Davis v. Henry

4 W. Va. 571 | W. Va. | 1871

Moore, J.

The appellant, Henry G. Davis, by bis counsel, insists:

1st. That the demurrer to the original bill should have been sustained, because of improper joinder of Wilson and others, with him.

2d. That the original bill should have been dismissed at the costs of complainant, Henry, because of the false and fraudulent representations made by him in relation to the land sold to said Davis.

3d. That the decree in the cross-bill should have cancelled the contract of sale of July 19th, 1865, with costs, and' not have dismissed the bill.

4th. That the court ought to have directed an issue, to try by jury, the question of fraud, and whether said Davis had discovered the fraud prior to the 19th July, 1865.

The appellee, Henry, by his counsel; insists :

1st. That the decree is right, both in' giving the relief prayed for in the original bill, andfiii dismissing the cross-bill, with costs. :

2d. That the evidence offered by Davis, to prove false and fraudulent representations on' the part of Henry, to procure the contract of 9th March, 1865, is insufficient to establish the charge made against him, and that the evidence tending to prove such representations is unworthy of credit.

3rd. That the charge of fraud in the contract of March 9th, 1865, is not supported by the proof in the cause.

4th. That if there had been really any question between Davis and Henry, about representations as to the presence of asphaltum coal on the land sold, previously to the second con tract,-yet when that contract was made on the 19th July, 1865, it was fully ascertained by Davis that it was not there, and that contract was made without reference to the presence of such coal on the land.

5th. That said contract was made with reference to mining for oil, the original object of pursuit.

6th. That if there be anything in the evidence, tending to raise the impression of such representation made by Henry on the order of trade and dealings, as ought to be construed^by the court to affect the first contract of March 9th, 1865, with fraud, yet that such fraud, if any, was already “condoned” by the second contract of the 19th July, 1865, for a valuable consideration, to wit: an abatement of 8,000 dollars, in eash, of the purchase money, and 15,000 dollars of stock in the company, which Davis was himself to form, for the purpose of working this and adjoining lands.

7th. That it is too late for Davis now to call in question the validity of the contract of July 19th, 1865.

It appears, on inspection of the original bill, that Henry G. Davis, Benjamin Wilson, Benjamin F. Martin, and Tal-iaferro K. Knight, are made defendants. Davis was the principal defendant, on'account of privity in the contract which Henry seeks the specific execution of; Wilson was made a party, because Henry had assigned to him 800 dollars of the •money he was to receive from Davis on the contract, “and the benefit of the said contract, to the extent of the said •sum so assigned,” and said Wilson had forbidden Davis from paying the same to said Henry.; Martin was made a party because he had in his possession, as the mutual friend ■of Henry and Davis, the contract of March 9th, 1865, and July 19th, 1865, which Henry prayed he should be required to produce, and plaee the same within the control and at the disposal of the eourt; Knight was made a party because he held, as an escrow, pursuant to the contract of July 19th, 1865, the deed which Henry and wife had made, conveying the land to Davis.

Justice Story, in his admirable work on Equity Pleadings, | 226, b., says, “in the case of a common bill for the specific performance of a contract of sale of real estate, the only proper parties in general, are the parties to the contract itself; special cases may indeed exist, in which the rule may be otherwise, bnt they stand upon their own peculiar grounds.” In this case, Davis’ privity in the contract sought to be enforced, makes him principal defendant. 'Wilson, by virtue of the assignment made to him, was entitled to the 800 dollars, with the interest due thereon, and having that equitable interest, he was in a situation to be affected by the decision of the court; it was, therefore, proper to make him a party defendant, that he might the more readily protect his equitable interest, which might otherwise be decreed to Henry, who had assigned to him. Wilson had also notified Davis of the assignment, and forwarned him not to pay the 800 dollars to Henry; hence it was essential to Davis’ protection that the rights of Wilson, in that respect, should be adjudicated in this cause.

It is also a well settled principle, in equity, that the person having the beneficial interest, is a necessary party, which illustrates “the ordinary doctrine that, the real parties in interest shall be brought before the court, whenever their interests may be affected.” Story’s Eq. Pl., §§ 153, 154, and notes.

As to Martin and Knight, it is true, they were in one sense simply witnesses, and had they occupied only that relationship, they would not have béen proper parties, but they stood in a nearer relationship — a quasi trusteeship. Martin had been constituted, as the mutual friend of both Henry and Davis, custodian of both contracts; Knight held as an escrow, the deed which Henry and wife had made to Davis. It was, therefore, their duty to act disinterestedly between Henry and Davis, and in good faith execute impartially the trust confided in them. The bill charged as follows: that “Martin holds said paper-writing, the sole evidence of said contract, in his possession, but gives out in speeches, that he considers the said Davis is solely interested in the same, and that he will surrender the same to him if he demands it;” that Knight “holds the said deed so deposited with him as aforesaid, and declines to deliver the same, either to your orator or to the said-, until ordered to do so by the order of your Honor; and the said Davis combines and confederates with other persons, to your orator unknown, to baffle, deceive, and defraud your orator in the premises.”

The bill also prayed that said Martin should be required to produce said contracts, and place them within the control, and at the disposal of, the court, and that said Knight be required to produce the deed, so as to be at the disposal of the court. On demurrer, the allegations of the bill are taken as true, and the bill thus showing such inequitable conduct, and the necessity for the production of the contracts and the deed, as proper exhibits in the cause, so essential to the final adjudication thereof, whether the decree should be specific performance or rescission, it seems to me, that viewed from this stand-point, there is such a special case in this instance as equity will embrace, and should sanction the joinder of defendants. For these reasons, and upon the principles laid down in the standard works on equity pleadings, I think there is not such a misjoinder of defendants, in this case, as would have justified the court in allowing the demurrer, and that the court did right in overruling it. Story’s Equity Pleadings, sections 221, 229; Mitf. Eq. Pl., side page 162.

Neither Wilson, Martin or Knight demurred; Davis was not the proper person to demur for misjoinder of defendants, and the demurrer was properly overruled for that reason also. Story’s Eq. PL, § 544.

This brings us to the case as it appears on the contracts, and evidence of the manner in which they were obtained. It is argued by appellant that his vendor, the plaintiff in the original bill, by device and false representations, took an uneonscieutious advantage of him in procuring the contracts; in short, practised positive, actual fraud. If that be true, then the court erred in enforcing the contract, because it is a well settled principle, that a court of equity will never assist a wrong doer in effectuating his wrongful and illegal purpose, which is the spirit of the maxim, “ That he who seeks equity, must do equity.” 1 Story’s Eq. Jnr., § 64, e. On the other hand, if the contract was not founded upon false representations, or if Davis assumed to judge for himself, and did not use the means of knowledge within his reach, but entered into the contract through unreasonable negligence or indiscretion, caveat emptor applies, and as to him equity closes its doors. Idem, § 200, a.

Without going into detail, it seems to me the weight of the evidence is against Henry; that he obtained the first contract from Davis through artifice and misrepresentation, is, from the depositions, unquestionable. That it was such a fraud as could not have been detected by any reasonable diligence on the part of Davis, a ruse so studied, and an imposition, though gross, yet so well concealed, was well calculated to deceive the most vigilant and discreet, especially at a time when the wonderful mineral developments of the country were so exciting'.

It is clear that Henry, before the making of said contract, had represented, not only to Davis, but to others, that in sinking the well on the land, he had struck, at the depth of 108 or 110 feet, a vein of asphaltum coal of eight or nine feet in thickness. He even exhibited specimens of it to different parties; sent samples of it to E. W. Lowther, who showed it to Davis; and when Davis and Lowther visited the well, they found small pieces of the coal, similar to the said specimens, scattered about the well, mixed with the borings.

Henry then told them the asphaltum pieces had been “taken out of the well, and that they had struck a vein of the coal at about 108 or 110 feet below the surface, of nine feet in thickness.” At the same time he stated to Davis and Lowther, that “they had a show of oil in the well.” This evidence comes direct home to Henry; and upon those representations, thus deliberately made by Henry, Davis entered into the contract for the purchase of the land, and. at great expense and labor explored it. He was diligent in. the exploration. He sank four wells: the first, one-third of a mile from the Henry well, 242 feet deep; the other three within the distance of' 14 inches of the centre of the Henry well, one to the depth of 130 feet, the second 129 feet, and the third 227, but found no indication of asphal-tum or oil. He then reamed out the Henry -well, increased the diameter thereof two inches, thus giving it six inches diameter, and in addition, sank the well 230 feet deeper than Henry had it, making a depth of 594 feet, and still found no indications of asphaltum coal or oil, thus demonstrating the falsity of the representations made to Davis. The first contract was unconscionable and fraudulent on-the part of Henry, and could not have been enforced in equity.

But it is claimed that Davis has abandoned his right to abrogate the contract, by again bringing himself into contact with Henry, by the modified contract of July 19th, 1865. In the case of Morse v. Royal, 12 Vesey, jr., 371, Lord Erskine meets this position directly. He says: “As to the doctrine of confirmation, it stands upon several authorities: where a man having been defrauded, with complete knowledge, chooses to come again in contact with the person who de-' frauded him, abandons his right to abrogate the contract, and enters into a plain, distinct transaction of confirmation. But when the original fraud is clearly established by circumstances, not liable to doubt, a confirmation of such a transaction is so inconsistent with justice, so unnatural, so likely to be connected with fraud, that it ought to be watched with the utmost strictness and to stand only upon the clearest evidence; as an act done with all the deliberation that ought to attend a transaction, the effect of which is to ratify that which, in justice, ought never to have taken place.” The same doctrine is affirmed in Sugden on Vendors, pp. 287, 288.

It seems to me Loi’d Erskine has stated the true princi-pie, and that this ease fairly binges upon that doctrine. If Davis entered into the contract of July 19th, 1865, with complete knowledge of the fraud practiced upon him in the first contract, which he was at liberty to rescind, he will be bound by it. Sugden on Vendors, 287, and cases eitedj Story’s Eq. Jur., § 306. The first contract was not absolutely void, but voidable, and, therefore, capable of confirmation’, where the party is fully informed, acts with his eyes open. But on the other hand, if Davis was not fully informed as to the fraud, at the time of the contract of July 19th, 1865, or was “ still acting under the pressure or influence of the original transaction, or labored under the delusive opinion that the first contract was binding upon him, and was thus induced to enter into the second contract, he is not bound.” Story’s Eq. Jur., §345, and note 2. And it seems to me he would not be bound by it, if he was influenced to enter into the second contract, by the declarations which Henry made before, and at the time of the making of said second contract, that Martin testified to, viz: “ that the asphaltum would be found as he had represented, at the time of the original purchase,” notwithstanding Davis doubted the truth of the statement; because that would be a continuation of the fraud, in order to obtain from Davis a new contract, by misrepresenting facts which Davis was not fully informed of, but relied on the good faith of Henry.

Taking this view of the case, I do not deem it necessary to discuss more fully the points raised by the several counsel ; and although I am inclined to the opinion, that the second contract cannot be considered as an abandonment of the right to abrogate, or as a distinct transaction of confirmation, and that upon the evidence, the court below would have perhaps acted properly, had it decreed a rescission of the contract; yet, as the depositions are not entirely satisfactory, but vague and indefinite as to the fact, whether Davis was fully informed at the time of making the second contract, that he had been defrauded by Henry, and that be intended tbe second contract to be a distinct transaction of confirmation, I think it would be proper to remand tbe cause to tbe circuit court, that tbe question may be settled by more definite testimony; or as this is clearly a case in which it would be eminently proper, by an issue out of chancery.

Therefore, as the evidence is not sufficient to sustain the decree of the court below, I am of opinion that, the same should be reversed, with costs, and remanded to the court below for further proceedings to be had therein.

The other Judges concurred.

Decree reversed,