16 F. Cas. 1016 | U.S. Circuit Court for the District of Maine | 1846
It is a mat-ter of regret, that the bills in this case, both the original and supplemental, are not drawn with more precision. Several important matters are alleged only indirectly, and it is unusual that so many others, introduced with directness enough, are not even attempted to be proved. In the answers, also, some things are alleged, which are not responsive to the bill, and much difficulty is caused in settling first what' is duly set out in both, and next what is properly proved of that which is duly set out. But from the whole it is undoubted, that the plaintiffs intend to claim relief on account of a fraud in the sale of the land in controversy, and not on account of a gross mistake. Whether, when fraud alone is averred and a mistake alone is proved, a recovery can be had on the latter ground — the-allegations of fraud being considered broad-enough to include a mistake — need not be here considered. See on this, Smith v. Bab-cock [Case No. 13,009], Oct Term, 1846, Mass. Dist. Because, if there is not proved some falsehood or fraud, material in this transaction. it is doubtful whether the plaintiffs could recover for a mistake alone when they had so ample an opportunity to examine the land before the purchase, and undértook to make the examination, and expressed themselves satisfied with the result. On this, the case of Warner v. Daniels [Id. 17,181] may be regarded as decisive, and may be referred to for the precedents' in support of that view. It was settled there, that though means of knowledge and explanation will usually defeat a rescinding of a contract for mere mistakes, yet it will not prevent a recovery for fraud, if that was practised in important particulars. relied on by the purchasers.
If the falsehood rendered the examination less perfect and full, or made the statements of the party to be in part confided in, as in respect to details, extending personal inquiry only to general matters and general appearances, the falsehood vitiates the whole. See cases cited in Smith v. Babcock [supra], and Tuthil v. Babcock [Case No. 14,275], (Mass.) Oct Term, 1846. Thus if a vendor affirm the rent to be more .than it is, it is a fraud for which he is liable; as that lies more within his private knowledge, even if the vendee made some further inquiries. Risney v. Selby, 1 Salk. 211; Pasley v. Freeman, 3 Durn. & E. [3 Term. R.] 51; 2 Esp. 572. Otherwise, if it was not so, and the truth could easily be ascertained. Harvey v. Young, Vel. 21; Leakins v. Clissel, 1 Sid. 146.
The next question then is, whether falsehood or fraud were practised in leading the plaintiffs to purchase the land of the respondents at the high price given. If they were, the sale was void, provided they were prac-tised by either of the respondents, or by any person whom they previously employed as an agent to make the sale, or whose acts in negotiating the sale they ratified or adopted afterwards. They would be thus liable, if the plaintiffs relied mainly on the statements thus falsely made to them; though some examination of the premises and timber may have been attempted by them, but carried on slightly, or imperfectly, or erroneously in consequence of such reliance on what was false. See Warner v. Daniels [supra]; Harding v. Randall, 15 Me. 332; 2 Hayw. 240; Lit. Sel.
Nor is it material in this case, whether or not either of the respondents or their agent knew to he false what was stated by any of them, provided he did state what was not true, and it was to a material point and was relied on. A vendor, in cases like this, is not in his own person or by another to throw firebrands, and say he is in sport, or make material statements which are untrue, and excuse himself by his own ignorance.
In relation to the evidence of fraud here, it is not of that plenary character which is found in some of the cases that occurred in the speculating era of 1S33. Nor is it brought home so clearly to one of the defendants, Crosby. So far as affecting him, it is rather as a fraud in law and an avoidance of the contract in respect to him in consequence of fraud, committed by others, with whom he was associated in interest, and whose acts in making the sale he adopted, and hence is bound by their misconduct in respect to the sale, rather than from any personal behavior of his own, which is proved to be either dishonest or dishonorable.
What, then, in the first place, are the leading facts proved, from which to infer fraud? The great general fact, which is shown by full testimony, is, that the Munroe Gore, in April, 1S35, cost the respondents only $2.23 per acre; and that this was two dollars per acre more than it cost Munroe only five years previous, with timber on it then, which had 'since been sold by him for a sum equal to all the original cost. The next fact of this character so proved is, that in only four months after their purchase, without making any improvements, the complainants were by some means induced to give $8 per acre for this same land, a price nearly fourfold what it had cost; and the respondents received of it themselves, in money and notes, $6 per acre, being a net gain in those few months of near three hundred per cent. Another of these facts so proved is, that from 1830 to 1835 this tract of land had been cut over by permission of the true owner, and all the timber which the licensee deemed worth cutting removed; and that when this sale was made, which was effected chiefly on account of timber on the land, nothing m fact remained there, except from a half to one and a half thousand feet to the acre. It will at once strike every observer of these general data, that there must have been some- extraordinary mistake existing, or some extraordinary deception practised, in order to enable the respondents to sell land thus stripped of timber, to purchasers on account of the timber, and at such an extraordinary advance, within so short a period, on even the high price which the respondents had given. The times, then, were, to be sure, unusual, and almost insane. But, had the whole truth been known to the respondents, madness must have “ruled the hour,” or they could not have given $8 per acre for land on account of timber, when only a half to one and a half thousand feet of pine existed to the acre, and that, as will soon" be seen, could not then easily be got to market, nor much value be then attached to any spruce or cedar timber thus situated.
The next inquiry would naturally be, who could have any interest in misleading the plaintiffs to give so excessive a price, except the owners, who were to receive, or some agent or trustee in connection with them, who was to receive a portion of the consideration for his services in effecting such a sale? Accordingly, the position taken by the plaintiffs is, that the contract of sale, the price, and all the preliminary negotiations for the' sale were made with Nathaniel Fifield. who had a bond for the land from some of the parties in interest. The form of this bond is not very distinctly proved, though' its existence is by the evidence and circumstances satisfactorily shown. It is highly probable that the bond on its face either allowed Fifield to have the land on paying $G per acre, if taken before a specified time, and which in that form was considered on this subject, in 1S33, as constituting him an agent to sell at that price, and assumed this form in order that his statements as an apparent owner should have more weight than if he was an apparent agent merely. Or the bond on its face authorized him to sell for the owners at that price, he retaining for his services all he sold it for beyond that price. It is of little consequence which was the form, if it was in either. The evidence in support of its existence and tenor is not so distinct as it might be expected, if Fifield had not been dead, and hence he could not state the facts as a witness, or if made a party, disclose them in his answer to proper interrogatories in the bill. But I see no reason, except perhaps the subordinate interest of Boynton and Porter, who are supposed to have given the bond, why their testimony should not have been taken by the plaintiffs to prove the particulars, or at least been offered by the respondents, to rebut what is set up on that subject, if it could be rebutted. As the evidence now is, however, in respect to the existence and terms of the bond, one of the respondents, Barstow, admits in his answer, that before the sale he heard that two of the owners in interest, viz., Boynton and Porter, had given a bond to Fifield to enable him to sell. He admitted it also to Ware, and again in a letter, April 5th, 1837, he states, “We then told two of our company they had better put the land into the market at $6 per acre.” He further states in that letter that a bond was given to Fifield by Boynton and Porter, that Fifield sold the land to the plaintiffs, and then introduced them to him, and a deed was given to them. And Jones understood from Barstow that Fifield said, in behalf of all the owners to Bullard, “that the land had been bonded to
This evidence looks much like the giving of the bond to Fifield of the character named, and by arrangement of all, and like a subsequent execution of his contract, with full knowledge that Fifield had made it for them. The statements of one of a company so situated bind all. Van Reimsdyk v. Kane [Case No. 16,872]; 18 Wend. 354; 2 Hill, Ch. 100. In their answers, likewise, both of the respondents concede, that they had stated verbally, “any person should have a deed of the land who would give” therefor $6 per acre. Barstow, in his answer, says, he gave Boyn-ton verbally the refusal of all his interest at that price, and supposes Fifield acted under a belief they would sell at that, rate, and Fifield receive all he got over $6 per acre. It is to be remembered, in connection with this, that Boynton is the son-in-law of D. Barstow, and that the latter admits further in his answer, that the plaintiffs were introduced to him before the sale was completed by Fifield, as being the persons who wished to purchase the land; that Fifield informed him they had been to Bangor to examine the land, and that he understood from some quarter Fifield was to have any sum he could get per acre beyond the $6 paid over to the respondents. He admits, also, that Fifield paid him for going to Boston, and he said to Bullard, that he came there to dose the delivery of the deed and the giving of the notes and payment of the money, or in other words, “for the purpose of completing the bargain for the purchase, as it had been agreed upon by the said Fifield.”. And it is stated in several of Barstow’s own letters, offered in evidence, that the plaintiffs bought the land of Fifield and not of the respondents; and it was on that ground, chiefly, for some time Barstow hesitated to make any compromise with the plaintiffs. So he stated also to Ware. The testimony is explicit from several witnesses, that Fifield in fact made the negotiations for the sale, arranged the terms, fixed the price, and probably received the two dollars per acre over the six, which the plaintiffs agreed to give.
After all this, it is hardly permissible to deny that he acted prominently in the transaction; that his acts, so far as regards the sale at $6 per acre, were adopted or carried into effect by the respondents; that being thus perfected by them and not him,-he never having obtained the title himself, nor conveyed it to the plaintiffs, all he did must be regarded in the light of an agent, and not of a principal; that his conduct for the owners was not only thus ratified, but had the previous express assent of two of those interested in the premises, and the subsequent knowledge of his participation, having the refusal and a bond, without disapprobation, by Barstow, one of the respondents and the acting owner, and the general assent of the other, Crosby, to a sale to any body who would give $6 per acre. He left the details of the business to be arranged by the others interested, on account of the pressure of his own individual concerns.
Under these circumstances, it has been settled in the case of Doggett v. Emerson [Case No. 3,960], that the owners cannot take the benefit of acts or negotiations like those of. Fifield, without bearing the burthen of them, or any liabilities growing out of them, on account of any falsehoods or frauds of his that accompanied them and were material to the sale. 12 Mod. 490; 1 Bos. & P. 406; Story, Ag. 455; 1 Durn. & E. [1 Term R.] 710; 10 Mass. 327; 1 Bailey, Eq. 343. It has also been settled, in the first named case, that this agency, independent of the circumstances which exist here and did not there of an agency created, or known or recognized by some of the owners themselves as by Bar-stow, one of these respondents, holding with the other all the legal title, is. to be inferred in law, with all its consequences and adjuncts, civiliter, if the owners choose to carry into effect the contrtict made by and under it. It is a subsequent ratification of it. Clark v. Van Reimsdyk, 9 Cranch [13 U. S.] 153; [Bank of Columbia v. Patterson] 7 Cranch [11 U. S.] 299; Long v. Colburn, 11 Mass. 98; Cushman v. Loker, 2 Mass. 106; Ward v. Evans, 2 Salk. 442; 1 Metc. (Ky.) 650; 1 Dess. 461, 470. See, also, Daniel v. Mitchell [Case No. 3,562]; 15 Wend. 114; 4 Durn. & E. [4 Term R.] 39, 41, 177; Lanborn v. Stetson [Case No. 12,291]; 3 Hill, 552. So it is settled there, that the owners need not have known the falsity or fraud in order to be charged with its civil consequences, if they undertake to receive the benefit of the contract made under it.
This is not a new doctrine, as some seem to suppose. In Doe v. Martin, 4 Durn. & E. [4 Term R.] 66, Lord Kenyon observes: “But it is said, that the transaction, as far as Martin was concerned, was fair and honorable, and that the fraud -only consists in the misapplication of the purchase money; but, without imputing any fraud to Martin, and, indeed, it is negatived by the verdict, the maxim, that the principal is civilly responsible for the acts of his agent, universally prevails both in courts of law and equity.”
But in addition to that principle for charging the respondents here, it is proved by two witnesses, that one of them, Barstow, and the one who seems to have been the active person in transacting the business, made, before the sale was completed, like representations with Fifield himself as to the certificates about the timber and the quantity of it, and that another equitable owner, Boynton, probably furnished those very certificates, which are charged in the bill to have been so untrue and deceitful. Besides this, three, if not more of the owners, were conusant to Fifield’s acting as agent for the whole, and did not forbid him to go on. but rather acquiesced in the bargain he had made, and thus gave
Next, in what did the falsity consist? In what particulars is the evidence as to falsity or fraud in material parts of this transaction, committed either by Fifield or any of tiie owners personally? It is sworn to, by two or three witnesses, that Fifield represented the certificates to be true and trustworthy, which stated the pine timber to be six thousand feet per acre, when in fact it did not exceed from a half to one and a half thousand, and that, “small, scattered and rotten.”
One of the certifiers further stated, that he had “recently” explored the land to ascertain the quantity, when in fact he had not been on it for several years, and then all which possessed any value was in progress of being cut off, and when in fact the other certifier had not examined at all over half the land. Both the certificates, also, instead of being trustworthy in other respects, had been procured by Darling under a promise from Smith, who held a bond of the land at $1 per acre, that he should have one quarter part of the interest in the bond if he would assist him in selling it. Darling is also one of the cer-tifiers to Sawyer’s character, as if disinterested, when in fact he was secretly interested in the sale of the land to the extent of one fourth, and is proved to have been afterwards paid one fourth of all the increased price thus obtained. It further appears that these certificates were sent by Darling to Smith, in April, 1S35, and that he, Smith, sent them to Boynton, one of the owners at the time of this sale, and the son-in-law to Barstow. The latter admits he saw them in Boynton’s possession, who being part owner by sub-contract, and the one who gave the bond to Fifield, doubtless delivered these certificates to him with the bond. They had been so effective as to help Smith sell the gore at $2.25 per acre, for which he gave only $1, and enabled Boynton and his associates to sell for $3 in gross or $6 net, what had cost them only about one third of the last sum. It was furthermore shown, that Fifield himself had represented to different witnesses the pine timber to be eight, ten, and twelve thousand feet per acre, being willing to guarantee ten, and the facilities for getting the timber off as good, and so good that it could be run twice a year to market, which would greatly increase its value, and especially impart all the value which the spruce possessed. When in fact it is now proved to have required usually two years then to get the timber to market, and so continued, till some improvements were since made in the stream at a considerable expense. It was next shown specially, that Barstow, one of the respondents, in person confirmed most of these statements, and urged the truth of these certificates on the plaintiffs, as a reason for completing the sale. He told Jones, that the quantity of timber was double what the certificates stated according to his belief; and the stream of water good to run the timber to market twice a year. Bullard testifies to similar statements of Barstow.
What is the result of all this? It is summed up truthfully by Barstow, in October, 1836, in his letter to Mason, in these words: “We all now believe that you have been basely imposed upon in the purchase of the Munroe Gore.”
But other objections have been urged to a recovery here; because other persons interested in the land beside the respondents have not been made parties. It is to be remembered, however, that the respondents alone bought the land of Munroe, and that the title was vested in them alone by the deed, and by them alone conveyed to the plaintiffs. Under these circumstances the bill can well be sustained against them alone. West v. Randall [Case No. 17,424]; Wormly v. Wormly, 8 Wheat. [21 U. S.] 421, 451, and note. But how much, under the circumstances here, must be paid back by them on a rescinding of the sale, in consequence of such sub-contracts, is a difficult question, and will be soon considered. See Doggett v. Emerson, May Term, 1846, on the master’s report [Case No. 3,962],
In actions on contracts, which form the nearest analogy to the present proceedings, an omission of a person, who ought to be a co-defendant, cannot be taken advantage of except by plea in abatement. Powers v. Spear, 3 N. H. 35; 1 Chit. Pl. 29; 1 Saund. 291b, note 4, and 154, note; Nealley v. Moulton, 12 N. H. 485. Dormant partners, also, are not necessarily parties in a suit, and are not allowed to become so to defeat the action. De Mautort v. Saunders, 1 Barn. & Adol. 398. Nonjoinder of a defendant, can be objected to only in abatement. 5 Coke 119; 1 Saund. 154. Here the plaintiffs might perhaps have made all parties, who got the money and bad any kind of interest at the time of the sale in its proceeds, and. on some accounts, that course would have been preferable. But it is very evident, that they were not obliged to prosecute any but those who conveyed to them, who alone contracted with them, and who possessed the legal title to the premises, leaving all subordinate interests and equities to be settled among those nho were the parties to
Another objection is, that one of the plaintiffs has conveyed all his interest in the premises to the other complainants. But it does not follow from this, that he is not entitled to join in bringing the suit for the benefit of his grantees, the original cause of action or complaint having arisen to him, and the remedy being properly in his name. Nor does his conveyance to them prevent them from releasing, or reconveying to the defendants all the title which came from them, it being still all in two of the plaintiffs, if not in the three equally. Such objections going to form rather than substance, should be taken earlier than pleas to the merits, and especially are they untenable if the decree can be so made as to prevent any injustice if theie be a misjoinder. 4 Younge & C. Exch. 557; 1 Beav. 277. Again, if one applies for an injunction and relief against a judgment for land, to which he had after the judgment released his interest, it has been held to be no bar, as it is a naked equity, and nothing passed by the release, as he then had no interest and could have none till created by a decree of a court of equity. Dunlap v. Stetson [Case No. 4,164].
The length of time from this transaction, in August, 1SS5, to the filing of the bill, in August, 1841, is likewise urged against any recovery here. It would operate against the present proceeding, if not bar it, under some circumstances, unless satisfactorily explained, though six years had not quite elapsed before these proceedings were instituted. Because, when a party has taken possession of property purchased, and discovers fraud in the sale, which he thinks vitiates it, he ought, as a general rule, to return, or offer to return, the property speedily, so as not to change in any material respect its condition or the rights of the other party before rescinding, and so as not to deprive him of remedies over, which would have been good if he had been called on earlier. Here, however, the fraud does not appear to have been discovered before the autumn of 1830, and from that time till 1839, there is evidence of negotiations and mutual propositions to compromise the dispute, and an impression that it was or would be compromised till the bill was filed in 1841. Indeed, an actual compromise is set up in the answers of Barstow, as having taken place, and been confided in by him, till these proceedings were instituted. And though no evidence has been offered proving it in such manner as to be binding in law or equity, yet it is admitted by the respondents, and accounts in some degree for the lapse of time without suit after the fraud was discovered.
Another reason, probably, why the plaintiffs need not be so active in reconveying or bringing a bill in this case is, their impression that the respondents had foreclosed their mortgage and taken possession of the premises; and though the foreclosure is denied, it is admitted by Barstow that he had entered on the premises, and sold half of them to' Holyoke, or half of the mortgage and notes as early as 183S. See on this, Warner v. Daniels, before cited, and 20 Johns. 585; 2 Schoales & L. 635.
There is one view, however, in which this length of time, though not barring the liability of the respondents, may have an equitable influence on the amount they are to refund, and I will consider this when giving directions concerning that amount. There are, also, several minor questions which have been started in argument, as to the competency of some of the witnesses, and the irresponsive character of some of the answers, which on this view of the evidence it is not necessary to discuss or settle.
On the question, then, of the liability of the respondents, my opinion is, that the sale of the land in question was void on account of the false and fraudulent representations which accompanied it, as they were very material in their character, reaching nearly the whole value of the premises, and were much relied on, notwithstanding the imperfect exploration for only one day or less, which was attempted by the plaintiffs. It must be set aside, therefore, and the consideration paid for it be refunded so far as hereafter pointed out, and the land reconveyed to the respondents. All this can be inquired into and reported on as to particulars, by a master in chancery. But in order to prevent difficulty and delay before him, and after his report is made, it is proper to consider two questions more at this time, in respect to the amount to be refunded.
One is, the influence which the length of time, under all the circumstances of this case, ought to have on the amount which these defendants should in equity refund. It has already been stated, that it is not such as to bar this liability, and I see no reason, therefore, why it should prevent the recovery of the whole amount of money which was received by themselves of the plaintiffs, either at the time of the sale or since, and retained for their own use. But as the money received by them then in equity belonged to others, who by sub-contracts were entitled to portions of it, and those portions were paid over before this bill was instituted, and the plaintiffs knew of the existence of such sub-contracts, and yet did not make the parties to them parties to the bill, nor prosecute the respondents at an early day, so as to enable them, if liable, to have a useful or seasonable remedy over on those sub-contractors, I am inclined to think this injurious neglect in the plaintiffs should prevent them from enforcing a repayment from the respondents beyond the amount of money which they have retained for their own shares. Called upon by this bill to exercise extraordinary powers on the ground alone that it is equitable, we ought to exercise them no further than is clearly equitable; and the parties beyond that, if left as they stand
The next question connected with the amount proper to be refunded, grows out of the sum and notes received separately by Fifield, the agent, and which did not pass originally into or through the hands of the respondents. If Fifield was- a party to the bill, the proper rule would be usually not looking to the exception here on account of the length of time operating as to sub-contracts, to charge him and the other respondents with such portions as they respectively received of the money and notes, and to require a reconveyance of the premises by the plaintiffs, on being repaid such sums as they had advanced, and on having their notes, which had not yet been paid, returned. There is no agent here, through whose hands all the money and the notes passed, so as to make him responsible in the first instance for all. and to be aided afterwards by the others, who are parties to the bill according to the portion each received, as in Daniel v. Mitchell [Case No. 3,562], and Doggett v. Emerson, before cited. But Fifield not being a party, Crosby and Barstow can alone be charged, and the amount they can be required to pay in respect to him, is a question of gome difficulty. Fifield is not a party as Emerson was in Doggett and Emerson, and as Todd was in Daniel and Mitchell. Nor did the money and notes, received by Fifield, pass through the hands of the respondents, or the latter run to the respondents, as they did in the .former case, if not in the latter, and which seemed to be considered an essential ingredient to charge them when one of the agents, such as Williams, in Doggett and Emerson, was not a respondent in the bill. Besides this, there is no admission in either answer, that money or notes were actually given to Fifield, though it is manifest from them and the evidence, and especially the letters in the case, that Fifield acted as an agent in the transaction, and indorsed some of the notes, and the bill states the amount given to him. The answers deny any knowledge that Fifield received $2 per acre, or any other sum, for his services, except by hearsay, or that the respondents in truth agreed to pay or allow any sum whatever for his agency aforesaid. The length of time, then, during which the plaintiffs neglected to prosecute their claims, is a decisive bar to making it equitable for them to account for Fifield's money or notes, by construction, when they never had either, nor can control either. The money and notes to Fifield might have been obtained back, had the respondents been called on and charged for them early. They went into the possession of Fifield at once, and from the plaintiffs, not the respondents; and hence with the knowledge of the plaintiffs, that they were in his possession. The respondents laid by and did not sue till, according to the evidence, Fifield had become insolvent and died, and after that, to charge them for his receipts, when the remedy over would be worthless, and has become so probably by the neglect of the plaintiffs, would be any thing but equitable. The most obvious remedy for them at all would have been against Fifield rather than the defendants. I must hesitate, then, under these peculiar circumstances, to charge the defendants with any money averred to have been paid to Fifield, as their agent, in part consideration for the land, or on account of any notes so given to him.
Some -question arises, whether the sum to be refunded by the respondents is to be done jointly or severally. The deeds to and from them seem to have been joint, as were the notes to them. But they were acting for themselves and others, owning, in fact, separate shares; and as their shares are recog-nised in these proceedings as severed from the rest, in the amount to be refunded, it may be proper that a severance should be made between themselves in the decree. But this point has not been discussed, and before drawing up a decree we will hear the counsel on it for both parties. It will now be entered for the plaintiffs, on the principles here laid down, and the case submitted to a master, to make the computations necessary and the inquiries indicated. There are also some questions of costs for amendments and filing supplemental bills, which the counsel will please to present early, so as to have them settled by the time the ease is ready for final judgment on the report.