120 Neb. 171 | Neb. | 1930
This is an action in equity arising out of the following
After trial the district court found as to the-railroad company that its occupancy of a portion of the lot, initiated under the terms of Dr. Paine’s letter, before the commencement of this case and before any claim was made upon said company, had developed into “an irrevocable license” to remain and the court thereupon dismissed the action against it. It may be said in passing that, in the present condition of the record, we are inclined to the view; that this determination as to the railroad company’s rights is not subject to serious challenge. But as between the plaintiff Newberg and the First Trust Company, as executor of the Paine estate, the trial court determined: “The deed to the property .in question from Otto R. New-berg to the First Trust Company of Lincoln, Nebraska,, as executor of the estate of Bartlett L. Paine, deceased, and now in the files of this court or in the hands of the clerk thereof, be turned over' to the defendant the First Trust Company of Lincoln, Nebraska, as executor upon its demand for the same; that in case defendant the First Trust Company of Lincoln, Nebraska, executor, fails to take said deed and to pay to the clerk of this court for the said Otto R. Newberg the sum of $5,000 with interest
It is the contention of the First Trust Company that the statute of limitations affords a complete defense to this action; that the executor was without authority to warrant the title, and any representations made at the time of the sale of the premises could in no manner bind the estate of Bartlett L. Paine; and that the plaintiff was entitled to neither rescission nor damages.
Taking up these questions in inverse order, it may be said the following facts seem, by fair implication at least, to be admitted by the parties. Lot 3 in suit, without the presence of the incumbrance constituted by the railroad tracks, and in the condition represented by the trust company, that is, being free of improvements or tracks, was fairly worth $5,000. Relying on' the representations made by the executor as to the unincumbered character of the lot, Newberg purchased the same and paid $5,000 therefor, which representations of the trust company as to the condition of the lot were in fact untrue. The railroad tracks were at that time on a portion of this lot, and, due to'the railroad company’s rights in and possession of the premises, their occupancy had then ripened into “an irrevocable license” to remain. The presence of this incumbrance constituted an actual damage to the value of the lot in the sum of $1,500, or, in other words, the actual lot sold, because of the presence of the trackage upon it, was worth not more than $3,500. It would have been
If it be conceded that Dr. Paine’s estate is. not liable on the covenants of the deed, nor because of the representations of the executor, which plaintiff relied upon at the time of the purchase, it must be admitted that to the extent of $1,500 there has been a partial failure of consideration in the transaction here presented, and to this extent the Paine estate has been augmented as a result of what is claimed in its behalf, solely because of lack of scienter, amounts to no more than a mistake on the part of the executor.
This court was early committed to the doctrine: “Whether in an action for damages for false representations it is necessary either to aver or prove the scienter, the authorities do not agree. The better rule, and the one adopted, by this court, is that the intent or good faith of the person making false statements is not in issue in such, a case.” Johnson v. Gulick, 46 Neb. 817. “A purchaser of real estate has a right to believe and rely upon representations made to him by his vendor as to the character,, quality, and location of the property, when the facts concerning which the representations are made are unknown to the vendee.” Hoock v. Bowman, 42 Neb. 80. See Farley v. Weiss, 76 Neb. 402. “Where one has made representations of fact shown to be false upon which the other party has relied to his damage, the intent or good faith of the party making the representations is immaterial in an action by the injured party to recoup his damages, or in an action by the former where the latter pleads the fraud of the plaintiff as a defense.” Bauer v. Taylor, 4 Neb. (Unof.) 710. Indeed, the general rule appears to be: “False representations made by a vendor as to his title, though innocently made, upon which his vendee relies to his injury,. may constitute such constructive fraud as will entitle the purchaser to a rescission.” 5 Thompson, Real Property, 427, 428, sec. 4313. See Baker v. Maxwell, 99 Ala. 558; Groppengiesser v. Lake, 103 Cal. 37; Morris v. Courtney, 120 Cal. 63; Woodruff v. Garner, 27 Ind. 4; West v. Wright,
On the basis that what has occurred amounts to no more than a “mistake,” it must be conceded that as a necessary result the estate of Bartlett L. Paine has been enhanced in the sum of $1,500. “If a party in ignorance or mistake of his rights and interests execute a conveyance, although no fraud is practiced upon him, a court of equity will relieve against the instrument; for it is against good conscience to take advantage of one’s ignorance to obtain his property. Thus, if an heir, in ignorance of the value of his inheritance, or in ignorance that some legacies or devises had lapsed, should convey his interest for an inadequate consideration, equity would convert the purchaser into a trustee. And if the purchaser should have full knowledge, or should stand in any confidential relation, or should practice the slightest art to mislead or conceal, the
It would seem under the authorities just referred to, which appear to be applicable to the facts in the instant case, that the fraud established constitutes even a stronger equity against the transaction as a basis of rescission. However, it is also to be remembered that upon the discovery of the mistake the plaintiff in the instant case tendered a reconveyance of all that he received in the transaction, and demanded relief in the alternative from the executor and the Paine estate represented by it. Therefore, assuming for the purpose of this discussion, but not deciding, that the term “mistake” is properly applicable to the transaction before us, it having resulted in the augmentation of the estate of Bartlett L. Paine in the sum of $1,500, to this extent the trust of the executors has been unjustly enriched and the proper application of the principles above quoted would result in a recovery by the plaintiff herein irrespective as to whether the false statements relied on amount to “legal fraud” or are properly designated by the term “mistake.”
A somewhat similar question was presented to the supreme court of Iowa in the case of Deery v. Hamilton, 41 Ia. 16. In that case an executor borrowed money under such circumstances that rendered the entire transaction invalid as to his trust, but the estate received the money and actually benefited thereby. It was accordingly held: “The estate has received the benefit of the money which was advanced by the defendant. It ought in good conscience to repay it with legal interest. This is not required because of the contract under which the money was borrowed, which is invalid, but on the ground that the estate has had the benefit of the money received from defendant.” Under the circumstances detailed in the evidence in the case before us it would seem that it is against “good con
But, by the clear weight of authority, the application of the principle is not limited to the relation of principal and agent. The language usually employed implies a more extended field. Thus it is said: “One who seeks to take advantage of a contract made for his benefit by another must take it subject to all legal defenses and inherent equities arising out of the contract, such as the fraud of the party procuring it, the nonperformance of conditions, or the right to a set-off, unless the element of estoppel has entered.” 13 C. J. 699, sec. 799. See 4 Page, Law of Contracts (2d ed.) 4217, sec. 2393; Assets Realization Co. v. Cardon, 272 Pac. (Utah) 204; Farmers State Bank v. Nicholson, 36 Wyo. 221; Fish v. First Nat. Bank, 150 Fed. 524; Farris v. Pitts, 221 Mo. App. 1204. Indeed, this court has said: “It is equally as fraudulent to attempt to enforce a writing executed by mutual mistake in such manner as not to express the real agreement between the parties as it is to procure such a writing by deceit or circumvention.” Story v. Gammell, 68 Neb. 709. Whether money or property lost or damages suffered because of false representations by the trustee, or by the executor, is under all circumstances within the rule quoted, qusere, however, we do not find it necessary to determine in this case. The “false representations” or “mutual mistake” in the instant case relate to the property owned by and conveyed on behalf of the estate of Dr. Paine in a transaction of which the “false representations” or “mutual mistake” constituted an integral part, resulting in a deficiency in the property attempted to be conveyed. The $1,500 loss or damage resulting therefrom to the plaintiff has accrued to the defendants in the form of unintended profits and constitutes an unjust augmentation of the estate thus rep
It must be conceded, however, that the rule is: “A misrepresentation as to quantity or acreage may constitute a fraud on the part of the vendor for which the purchaser may rescind.” 27 R. C. L. 645, sec. 407. Still, it is well established by precedent that the inherent discretion of a court of equity, in an action for rescission, instead of decreeing an unconditional rescission to the extent of fully restoring the parties to their former status and condition with a view of rendering its relief complete and more appropriate to the peculiar case before it, “Instead of granting relief by way of rescission, * * * may and frequently does grant the purchaser an abatement from the purchase price in case of a deficiency in quantity.” And, indeed, “The purchaser has been restricted to this form of relief and a rescission of the transaction denied even where the vendor was guilty of fraudulent representations as to quantity.” 27 R. C. L. 645, sec. 407. The provisions therefore which appear .in the decree entered in the district .court in the present case for damages must be deemed as an “abatement from the purchase price” as an incident of rescission and not identical with damages to which a party is entitled in an action at law for the breach of a valid contract. In other words, the liability of the defendant in the instant case is based, not upon what the plaintiff lost by reason of the fraud or the mutual mistake, but rather as limited to what the defendant estate possesses and which was obtained because of the acts and representations of its executor. The present action does not sound in tort, nor does it necessarily involve the limitations imposed by the principles of common law proceedings upon the proper use of common counts such, for instance, as “for money had and received.” While on the question of
The defendant further contends that the executor in this case was not guilty of legal fraud, and that, being* liable, if at all, on the basis of an honest mistake made, section 8517, Comp. St. 1922, is controlling, and an action based on mutual mistake is not continued four years after the discovery of the mistake. This court has apparently, in express terms, announced a contrary conclusion. Shanahan v. Fidelity-Phenix Ins. Co., 117 Neb. 132; Carter v. Leonard, 65 Neb. 670; Pinkham v. Pinkham, 60 Neb. 600; Ainsfield v. More, 30 Neb. 385. Appellant favors this court with a learned discussion of these cases, the conclusion of which is that the point here involved has never been the controlling point in any of the judgments rendered by this court and the statements announced in each of the decisions enumerated amount to no more than obiter dictum, and the rule apparently announced therein by this court is in contravention of the express terms of the statute. Conceding, arguendo, appellant’s premise that to render a statement of law authority as a precedent it must be involved in and presented by the facts of the case then for consideration and be made a “controlling point of any judgment rendered” therein, manifestly the cases cited are not for reexamination in the present opinion. True, in appellant’s brief we find this statement: “This action was not commenced until November 12, 1927.” It must be admitted that under appellant’s contention this fact is essential to present the question of the application of the statute of limitations in the instant case. There is, how
It follows, therefore, that the decree entered by the trial court is correct and its judgment is
Affirmed.