41 Minn. 337 | Minn. | 1889
This is an action brought to rescind a contract by which the plaintiffs purchased from the defendants Hill and Browne certain shares in the capital stock of the defendant the Clyde Coal Company, a corporation formed for the purpose of mining coal in certain lands in the state of Iowa, to recover the money paid upon the purchase, and secure the delivery to plaintiffs of promissory notes executed by them for part of the purchase price. The ground upon which such rescission is sought is that, to induce them to make the purchase, the defendants Hill and Browne made to plaintiffs certain false representations as to material facts, relying upon which they
Assuming that the facts as to which, according to the findings, the false representations were made, were material and such as the plaintiffs, if they believed them, had a right to rely and act upon, there is really no question of law in the case. That one who, making a purchase, does not get by it substantially what, from the false representations of the vendor as to material facts, he had a right to believe, and does believe he is purchasing, may have a rescission of the contract of purchase, if he is guilty of no laches, is beyond question. It would be the grossest injustice to hold a party to a purchase, where, solely through the fault of the other party, he gets only what he did not intend to buy. ' And to this right of rescission it is not essential that the false representations were made with actual intent to defraud. The right is not based upon actual fraud, but on a material mistake of facts caused by the fault of the other party. And it is, in general, a fault in a party to negotiations for a contract to state positively as a fact, as though he knew it to be such, what he does not know to be the fact, where the other party has a right to believe he knows it to be a fact, and does not himself know and has not equal means of knowing what the fact is..
Nearly all that the appellants contend for is that the evidence does not sustain the findings of fact. And we are urged to determine the objections upon a rule of decision other than that which the court has, in general, always applied in the review of findings of fact by the court below. That rule has been to sustain such findings where the evidence fairly leaves a question as to what the fact is. And, following that rule, we never reverse a finding merely because we may think from the record there is a preponderance of evidence against the finding, so that the court below might well have found the other way.
The appellants urge that in an action for rescission of a contract, the allegations of the plaintiff should be sustained by more full, clear,
The Clyde Coal Company had a capital stock of $300,000. Its property, which this stock represented, consisted of 1,560 acres of land lying in three parcels, supposed to be valuable coal lands, in the state of Iowa. The value of the land and consequently of the stock depended almost wholly upon the existence of available veins of coal in the land. It is upon the falsity of representations in respect of this, alleged to have been made by defendants to plaintiffs during the negotiations for the purchase by the latter of the stock, that the .action is based. These representations are claimed to have been made in conversations of defendant Browne with plaintiffs; in a prospectus prepared by Browne and issued by the company, and accompanied by a map showing the location of drill-holes, the depth at each hole at which coal was found, and the thickness of the vein at each hole; and in a letter written by the defendant Hill to one of the purchasers. Much that was said in these conversations, and written in the prospectus and letter, amounted, as the court found, only to expressions of opinion by the defendants as to the existence of coal in the lands, and their belief and expectation in the value of
Two of the assignments of error are to tiie effect that the court erred in finding from the evidence that the plaintiffs did rely and had a right to rely on the representations so made to them. There is direct evidence sufficient to justify the court in finding the fact that plaintiffs believed the representations and were induced by their belief in them to enter into the purchase. Whether they had a right to rely and act upon them depended on their materiality to the subject of the negotiations. The court found as a fact: “The drilling of holes in lands, properly done, discloses the character of the different formations below the surface at the points where said holes were sunk, and the existence or absence of coal and the quality thereof if present, the thickness of the deposit, and the distance beneath the surface; and such tests are of great importance in determining the value of lands for coal-mining purposes.” The evidence abundantly sustains this'finding. The statement of defendants that they expended $20,000 and three years time in making the drillings, and that they referred to them as demonstrating the existence of valuable coal upon the land, would without other evidence be sufficient to prove as against them the importance and materiality of the borings in arriving at a conclusion as to the existence and the value of coal deposits.
As found by the court below, the defendant' Hill had no personal knowledge of the lands. He relied on the reports of the drillings, and believed they were made with great care, and that they were accurate and reliable, and had no reason to believe otherwise, and made the representations in good faith and without intent to deceive. He appears to have made the representations relying upon those that had been made by Browne to him. The court also finds that Browne supposed the drillings were correctly made and the reports of them accurate, and he made the representations without intent to deceive save as indicated in the following finding of the court, to wit:
“One McBirney who was employed by said Browne to drill some of said holes, including hole No. 5, so called, upon a tract of said
. The evidence was sufficient to sustain these several findings of fact, unless it be the finding that on account of the other facts so found, “said land and said stock were much less valuable than if the facts had been as reported by said McBirney.” This involves the inquiry whether the tests upon which plaintiffs relied to sustain their allegation that the defendants’ representations were materially untrue, were sufficient to justify the conclusion that the variance between the facts as plaintiffs had a right from the representations to believe them to be, and the facts as they actually were, would materially affect the value of the lands as coal lands. The tests consisted in drilling five holes to reach what the reports of McBirney’s drillings indicated as a vein of coal at and in the vicinity of the hole designated by him as No. 5, and by sinking a shaft four feet by five, or ■ three feet by five, along the side of that hole. Although as the evidence shows the veins of coal in the Iowa fields are irregular, in some places thicker, in others thinner, and sometimes unexpectedly giving out altogether, so that drillings are not absolutely infallible as showing the extent of a vein nor that it is of a given thickness throughout its whole extent, yet the evidence in the ease strongly tends to show that when carefully made they are evidence of the existence or non-existence of veins of coal, and their thickness and character and depth below the surface, and, where there are enough of the holes,
We have after considerable hesitation arrived at the conclusion that the evidence justified the finding “that said land and said stock were much less valuable than if the facts had been as reported by said MeBirney.” It is to be borne in mind that the evidence as to the variance between his reports and the fact is not for the purpose of assessing damages, but only for the purpose of ascertaining if the lands as coal lands were in fact so much less valuable than plaintiffs had a right to believe and did believe them to be from the representations made to them by defendants, that, had they known the truth, they would not have made the purchase. As a basis for as
Order affirmed.
Note. A motion for reargument of this case was denied October 3, 1889.