Bristol v. Braidwood

| Mich. | Oct 21, 1873

Christiancy, Ch. J.

This was an action of replevin brought by Braidwood against Bristol in the circuit court for the county of Lapeer, for a pair of colts which the former bad sold or traded to the latter for forty dollars in cash and a mortgage and accompanying note of one Henderson, given not long before to one Goetchius, for four hundred dollars at ten per cent, interest, upon which two hundred and fifty dollars had been paid and endorsed. This mortgage tbe defendant (below) represented to tbe plaintiff to be “'as good as tbe wheat,” “as good as .the money to any one who did not want to use the money; for,” said be, “it is drawing ten per cent, interest.” And being asked by plaintiff if there was any mortgage ahead of this, he replied that there was not, as far as be knew.

The plaintiff, about four days after the trade, claiming to have ascertained that there was a prior mortgage upon tbe land, executed by one Augustus Hilliker to one James Lee for some fourteen hundred dollars, which had been foreclosed and a deed given by the sheriff, tbe right to redeem from which would expire in about twenty-three days, and claiming to have been defrauded by the representations of the defendant, tendered back to him the mortgage and the forty dollars (which the defendant refused to receive), and demanded his colts, thus attempting to rescind the contract.

If the representations complained of were such as to entitle the plaintiff to rescind the contract and bring replevin, on the ground that they were false and fraudulent in reference to a prior incumbrance, it is very clear that this could be so only because such prior incumbrance affected the title upon which the Goetehius mortgage (transferred to plaintiff) depended, and because its enforcement might defeat the latter in whole or in part. For, though such prior mortgage might describe the same land, yet, if executed by some one having no connection with the real title, but outside of the chain of title, it could in no way defeat or affect the Goetehius mortgage or impair its security.

It was therefore incumbent upon the plaintiff not only to show, first, a prior mortgage describing the land, but, second, that it was connected with, and affected the title in such a manner as to impair the value of the Goetehius mortgage. All he did was to prove by the record the existence of a prior mortgage describing this land, executed by Augustus Hilliker to James Lee, and that this mortgage had been foreclosed, and a sheriff’s deed executed to one Baldwin Copeland. He entirely failed, and did not even attempt, to show that Hilliker, who executed this prior mortgage, ever owned the land, or had any connection with the title.

Goetehius, however, was sworn for the defense, and gave some testimony tending to show that he, when he took his mortgage from Henderson, and afterwards, recognized the existence of a prior mortgage affecting the value of his security; and it might have been a question whether this evidence might not have warranted a jury in finding that the prior mortgage did affect the title and impair the security of the Goetchius mortgage. But this cannot avail the the plaintiff below upon this record, since the court, in denying the request of the defendant for a contrary charge, instructed the jury that the mere proof of the existence of the prior mortgage describing the same land, and the sheriff’s deed on foreclosure, made a prima facie case that there was a prior incumbrance upon the land, and threw upon the defendant the burden of proving that it did not affect the title. This we think was clearly erroneous. ' The burden of proof was upon the plaintiff throughout, to show that it did affect the title, and not upon the defendant to prove that it did not.

This disposes of the casé; but as a new trial is to be awarded, it is proper to notice another feature of the case, which will be likely to appear upon the new trial substantially as it does here; as the plaintiff and defendant substantially agree upon what the representations of the defendant were upon the points we have noticed above. These representations, so far as material to the question of fraud and the right of the plaintiff to rescind, I have set forth above; and so far as they relate to the value of the mortgage, — irrespective of the question of a prior mortgage, — they should, I think, be looked upon merely as the expression of an opinion, or as a matter of commendation by the vendor, the defendant. Its value also would depend not merely on the value of the mortgage security, but upon the personal responsibility of Henderson, whose note accompanied the mortgage, and so far as the mere question of value is concerned, — if there was no previous mortgage, — it was a question upon which the plaintiff, in the exercise of ordinary diligence, should have ascertained for himself, and upon which he would have been as competent to judge as the defendant. And upon this question there is nothing in the case which should, as it seems to me, relieve the plaintiff from the application of the principle of caveat emptorj especially as it does not appear, and is not pretended, that the mortgage would not have been perfectly good, and as valuable- as represented, if there had been no prior mortgage upon the land.

The whole question of misrepresentation and fraud must therefore turn upon the representation in reference to the fact, whether there was a prior mortgage; and upon this point it may, for the purposes of this case, be admitted that if the defendant, for the purpose of obtaining the plaintiff’s property for the mortgage, asserted to him, as a fact of which he professed to have knowledge, that there was no prior mortgage upon the land, when he knew, or had good reason to believe the contrary, or no good reason to believe his assertion to be true, he would be liable ag for a fraudulent representation, and the plaintiff might have rescinded the contract and reclaimed his property. And in such a case it would not be material whether Henderson’s note, without the mortgage, would be good, or whether the land was worth more than enough to pay off both the mortgages (though it would be otherwise where he retained the property and brought his action for damages), because, notwithstanding these facts, the plaintiff might not have consented to part with his property for the mortgage, and the plaintiff was entitled to have substantially the thing bargained for, and such as the defendant represented it to be, and if it turned out to be essentially different, he would have a right to rescind, by tendering back the mortgage and demanding his property.

I cannot, however, assent to extend the maxim caveat emjotor so far as to hold (as seems to have been held in some cases) that where a vendor of real estate, for the fraudulent purpose of effecting a sale, makes a positive representation of particular facts respecting the title, which he knows, or has good reason to believe to be false, and which turn out to be false in fact, but which, if true, would make the title good, he cannot be held liable in an action for the fraud, or the vendee can have no right to rescind, because he had it in his power to ascertain from the records the truth or falsehood of the representation, and the true state of the title, but has neglected to do so, in reliance upon the truth of the vendor’s representation of the facts. There may be good, prudential reasons why, when I am selling you a piece of land," or a mortgage, you should not rely upon my statement of the facts of the title, but if I have made that statement for the fraudulent purpose of inducing you to purchase, and you have in good faith made the purchase in reliance upon its truth, instead of making the examination for yourself, it does not lie with me to say to you, “It is true that I lied to you, and for the purpose of defrauding you, but yon were guilty of negligence, of want of ordinary care, in believing that I told the truth; and because you trusted to my word, when you ought to have suspected me of falsehood, I am entitled to the fruits of my falsehood and cunning, and you are without a remedy.”

But these questions are no further involved than this: if no- action could be maintained and no contract rescinded on the ground of such fraudulent misrepresentation of facts regarding the title of real estate, simply because the vendee neglected to examine the records, the present action could not be maintained, whatever the representations may have been. But what were the representations in regard to the existence of a prior mortgage? When asked if there was any such, the defendant simply says, “there is not, that I know of.” He does not attempt to make any representation whatever of the fact, whether there was such prior mortgage or not; and the whole import and fair understanding of the representation was, as it seems to me, that he did not know what the fact was, whether there was or was not such prior mortgage; but only that he did not know of any. This was fairly putting the plaintiff upon inquiry, to ascertain the fact for himself. I will not undertake to say, — nor does this case call for an opinion upon the point, — that if the defendant knew at the time, of a prior mortgage affecting the title of the property, he might not be held liable for a fraud, if, for a fraudulent purpose,. he stated that he did not know it; — though this might be going a great ways, when tbe plaintiff was thus fairly put upon inquiry by being told simply that be did not know of any. But was there any evidence fairly tending to show that tbe defendant did know of the existence of tbe prior mortgage ?

The only evidence which can possibly be claimed to have this effect, is that of Charles Sheine, who testifies that, in a conversation with.tbe defendant in reference to purchasing the G-oetchius mortgage, — some time prior to the trade with the plaintiff, — he [Sheine] told the defendant that he had heard that the .mortgage was not good, that he had heard that there was a mortgage ahead of it. This was not only hearsay, but second-band hearsay, which, if tbe defendant was not entitled to treat as a mere idle rumor for all purposes, cannot, as it seems to me, have any fair tendency to show that he bad falsely or fraudulently misrepresented when be told the plaintiff he did not know of any mortgage. I see nothing in this‘evidence calculated to induce the belief of tbe defendant in the existence of such a prior mortgage.

The judgment must be reversed, with costs, and a new trial awarded.

The other Justices concurred.