150 Va. 132 | Va. | 1928
delivered the opinion of the court.
This is a case in which the trial court has sustained a demurrer to the notice of motion, and, the plaintiff failing or declining to amend, has entered final judgment for the defendants. This ruling presents the only question here for review.
The original notice of motion contains these allegations, substantially: That Howard W. Smith and
The defendants filed a demurrer, and plaintiff asked leave to amend his notice of motion, which was granted. Presumably, the plaintiff realized that this demurrer to the original notice would have been sustained upon the ground that he could not maintain
He then filed an amended notice. The purpose of this amended notice is to avoid the bar of the statute of frauds, and the right to recover asserted therein is based, not upon the contract, but, reciting and affirming the contract as the basis for the action, alleges deceit and fraud in its inception as the ground for recovery.
The amended notice prays for a judgment for $200,000.00 and contains these allegations: “That on the first day of May, 1924, and for a long time prior thereto, the plaintiff herein was the owner of a tract of land within the corporate limits of the city of Alexandria, Virginia, known as Temple Park, containing eleven acres, more or less, and was also the owner of a one-half interest in a corporation known as the Rosemont Park Company, said corporation being the owner of a tract of land within the corporate limits of the said city of Alexandria, Virginia, containing twenty-eight acres, more or less, and known as Rosemont Park; both of said tracts of land being subject to an indebtedness of about $25,265.50, said indebtedness was evidence by certain promissory notes secured by a deed of trust conveying said tracts of land to the defendant, Howard W. Smith, as trustee. That in addition to this, the plaintiff owed fifty-eight promissory notes for the sum of five hundred ($500.00) dollars each, payable in three years, in the total sum of twenty-nine thousand ($29,000.00) dollars, bearing interest at the rate of six per cent per annum until paid, secured by a deed of trust conveying the undivided one-half interest in the said Rosemont Park to the said Howard W. Smith, as trustee.
“That the said Howard W. Smith and W. P. Woolls on, towit, on or about the first day of April, 1924, while still purporting to be acting as such attorneys, for and on behalf of the said plaintiff, in the aforesaid matters, advised the plaintiff to allow the payments on the notes, secured by the first deed of trust on said two tracts of land, to become in default for the purpose of having said property sold and thereby clearing up certain litigation which, as he was advised by the said attorneys, affected the title to the said property; that the said Howard W. Smith and W. P. Woolls, then and there, well knowing that they did not intend to finance for the plaintiff’ the purchase of said property when it should be sold under the first deed of trust that was on the two tracts of land as aforesaid, but the said Howard W. Smith and W. P. Woolls contriving an,d fraudulently intending, craftily and subtly to deceive and injure the said plaintiff, and with the intent that the said plaintiff should rely upon the said Howard W. Smith and W. P. Woolls, and to induce said plaintiff to refrain from making other arrangements to finance the purchase of said property, on the day and year last aforesaid, fraudulently and deceitfully informed said plaintiff and agreed with said plaintiff, that they were in a position to finance and that they would finance for the plaintiff the purchase of the said property when the said property was sold under the aforesaid first deed of trust.
“That thereafter, to-wit, on or about the 1st day of May, 1924, the said Howard W. Smith and W. P. Woolls, in furtherance of their scheme to defraud and deceive the plaintiff, informed the plaintiff that they would not finance for the plaintiff the purchase of the said property, and that the said Howard W. Smith and W. P. Woolls, then and there, secured the defendant, Chas. C. Carlin, to purchase the said property at said trustee’s sale for and on behalf of and for the use and benefit of the said plaintiff. The said Howard W. Smith, W. P. Woolls and Chas. C. Carlin representing to the plaintiff that he the said plaintiff should have thirty days from the date of the said sale of the-said property, in which to re-finance the purchase of the said property and make settlement with the said Howard W. Smith, trustee, for the purchase price of the said property, the said Chas. C. Carlin to receive from the said plaintiff the sum of $2,800.00 for his services, which said sum the plaintiff agreed to pay, and upon the payment of the purchase price for said property, it was to have been conveyed to said plaintiff by the said Howard W. Smith, trustee. All of which statements, representations and agreements were then and there made by the said Howard W.
“That on, to-wit, the 15th day of May, 1924, the said defendant, Chas. C. Carlin, at the instance and request of the said defendants, Howard W. Smith and W. P. Woolls, and with the intent to defraud the plaintiff of his right, title and interest in said property, did cause the said property to be conveyed to the said defendant, John A. Massie; that the said John A. Massie well knowing the premises, and well knowing the fraud that has been imposed upon the plaintiff as
“The plaintiff further alleges that on the 8th day of July, 1924, a certificate of incorporation was filed with and recorded in the office of the Secretary of the Commonwealth of Virginia, creating the aforesaid corporation, known as Temple Park, Incorporated, which as appears herein is seven days subsequent to the date of the deed from John A. Massie, conveying title to the tract of land known as Temple Park to the said corporation.
“The plaintiff further says that on the 13th day of August, 1924, a certificate of incorporation was filed with and recorded in the office of the Secretary of the Commonwealth of Virginia, creating the aforesaid corporation known as Rosemont Improvement Company, Incorporated, which was the same day the said John A. Massie conveyed to the said corporation the tract of land hereinabove referred to as Rosemont Park.
“By means and in consequence of which representations and affirmations as set out in this notice of motion, and as made by the said defendants to the plaintiff as aforesaid, the said plaintiff not knowing to the contrary, but believing that the defendants, Howard W. Smith, W. P. Woolls and Chas. C. Carlin, were acting in good faith at the time the said representations and affirmations were made to the plaintiff, as set out herein, and the plaintiff acting in reliance upon said representations and affirmations, and as a direct result thereof the said plaintiff was damaged to the extent of two hundred thousand ($200,000.00) dollars.”
To this notice defendants filed a general demurrer, specifying these grounds:
“1. That the said notice of motion is based on an alleged parol contract for the purchase of land upon which no action can be brought under section 5561 of the Code of Virginia.
“2. That the said notice of motion does not allege that plaintiff ever performed Ms undertaMng as set forth in said motion, or tendered payment of the purchase price of said property witMn tMrty days of said sale.
“3. Because said notice of motion does not allege that the plaintiff ever tendered to the defendant, C. C. Carlin, for services, as set forth in said notice, the sum of $2,800.00, or any other sum.
“4. Because said notice of motion does not allege that said Lloyd was in a position to, and offered to, and*144 was ready and willing to finance the purchase of said property within thirty days from the date of said sale.
“5. That said notice of motion does not allege that said Lloyd by reason of said alleged statements and representations by the defendants, Howard W. Smith and William P. Woolls, was prior to the sale of said property induced to refrain from making other arrangements to finance the purchase of said property.
“6. That said notice of motion does not allege that the plaintiff ever paid or offered to pay to the said defendants, or to any or either of them, any consideration for the performance of the alleged statements, representations and/or agreements, or any part thereof.
“7. Because the said notice of motion does not state any cause of action against the said defendants or either or any of them.
“8. Because said notice .of motion does not allege in what way plaintiff acted in reliance upon the alleged representations and affirmation set forth in said notice of motion.”
Courts, as they should be, are always alert to discern fraud, and when discovered, to afford proper relief against it.
The rule of law relied upon in the amended notice is elaborately discussed in note to Palmetto Bank & Trust Co. v. Grimsley (134 S. C. 493, 133 S. E. 437), found in 51 A. L. R. 46.
The amended notice, then, which is based upon allegations of deceit and fraud, states substantially the same facts as were stated in the original notice, but alleges that the promises and agreements which were made to the plaintiff by the defendants as inducements to him to rely thereon were made by the defendants with intent to deceive and defraud, and with the intent and purpose on their part not to perform their promises.
There are, however, some real and apparent exceptions. The courts are not agreed as to all of these exceptions, but there is much authority to the effect that an action in tort for deceit and fraud may sometimes be predicated on promises which are made with a present intention not to perform them, or on promises made without any intention to perform them. It has been stated that the gist of fraud in such case is not the breach of the agreement to perform, but the fraudulent intent. In the perhaps vain but laudable effort to maintain entire verbal consistency, some courts have held that the fraudulent purposes of the promisor and his false representation of an existing intention to perform, when such an intent did not exist, is the misrepresentation of a fact. 26 C. J. 1093; Hill v. Gettys, 135 N. C. 373, 47 S. E. 449. It has been said that the state of the promisor’s mind at the time he makes the promise is a fact, and one which is exclusively within the promisor’s own knowledge; so that, if he represents his state of mind — that it, his intention — as being one-thing when in fact his purpose is just the contrary, he
This general language from Metcalf v. Hart, 3 Wyom. 513, 27 Pac. 900, 913, 31 Pac. 407, 31 Am. St. Rep. 156, is worthy of repetition: “It would be rash to attempt to give a perfect definition of fraud. Many eminent jurists have attempted it.' None have succeeded. The best definitions given admit of so many exceptions as to greatly impair their usefulness in judicial discussion. The only safe way seems to be to define, or rather describe, the fraud suspected to exist in any given ease, by comparison with similar cases selected from the reports. Of all the attempted definitions to be found, it seems that none are more satisfactory or instructive than merely to say that fraud is unfair dealing; and when, through inducements held out by one person, even only by means of a promise by which another person is influenced to change his position so that he cannot be placed in statu quo, and will be seriously damaged unless the promise is fulfilled, then the refusal to perform is fraud. Any transaction that outrages our sense of justice or shocks the conscience of an honest man may well be viewed with suspicion, and scrutinized closely.”
So it has been frequently held that fraud may sometimes be predicated upon the failure to perform a promise where the promise is the device to accomplish
Mr. Williston thus construes the decisions on this point: “It is frequently said that a promisory statement cannot be the basis of an action for deceit, and a prediction of future events is at best a statement of opinion. It is undoubtedly true that failure to perform a promise cannot amount to a fraud. And in many jurisdictions, without consideration of the question whether a promise was made with an intention not to perform, it is held that the making of the promise cannot be an actionable fraud.” (Citing among other cases Watkins v. West Wytheville Co., 92 Va. 1, 22 S. E. 554.) “It has been pointed out, however, that when a promise is made with an intention not to perform it, the promisor is guilty of a misrepresentation — and in a number of cases, generally of recent date, the doctrine seems to be broadly accepted that a promise which the promisor does not intend to carry out may have been a misstatement of a material fact.” 3 Williston on Contracts, section 1496.
It is upon such alleged deceit and fraud that the plaintiff here bases his action. We are of opinion that an action for such deceitful and fraudulent promises as are here alleged may be maintained, but only where there are supporting allegations of diligence and readiness on the part of the plaintiff and refusal to perform by the defendants and the resulting damages. In a ease like this such supporting allegations are necessary.
Adverting then to the amended notice in this case, we find that it- contains some of the allegations necessary in such a ease, but that it omits some which are essential.
This rule requiring prompt disaffirmance of the-contract where a fraud is alleged, is everywhere recognized, and is thus stated in 2 Pomeroy’s Equity Jurisprudence (4th ed.), section 897: ‘ ‘All these considerations as-to the nature of misrepresentations require great punctuality and promptness of action by the deceived party upon his discovery of the fraud. The person who has been misled is required, as soon as he learns the truth,, with all reasonable diligence, to disaffirm the contract, or abandon, the transaction, and give the other party an opportunity of rescinding it, and of restoring both of them to their original position. He is not allowed to go on and derive all possible benefits from the transaction, and then claim to be relieved from his own obligations by a rescission or a refusal to perform on his own part. If after discovering the untruth of the-representations, he conducts himself with reference to the transaction as though it were still subsisting and binding, he thereby waives all benefit of and relief from, the misrepresentations.”
If the fraud so alleged was in fact perpetrated, the plaintiff must have known of it within thirty days, from the date of the sale, which was May 3, 1924; whereas, this action was not instituted until nearly two- and a half years thereafter — that is, on October 5, 1926, and the original action was based on the contract alleged. This delay is absolutely unexplained and. seems to be inexplicable in view of other allegations of' the notice. The inference is that the plaintiff was-either unable or unwilling to exercise his option.
Neither fraud nor damage can be presumed, and the allegation of a mere purpose to commit fraud cannot be made the basis of an action. The purpose must be consummated, the injury inflicted. In this case clearly the duty to reconvey did not and could not arise unless and until the plaintiff had himself performed, or offered to perform, the conditions precedent. He has suffered no damages unless he could have been ready to pay the sum admitted to be required of him
The principle to which we are adverting is thus expressed in Clark and Others v. White, 12 Peters 196, 9 L. Ed. 1054: “In equity, as in law, fraud and injury must concur to furnish ground for. judicial action; a mere fraudulent intent, unaccompanied by any in-injurious act, is not the subject of judicial cognizance.”
In Hope v. Shirley (Tex. Civ. App.), 187 S. W. 973, it is thus succinctly stated: “It is well settled by the authorities that even if a fraud be practiced, no cause of action arises unless some damages which are legally recoverable as a result thereof are alleged and shown.” '
Many cases sustain this succinct statement of the rule, found in 12 R. C. L., section 10, page 239: '“The ground of the action df deceit is fraud and damage, and when both concur the action will lie. Moreover, both must concur to constitute actionable fraud, 3b common statement of the rule being that neither
In 2 Pomeroy’s Equity Jurisprudence (4th ed.), section 898, the correct rule is thus stated: “The-statement of facts of which it (fraudulent misrepresentation) consists must not only be relied upon as an inducement to some action, but it must also be so mate-' rial to the interest of the party thus relying and acting upon it that he is pecuniarily prejudiced by its falsity— is placed in a worse position than he otherwise would have been. The party must suffer some pecuniary loss or injury as the natural consequence of the conduct induced by the misrepresentation. In short, the representation must be so material that its falsity-renders it unconscientious in the person making it to enforce the agreement or other transaction which it has caused. Fraud without resulting pecuniary damage is not a ground for the exercise of remedial jurisdiction, equitable or legal; courts of justice do not act as mere tribunals of conscience to enforce duties which are purely moral.”
Black on Rescission & Cancellation, section 567, says this: “In order to obtain a rescission of a contract, it is necessary for the complaining party to show that he has suffered actual loss or injury by reason of it, or that he is threatened with substantial loss or injury which will fall upon him if the contract is not annulled.
Black gives the reason for this rule in section 37: “Resulting Loss or Damage to Defrauded Party. — -As a general rule, a fraud which causes no injury is not legally cognizable; and it is an essential part of the definition of fraud as a cause for the intervention of
In 9 Cyc., page 431, it is said: “Damage Must be Shown. — As in an action for deceit, so also in order to avoid a contract for false representations, it is essential that the party complaining shall have been prejudiced or injured by the fraud.”
In Elliott on Contracts, Vol. 1, section 91, page 163, this appears: “Before fraud will rise to an action for deceit, or for rescission, or before a sufficient defense can be predicated thereon in an action on the contract, the fraud practiced must result in injury. The principle of damnum absque injuria applies.”
Russell v. Industrial Transportation Co., 113 Tex. 441, 251 S. W. 1034, 258 S. W. 462, 51 A. L. R. 1.
There is then no basis for a recovery under the peculiar facts of this ease in the absence of any allega
While the plaintiff had the option to redeem property, he was under no obligation to do so, and the rule stated in Matthews v. LaPrade, 130 Va. 408, 107 S. E. 795, applies, though that was an action for breach of contract and not an action for deceit and fraud based upon a contract. It is thus expressed: “The original notice nowhere alleges that the plaintiff ever exercised the option given him, nor does it allege any facts which would in any way aid the description of the land given in the receipt copied into the notice nor any facts which would bring the plaintiff’s claim to damages within the exception to what he states is the general rule prevailing in this State in such cases. The demurrer was, therefore, properly sustained.”
Every case has its own peculiar facts, and in this case it is impossible to determine from the facts alleged whether or not the defendants would have perpetrated the fraud which is charged, until the plaintiff had, in some way, indicated his desire to exercise his option. The presumption from the allegation of the notice is either that he elected not to do so, or was not able to do so. The contention that the action can be maintained by merely alleging that the parties defendant made the contract with the fraudulent intent not to perform and fraudulently failed to perform, in the absence of any allegation that the plaintiff ever even
The ease presents other interesting questions, but this is decisive. In the absence of an allegation that hewas, oreouldhavebeen, ready to pay the $2,800.00 that he was under obligation to pay Carlin, and of an .allegation that within thirty days he could have been or was ready, able and willing to pay the purchase money, he is not entitled to maintain the action. The fair construction of the notice itself is that notwithstanding the conveyance to Carlin and the later conveyance to Massie, with notice of the alleged agreement with the plaintiff, and even after the conveyance of the property to the two corporations, the defendants still had control of it and could have had it reconveyed to the plaintiff if he had supplied the consideration and .so performed the necessary conditions precedent.
There .is no Virginia case which has involved a precisely similar question, and there are none in which kindred questions as to fraud have been adjudicated which are contrary to the conclusion which we have stated.
There is no error in the judgment of the trial court sustaining the demurrer.
Affirmed.