her Portland property for the Orange county property the defendant falsely and fraudulently represented to her that he had invested $10,000 in the California property; that it had cost him $6,000 to level the land so that it could be irrigated, to buy and set out orange trees, and to install a water pipe line; that the pumping plant on the premises was of sufficient capacity to supply water for irrigating all the property; that from three to six hours was sufficient time for the irrigation of all the tract; that he owned the 10-acre tract; that the whole property was of the value of $18,000; that he had a mortgage to secure the loan of $8,000 on the 10-acre tract, and that plaintiff could judge of the value of that tract by the fact that there was a mortgage on it to secure a loan of $8,000 and that the Orange county property contained 15 acres. The pleading points out the particulars wherein it is claimed that the alleged representations were false. It is alleged that the defendant only had $3,291 invested in the premises that the total expenditure made by the defendant for trees and a pipe line and for leveling the 4.34-acre tract was $141, while the 10-acre tract had already been leveled and planted to trees when the defendant contracted to purchase it; that the pumping plant was not of sufficient capacity to supply water for irrigation; that it required from 10 to 11 hours at a cost of $1 an hour to irrigate the property; that the two tracts were not worth to exceed $12,000 "including incumbrances"; that the defendant did not own the 10-acre tract, "and there was no mortgage to secure a loan of $8,000 on said 10-acre tract, and said $8,000 mortgage did not indicate the value of said tract," but that defendant had purchased the 10-acre tract on a contract for $9,000, and had paid $1,000, leaving a balance of $8,000 due on the contract; and that the two tracts contained only 14.34 acres of land.

The plaintiff alleges that she believed the representations of the defendant to be true, and that, relying on them, she exchanged her Portland property for the California property to her damage. A trial by jury resulted in a verdict for the plaintiff, and the defendant appealed from the consequent judgment.

Hamilton R. Johnstone, of Portland (Geo. R. Alexander and Benson & Benson, all of Portland, on the brief), for appellant. Otto J. Kraemer, of Portland (Chamberlain, Thomas & Kraemer and L. W. Humphreys, all of Portland, on the brief), for respondent.

HARRIS, J. (after stating the facts as above).

The court instructed the jury that:

"The measure of damages in this case is the difference between the value of the land as it would have been if it was as represented and the actual market value; in other words, the value which Mr. Jenson represented was the true value and its actual value, which you find is the market value."

This instruction was erroneous. It is settled in this state that in an action to recover damages for false representations inducing an exchange of property the measure of damages is the difference between the market value of the property parted with by the person defrauded and the market value of the property received by him. Salisbury v. Goddard, 79 Or. 593, 600, 156 P. 261; Purdy v. Underwood, 169 P. 536, decided January 8, 1918. See, also, Van de Wiele v. Garbade, 60 Or. 585, 591, 120 P. 752; Caples v. Morgan, 81 Or. 692, 706, 160 P. 1154, L. R. A. 1917B, 760; Smith v. Bolles, 132 U.S. 125, 10 S.Ct. 39, 33 L.Ed. 279; Sigafus v. Porter, 179 U.S. 116, 21 S.Ct. 34, 45 L.Ed. 113; George v. Hesse, 100 Tex. 44, 93 S.W. 107, 8 L. R. A. (N. S.) 804, 123 Am. St. Rep. 772, 15 Ann. Cas. 456; Robertson v. Frey, 72 Or. 599, 144 P. 128; Barbour v. Flick, 126 Cal. 628, 59 P. 122; 12 R. C. L. 455.

When testifying as a witness the plaintiff was asked:

"Was anything said about the value of the property there?"

And over the objection of the defendant she was permitted to answer:

"He said his place was worth $18,000, and he had $10,000 invested in it, and there was a mortgage of $8,000 against it."

It is contended that this answer was prejudicial error, because the statement attributed to the defendant was only an expression of his opinion of the value of the property, and hence did not amount to fraud. The force and effect of the answer of the witness may be better understood if a brief statement is made of some of the testimony given by her both before and after the answer in question. She explained to the jury that she valued her property in Portland at $10,000, and that, after deducting $1,700, the amount of a mortgage, its net value to her was $8,300. She testified that the defendant told her that he valued his property at $18,000, and that after deducting the $8,000 mortgage on his property "there would be a cash difference coming to him"; that she told him that she had no money to pay a cash difference, and that thereupon he stated that he would trade even if she would pay his agent's commission, but that he was giving her "$2,000 the best of the deal, and this was on account of his wife's poor health that he had to make the change." The plaintiff also testified:

That the defendant told her "that he bought the 10 acres for $9,000, but his reason for buying that was because it had the buildings and pumping plant on, and it had cost him $6,000 to level off the land so the water would flow for irrigation and to buy the trees at 65 cents a tree and set them out, and that he had $10,000 invested in the property; and I thought that if he had paid $9,000 for 10 acres that it was worth his price, if it had cost him $6,000 to level it off and buy the trees and set them out."

The witness was also asked the following question:

"Was there anything said about any connection between the value of the property and the mortgage?"

And she answered:

"Yes; he said you can judge as to the value of the property by the mortgage there is on it."

There were between 1,100 and 1,200 trees on the two tracts, and according to the testimony of the plaintiff:

"Mr. Jenson told me that this was preferred stock, and that they were selling it at 75 cents a tree, but he bought them at 65 cents."

The plaintiff further explained:

That she understood that the defendant had expended the $6,000 "for buying trees, and labor in setting them out and leveling off the land, and the pipe line."

As a general rule a false representation does not constitute actionable fraud unless it relates to a fact which is existent or has existed in the past; and therefore the mere expression of an opinion or a representation in regard to a matter of estimate or judgment does not ordinarily amount to fraud. 12 R. C. L. p. 244, § 14. A representation of value, when standing alone, is usually regarded as a mere opinion, because it largely involves a matter of judgment and estimation about which persons may differ; and yet it may under special circumstances be treated as a representation of a fact; 2 Pom. Eq. Jur. § 878. However, in the instant case the representation that the property was worth $18,000 does not stand alone and by itself, but it is coupled with other statements made in support of the representation of value. In 20 Cyc. 18, the rule is stated thus:

"An expression of opinion may be so blended with statements of fact as to become itself a statement of fact. Where one of the parties has

...