Doggett v. Emerson, 3 Story 700

Doggett v. Emerson

3 Story 700 | U.S. Circuit Court for the District of Maine | 1845

STORY, Circuit Justice.

This is one of that unfortunate class of cases, which grew out of the marvellous spirit of speculation in timber lands, which a few years ago pervaded the whole state of Maine, and spread such wide ruin and disaster in many directions, and produced a most sad spectacle of delusion and moral infirmity. The cause has been argued at great length, and with great ability. I shall not pretend to go over the complicated facts presented in the printed record; but shall principally advert to those questions, which, in my judgment, involve the substantial merits of the case, and to those conclusions of facts, which I have drawn from a full survey of the evidence, in their application to those questions. The material questions appear to me to be these: In the first place, was the plaintiff, Doggett, induced to make the purchase by any gross misrepresentations or mistakes, on the part of Williams, as to the quality of the land in the township, or the amount and quality of the timber thereon? In the next place, was Williams the agent of Emerson, and the other co-defendants, in the negotiation and sale to the plaintiff? In the next place, do the lapse of time and the intervening circumstances interpose any bar to the present bill, supposing the other questions to be decided favorably to the plaintiff?

Upon the first question, it does not appear to me that there is any reasonable ground to doubt, that the purchase of the plaintiff was made upon an entire credit given to the representations of Williams of the quantity and quality of the timber on the township. The plaintiff resided in Boston, and, confessedly, had no knowledge of timber lands, and had never seen the township. He musí, therefore, have placed implicit reliance upon the statements of Williams. Now it is quite immaterial, in a case of this sort, whether Williams was himself at once the deceiver and the deceived. The question is not, whether he acted basely and falsely; but whether the plaintiff purchased upon the faith of the truth of his representations. If the plaintiff did so purchase, then, upon the settled principles of courts of equity, the bargain ought to be set aside as founded upon gross misrepresentation and gross mistake, going to its very essence and objects. The whole doctrine turns upon this, that he who misleads the confidence of another by false statements in the substance of a pinchase shall be the sufferer, and not his victim. I had occasion to consider this subject somewhat, at large in the case of Daniel v. Mitchell [Case No. 3,562]. It came also under consideration in some of its aspects in the case of Small v. Attwood, 1 Younge, 407, 459, and was elabor*816ately discussed in the house of lords, in the same case, on an appeal from the decree of the court of exchequer. Now it is manifest that the sole object of this purchase, was in the then inflated and exaggerated state of the market respecting timber lands, the timber on the township. The object was, not settlement or agricultural purposes, but speculation on the sale of the timber on the township. The quantity and the quality of the timber, were, if not the sole, the main object of the bargain. It appears to me, that it is high time, that the principles of courts of equity upon the subject of sales and purchases should be better understood, and more rigidly enforced in the community. It is equally promotive of sound morals, fair dealing and public justice and policy, that every vendor should distinctly comprehend, not only that good faith -should reign over all his conduct in relation to the sale, but that there should be the most scrupulous good faith, an exalted honesty, or, as it is often felicitously expressed, uberrima fldes, in every representation made by him as an inducement to the sale. He should, literally, in his representation, tell the truth, the whole truth, and nothing but the truth. If his representation is false in any one substantial circumstance going to tlie inducement or essence of the bargain, and the vendee is thereby misled, the sale is voidable; and it is usually immaterial, whether the representation be wil-fully and designedly false, or ignorantly or negligently untrue. The vendor acts at his peril, and is bound by every syllable he utters, or proclaims, or knowingly impresses upon the vendee, as a lure or decisive motive for the bargain. And I cannot but believe, if this doctrine of law had been steadfastly kept in view, and fairly upheld by public opinion, the various speculations, which have been so sad a reproach to our country, would have been greatly averted, if not entirely suppressed. by its salutary operation.

In the present case, the representations made by Williams, and confirmed by the certificates, which he produced with such an ambitious display, as the main inducements to the purchase, are, as is now conceded, grossly false. It is impossible, perhaps, at this moment to say exactly the amount of timber, which, at the time of the sale, was standing on the township. In all probability it does not contain more than from four to eight millions of feet of merchantable timber. In 1S31, one Kelsey was employed by the land agent of the state of Maine, to survey and examine it, and he represented it to contain eighteen millions of feet; whereas, Emerson himself, in his memorial to the state commissioners in 1S41, made to procure a reduction of the bonds given to the state, avers under oath, that “it does not contain three millions, probably not one million of merchantable timber of the first quality;” so that he treats Kelsey’s survey as a very gross exaggeration, founded in positive mistake. And the commissioners of the state,, in their report, after full examination of the evidence, stated, that the township “did not contain pine timber of a sound and valuable quality to the amount of more than one fourth part of what was estimated in the survey and filed notes of the surveyor Kelsey.”' But what shall we say to the certificates of Towle, and others, shown to the plaintiff by Williams at the time of, and as inducements for, the purchase? It is said that these certificates were not procured by Emerson and the other defendants; but they were procured by other persons contemplating a purchase from the defendants, and were known to, and used by Goss, the brother-in-law of Emerson; and being in the same house with him, and interested in the sale of the township, were put into the hands of Williams, by Goss, for the purpose of being used in procuring purchasers. Again, it is. said, that Emerson and the other defendants had no knowledge, that the certificates were used or designed to be used by Williams in accomplishing a sale of the township; and they, therefore, are not partners to, or to be affected by his acts. But if Williams was, and acted as their agent in the sale, then his representations bind them, or the sale must be treated as a mere nullity. If they did not authorize the use of the certificates nor the representations of Williams, and he was their agent, then one of two things must be the result; either, that the sale, having been made by the agent upon false material representations binds them to make those representations good, they having afterwards adopted and confirmed the sale; if so, they must be bound by it cum onere, with all the incidents; or, the sale having been without authority from the defendants, and procured by false material representations of Williams, is not binding, either upon the defendants or upon the plaintiff. In short, the sale is utterly void; the plaintiff, as purchaser, cannot be bound by a sale made by an agent, who falsely represents the quantity and quality of the thing sold, for if he is to bo bound by the sale, it is because the agent has authority to make the representations as well as the contract. And the defendants cannot avail themselves of the contract, as a sale by their agent, and repudiate the accompanying representations. The defendants are bound by the contract of sale in its totality, or not at all; so that the actual posture of the case, if it be one of agency by Williams, is either a nullity throughout, or binding throughout. The principals have no right to bind the other party by a ratification of part of his acts and transactions, and by a rejection of the rest. They must take the whole or none. The representations are a part of the res gestae, and not separable from the sale. The question as to the agency of Williams will arise hereafter. Now, the certificates above alluded to. which constituted the basis, as it were, of the purchase, *817represent the township to contain from one hundred and fifty to two hundred millions of timber. So gross an exaggeration, so extravagant an estimate, never could have been made in good faith by the certificate makers —notwithstanding their affected sincerity— nor could the certificates have been intended otherwise than to mislead and cheat purchasers, credulous, if yon please, but on that very account more easily seduced and deceived. This record, as well as some others of. a kindred character, which have already been before this court, exhibit a very low standard of morals and duty—if one might not more strongly characterize it as a most unscrupulous profligacy—much in vogue among this class of certificate makers. Admitting, that Williams himself was a dupe of the deception, (which is not very easily to be admitted), the aggravation of the case is not lessened as to the plaintiff and other purchasers. They believed in him and in the certificates, and the plaintiff made the jmrchase upon the faith of both. It was, therefore, either a case of mutual mistake' or of gross misrepresentation in a matter vital to, and constituting the very, basis of the bargain. If the law would tolerate such a bargain, which I am very slow to believe, it would find no countenance in a court of equity. There is not any ground to suppose, that Emerson was not acquainted with the contents of these certificates. On the contrary, if Williams is to be believed, his testimony fully establishes, that Emerson not only knew the contents, but corroborated them; and there is some other independent testimony in the record to the same effect. There is, besides, a not unimportant ingredient in this case, which ought not to be passed over in silence. The paper given by Emerson to Williams, (of which we have several versions in the case not differing substantially from each other in their import on this point,) affirms, that Williams is to hayo the refusal of three fourths of the township at six dollars and fifty cents per acre;—the terms one third cash, one third in one, and one third in two years, with interest annually. Now from this paper it would seem, that Emerson was to retain one quarter part on his own account; and that the real price was truly stated. In point of fact, the infice is untruly stated, and as it would seem purposely. At all events, it could not but mislead, as it was considerably higher than the actual bargain, and would have a tendency to show, that Emerson placed a higher value on the land than was the truth. The other defendants deny, in their answers, that they ever authorized Emerson to sell any portion less than the whole township, or that they ever authorized him to make such a contract of refusal as he gave to Williams. Be it so. They subsequently ratified the sale as made to the plaintiff, and are bound by it. as much as if they had given a precedent authority. There is some attempt made to explain the ground of this false statement of the price in the paper given by Emerson to Williams; but I must say, that it is wholly unsatisfactory, and looks very much like an afterthought. Besides, the paper would naturally lead every purchaser to suppose that the price was six dollars and fifty cents for every acre in the whole township; and not upon a deduction on account of an excess of land covered with water in the township beyond the usual quantity. Nay. such is the obvious purport of the language used in it. Emerson could not but know, that the paper would be shown to purchasers; nay, that its known object must have been to procure purchasers. Why then should he have suffered them to be misled by a statement now admitted to be untrue on the face of the paper?

Passing from this, let us proceed to the next question, and that is, whether the sale was made by Williams, as the agent of Emerson and the other defendants, or on his own sole account as principal. I am aware of the positive1 denial of Emerson of any such agency; but, looking at all the facts, is not the agency substantially an inference of law? If Williams is to be believed, he acted as the agent of Emerson and the other defendants, and not upon his own sole account as a purchaser. It is said, that Williams is an interested witness; but it seems to me, that his interest is no more than that of any other person, called as a witness to establish his agency in a particular transaction; and the competency of such a witness is a known exception, in the law of evidence, to what may be deemed the general rule. Then, again, his credibility is assailed, upon the ground of his mistakes and the frail state of his memory. But the ex parte deposition, taken in May, 1842, before his apoplectic attack, if it be not primary evidence, is, at least, corroborative evidence of his deposition in November, 1842, to the general truth of his statements, as to all the material facts on which I rely upon the present occasion; and his testimony derives no small support incidentally from other witnesses. The main fact, whether he was a purchaser or an agent, is scarcely a matter in which he could be under any error or mistake. The paper given to Williams by Emerson is by no means inconsistent with the suggestion, that he was an agent. It is precisely what would take place, if the design was to conceal the agency, and yet at the same time to give the agent an interest and premium upon all he could sell the township for beyond a fixed price. Such a course of proceeding is not unknown in general commercial business; and this court has had occasion to know, that, in the recent timber land speculations, it was not an uncommon expedient. It was not unimportant to give to a real agent, the appearance and character of a purchaser on his own account. His representations would be likely to be listened to with more respect and confidence, as a purchaser, than as an agent. *818clothed with the instructions and interests of others. The subsequent facts corroborate this view of the matter. All the defendants, except Emerson, deny, that they ever authorized him to give any such paper of refusal, or to sell sub modo. Emerson was to sell for all of them, and to sell the entirety of the township; and certainly he might consistently employ a sub-agent to effect the sale upon such terms as he, Emerson, might dictate and subsequently sanction. Williams never made any deed; but Emerson acted as the substantial party in interest, and the title from the state to the purchasers was procured by and through Emerson. So that, whatever was the form of the transaction, Emerson acted as principal for the defendants in procuring the deeds from the state, and he received the purchase money and took the notes in his own name. Williams incurred no responsibility either to Emerson or to the purchasers in the final arrangements, whatever he might have done in the antecedent steps of the negotiation. ■ Indeed, it is very difficult to see, how, upon the admitted facts, he can be treated .as a purchaser from Emerson—or as principal selling to the plaintiff and the other persons, interested in the sale. He never acquired any title to the property himself. How could he then be treated otherwise than as an agent, not in form, but in substance, negotiating for Emerson and the other defendants? It is true, that he was permitted to appear as a principal; but it is equally true, that he was a mere conductor rei, subject to the control and confirmation of the sale by Emerson as the owner of the property.

[NOTE. This cause was heard in vacation, by agreement of the parties, but Judge Stor.v died before the decree sketched out by him was entered. A motion to enter the decree at the next term was granted by Judge Woodbury over respondents' objections. See Case No. 3,9(11. Afterwards the cause was heard on exceptions to the master’s report, and also upon an application of respondent Norcross to put in evidence, under a cross bill, a discharge obtained by him in bankruptcy. See Case No. 3,962.J

In considering the testimony of Williams, I have not adverted to the depositions of Moses Paul and Joseph Hanson, introduced into the supplemental record; not that, if regularly introduced into the case, they would in any manner change my opinion as to the value of his testimony; but simply because, being irregularly and improperly taken, and being irrelevant to the matters of the supplemental bill, they must be suppressed.

In the next place, as to the lapse of time. This in many cases is a most important consideration, and weighs much, and sometimes, “est maximi et momenti ponderis,” especially when there has been a great change of circumstances as to the character and value of the property, in the intermediate period; and a fortiori, where the party complaining has been fairly put upon his diligence, and has had ample means of inquiring as to all the material facts, and has chosen to lie by in gross indifferenceand indolence. This question does not indeed seem fairly open upon the present pleadings. The bill charges that the plaintiff first discovered the gross fraud and imposition prac-tised upon him in July, 1841, and, as it should seem, by means of the memorial of Emerson to the commissioners, in March, 1841, and their report thereon made in July, 1841. The answer sets up no denial to this statement, of the bill; and does by implication admit its correctness. But whether this be a just inference or Dot, it seems to me, that the lapse of time cannot interpose any bar to the relief asked by the bill, if otherwise well founded; for the memorial of Emerson is of itself clear proof, that he was before that time fully aware of all the material facts; and there is no pretence to say,- that he communicated them to the plaintiff. Neither is it shown, that the plaintiff had, by any other means, obtained suitable information to put him upon inquiry. In short, for aught that appears in the case, the plaintiff never discovered the gross falsity of the representations made to him until the memorial and report brought it home to his knowledge. Besides, as was remarked by the lord chancellor in Partridge v. Usborne, 5 Buss. 195, 232, when one party to a contract makes a positive representation, it is not laches in the other not to proceed immediately to verify that representation. At all events, the defence is not put upon any such ground as the lapse of time, and knowledge by the plaintiff of the material facts, so as to have called upon him for precise proofs of his real situation and of the time when he first discovered the full nature and extent of the deception practised upon him. So that it seems to me, that the court is not called upon in this case, by the state of the pleadings and evidence, to act upon any such defence as the lapse of time, whatever, under other circumstances, might have been the just value of any such defence. Upon the whole, without going more at large into the merits of the case, my opinion is, that the contract of sale with the plaintiff ought to be set aside, as founded in gross mistake and gross misrepresentation, and that the plaintiff ought to be restored to his original rights, and receive back the purchase money, upon executing a due re-conveyance to the defendants, and making such other allowances as upon a hearing before a master shall, under all circumstances, be equitable and just