Wilson v. Carpenter's Adm'r.1

• Decision Date: 14 March 1895
• Citation: 91 Va. 183,21 S.E. 243
• Parties: WILSON, Trustee. v. CARPENTER'S ADM'R.1
• Court: Virginia Supreme Court

21 S.E. 243

91 Va. 183

WILSON, Trustee.

v.CARPENTER'S ADM'R.¹

Supreme Court of Appeals of Virginia.

March 14, 1895.

Sale op Land—Misrepresentations by Vendor —Suit for Rescission—Evidence—Statements to Others—Waiver.

1. When a purchaser has been induced, by a material misrepresentation of the vendor, to buy, he has a right to have the contract canceled, correlative with that of the vendor to disaffirm the sale when he has been defrauded.

2. Plaintiff was induced to buy a lot in the town of G. by the false representation that $1,-500, 000 had been secured to induce manufacturing enterprises to locate in said town. Held, that he was entitled to a rescission of the contract, and to have the money paid refunded.

3. In a suit to cancel a contract for false representations by an agent, evidence of similar statements made by him to other people at other times, though not competent to prove what occurred when the contract in question was made, may be introduced to show the bent of the agent's mind.

4. The intent of a party making a representation to induce a contract is wholly immaterial, but the question is whether the other party has been misled and injured.

5. When the seller has made a false representation, which, from its nature, might induce a buyer to enter into the contract on the faith of it, it will be inferred that the buyer was induced thereby to contract, and it does not rest with him to show that he in fact relied upon the representation.

6. One is not bound by a waiver of his rights, unless such waiver is distinctly made with full knowledge of the rights which he intends to waive; and the fact that he knows his rights and intends to waive them must plainly appear.

7. A purchaser is not deprived of his right to relief on account of false representations from the vendor by the fact that he had the means of discovering the falsity of the representations.

Cardwell, J., dissenting.

Appeal from circuit court, Rockbridge county.

Bill by William Carpenter's administrator against Robert N. Wilson, trustee, and others, to cancel a contract for the sale of land. From a decree in favor of complainant, defendant Wilson appeals. Affirmed.

Frank Glasgow, for appellant.

Strayer & Liggett, for appellee.

HARRISON, J. Robert N. Wilson held, as trustee for himself, David B. Taylor, Thomas S. White, Fitzhugh Lee, and others, with full power to sell and convey the same, lot No. 20 in block 127 on McCullough street, in the town of Glasgow. He placed the lot in the hands of Thomas S. White & Co., real-estate agents, for sale. In September, 1890, Thomas S. White sold the lot to William H. Carpenter, of Rockingham county, for the sum of $1,500; the purchaser paying in cash $400, and executing two bonds for $550 each, at 6 and 12 months, with interest for the residue, receiving from R. N. Wilson, trustee, a deed of conveyance for the lot, dated September 23, 1890, and contemporaneously therewith executing a deed of trust to secure the two deferred bonds. Before the first bond became due, Carpenter paid the same. When the second bond became due, in September, 1891, it was not paid. On the 3d day of November, 1891, William H. Carpenter filed his bill in the circuit court of Rockbridge county against R. N. Wilson, Thomas S. White, and the other owners of said lot, praying for a rescission of his contract of purchase. Before the case was ready for hearing, however, the plaintiff died, and it was revived in the name of J. N. Keagy, his administrator. The bill sets forth the foregoing facts in regard to the sale and purchase of said lot, and alleges that the purchase was made on the positive assurance from Thomas S. White, agent, that the Rockbridge Company, promoters of the town, had already secured beyond a doubt $1,500, 000 from an English syndicate; that this largesum of money was to be used in building up and carrying on industrial enterprises at Glasgow, which would cause real estate to advance very rapidly, start the town on a "boom" on a grand scale, and make it a manufacturing place of great importance. The complainant further alleges that he knew nothing himself of what was proposed at Glasgow, and relied solely on the representations of said White, and by reason of the representations and assurances thus made, and especially the representation that $1,500,-000 had been secured to be invested at once in manufactories, he was induced to buy the lot; and that, but for such assurances, he would never have invested a dollar in the town of Glasgow. The bill further alleges that the statements made by Thomas S. White were untrue, false, and fraudulent; that not a dollar of the English money had ever been invested in Glasgow; that the English syndicate never completed any contract with the Rockbridge Company, and that all negotiations in reference thereto have long since failed, without hope or expectation of being revived; that, so far from the lot purchased by him advancing in price, it bad little or no value. The bill prays that the contract of purchase be rescinded; that defendants be required to repay the money paid on the purchase; that the lot be reconvened to R. N. Wilson, trustee, and that be be enjoined from collecting the remaining unpaid bond. The injunction was granted as prayed for, and on the 1st day of March, 1892, the defendants filed their joint and separate answer, demurrer, and cross bill, admitting the sale of the lot by their agent, White, and its purchase by Carpenter, and alleging that none of them but Thomas S. White, through whom the sale was made, were cognizant of the facts and circumstances attending the sale; the defendant Thomas S. White denying that he made the positive assurance alleged in the bill as to $1,500, 000 having been secured by the Rockbridge Company from the English syndicate, and further denying that the alleged representations and assurances caused the plaintiff to invest at Glasgow; that many prudent and cautious business men were at that time buying lots there, believing it would grow into a large town. The respondents call for strict proof of all charges, in the bill, and ask for a decree for the balance due from the purchaser. Evidence was taken by the plaintiff and defendants, and on the 20th day of March, 1893, a final decree was entered, overruling the demurrer; declaring that the sale of the lot was induced by false representations of the defendants, which were material, and to the injury of the purchaser; rescinding the contract of sale; canceling the unpaid bond; appointing a special commissioner to reconvey the lot to R. N. Wilson, trustee; and decreeing that the defendants pay the administrator of William H. Carpenter $1,070, with inter est on $947.13 from March i, 1893, and costs of suit, —that being the amount paid by his intestate on the lot From this decree an appeal was granted the defendants Thomas S. White and others to this court.

The question presented by the pleading for determination is one of fact. The law applicable to a case of this sort is too well settled to be any longer doubted or called in question. No man is bound by a bargain into which he has been deceived by fraud or misrepresentation. Whenever a purchaser has been induced, by a material misrepresentation of the vendor, to buy, he has a right to repudiate the contract; a right correlative with that of the vendor to disaffirm the sale when he has been defrauded. Courts of equity are always open to afford 'relief in such cases, and false representation of a material fact, constituting an inducement to the contract, on which the purchaser had a right to rely, is always ground for rescission of the contract by a court of equity. Crump v. Mining Co., 7 Grat. 352; Guin v. Byrd, 32 Grat. 293; Linhart v. Foreman's Adm'r, 77 Va. 540; Iron Co. v. Trout 83 Va. 397, 2 S. E. 713; Pom. Cont. § 12, p. 289. Further elaboration of the law on this subject would be unprofitable repetition. It is only necessary to consider the evidence, and determine...