Lead Opinion
The parties were to have equal access to the accounts. On-the demand of either party, the 170 lots were to be selected, separate accounts thereof kept, and provision was made for selection of lots in the event that they could not agree.
The defense, as well as the counterclaim, is based on the charge that the notes executed by defendant to plaintiff and the contract entered into by them were obtained by fraud, in that, as is alleged, plaintiff represented to defendant that he was familiar with said lots and their value, and that inside lots were worth $35 each, and corner lots, $40 per lot; that said lots were covered with timber, which, when cut, would sell for more than the price of the lots, whereas said lots, in fact, were not worth to exceed $2 or $2.50 each, and had no timber whatever on them; that defendant knew nothing of said lots, but relied upon said representations, and was induced thereby to execute said notes and contract, with the intent on the part of plaintiff to defraud him. The only controversy is whether the evidence was such that the is
“Harley and Ulch came down to the office and talked to me about it. Ulch told me what a good investment this was, and how good the property was, — good lying property, — and about the timber on it. He took me over to the Kirkwood Hotel to meet Harley, and they showed me pictures, purporting to be trees, and said that similar trees on the property would be worth more than the property was worth. Harley said this, and Ulch agreed with him. Ulch talked to me in August, going out to the State Fair, telling me about the property; and I guess on the average of three or four times a week he would come to the office and talk about it, before I met Harley. Ulch told me that the property was in short walking distance of the business section of the town, and that it was a good lying property and had trees on it, and that a state highway went through there. He said timber on the lots was worth more than the price of the lots themselves, and when we cut them, would bring more than the price of the lots. The inside lots were $35, and corner lots, $40; and he said they would sell for $75 and $100, and that the only reason I was getting in at that price was because I was his brother-in-law, and was getting in on the ground floor. This was before I saw Harley. Ulch told me he owned 40 lots, and wanted me to go in with him, which T did. He represented to me that he had paid for these 40 lots the same price that I was paying, — $35 for the inside
The witness told of having bought 20 lots of Harley, through Ulch, and proceeded:
“Most of my talking in regard to the value of the property was to Ulch entirely, and when I went to see Harley, he merely repeated, and showed me pictures of property around there, and of the timber. After I bought these 20 lots, I had a number of conversations with Ulch. He told' me that he had 40 lots, .and he knew the value of the property' there; and I told him I didn’t know anything about it. This was before I bought the 20 lots. After that, he came down there again, and talked to me about buying a quantity of them, saying that he wanted to get the agency here, and that Harley wanted somebody to go in with him, and he wanted me to go in with him, and I told him I could not pay for it. Ulch had three or four lots in Warrentown, near there, and had been out there several times, and said he knew the property was worth more than we were paying. He showed me pictures at his house and at Harley’s room in the Kirk-wood. He said the timber on our property was the same as the picture. He again told me about how it laid and the timber on it, and about the state highway going through there.”
The witness then explained that he was without experience in dealing in real estate, and that he never went to see Harley unless Ulch was with him.
“Ulch knew that I didn’t know anything about the value of the property out there, and that I didn’t know anything about Astoria at all. I told him I would have to depend on
On the other hand, Heefner testified, in substance, that defendant was present at one time when Ulch declared that he knew nothing about the property or its value, — that he merely took a chance; and that he and Ulch exchanged a picture show for some of these lots. Ulch denied knowing anything about the lots, save as informed by Harley, and swore that he had said nothing to the contrary to defendant, and had not said what they were worth, or anything concerning timber growing thereon, or its value, or what the lots would sell for. He testified that, as Harley would not take defendant’s notes for one half the price of the lots, for that they were not bankable, he executed to him nine notes, for the aggregate sum of $5,240, and conveyed a lot at a consideration of $1,100, which was worth $150 more than that, under an arrangement with defendant to execute his notes as he did for an undivided one-half interest in the 170 lots; and that he paid the notes executed to Harley, subsequent to their transfer by him; that lie had had no arrangement with Harley for a rebate in price or that he should have a commission, and had received neither; and, in substance, that defendant was the aggressor in making the purchase. The witness further testified that he had never seen the lots, and had been no nearer to them than the railroad came, but had been in Astoria three times, and owned several lots in Warrentown, a suburb of and west of Astoria; whereas the Astoria addition was east of the city limits. The deposition of Harley was taken and read in evidence, corroborating the testimony given by Ulch, though saying that Ulch stated that he was familiar with Clatsup County (in which Astoria
Such is the evidence in brief, though omitting many of the details. Therefrom the jury might have found that the representations of value and of the timber growth and its value were made, as alleged; that this was done to induce defendant to enter into the arrangement to buy, which was carried out; that the representations were false; and that defendant was ignorant of the facts, and relied on said representations in arranging to take a half interest in the lots, in pursuance thereof. It may be that both Harley and Ulch disputed the evidence on which the finding must have been based. The circumstance that Harley was engaged in the enterprise of deceiving customers into paying $35 or $40 each for lots which he must have understood, because of their location, if for no other reason, were not worth over $2.50 a lot, or what the land would be worth if not platted, would not be likely to commend his credibility to the jury. This alone would warrant the consideration of his testimony with distrust. Moreover, the interest in the deal manifested by Ulch, and his advance on the credit of Wessel, can only be explained away on the theory that he was actuated by benevolent motives toward a relative. It is to be observed, however, that the tie was not of blood; and, in any event, relationship, as well as close friendship, is frequently made use of as an aid in working on another’s confidence, and the invitation to “come in on the ground floor” is made with the design to make effective use of the cellar below! The parties hereto testified before the jurors, and the credibility of each
“In such case, inasmuch as the utterer has no knowledge on the subject whatever, it would be impossible to establish a scienter by proof showing that he knew the representation to be false, for the reason that no showing pro or con on the subject could be made. Therefore, the law will constructively supply the scienter because of the reckless conduct of the utterer, for the very good reason that -a positive statement of fact implies knowledge of such fact; and, if the party who makes it has no knowledge upon the subject, he is telling scienter what is untrue — he is affirming his knowledge, when in truth he has no knowledge to affirm.’’
See Davis v. Central Land Co., 162 Iowa 269; Haigh v. White Way Laundry Co., 164 Iowa 143.
We entertain no doubt in deciding that the evidence was such as to carry the several issues to the jury, and that there is no room for interference by this court. — Affirmed.
Dissenting Opinion
(dissenting). The defendant does allege that, though plaintiff knew defendant had no such knowledge, plaintiff said he knew the value of certain lots, their condition and surroundings; that he told this falsehood with intent to cheat defendant; that plaintiff knew, when he so affirmed, of his personal knowledge, that defendant had no knowledge of the value of the lots, and relied on plaintiff; that plaintiff made the false statement to -induce defendant to give him the notes he here sues on, and so did induce defendant to give them; and that the lots were not what plaintiff had, of claimed personal knowledge, affirmed them to be, but, on the contrary, were of practically no value.
I -agree there is a conflict over whether plaintiff made these representations; that the jury has resolved this conflict in favor of the defendant; and that with this finding we cannot interfere. But that settles nothing except that plaintiff told defendant he had personal knowledge of the value of the lots, though he knew he had no such knowledge; that this induced the giving of the notes; and that the lots were,
Now, while lying about having personal knowledge of the quality of a thing is not the equivalent of lying about the quality of that thing, showing that one has deliberately falsified concerning having knowledge of the quality, and that the quality is, in fact, not what he so affirms it to be,
The presumption that a deed found with the grantee has been duly delivered, or that statements in a pleading filed by a duly authorized attorney are admissions 'of his client, is as strong as the inference of scienter of which I have spoken. Both the presumption of delivery -and of admissions were present in Schaeffer v. Anchor Mut. F. Ins. Co., 113 Iowa 652, at 656; same case, 133 Iowa 205, at 209.
Recklessness is not fraud. It is, at most, evidence which raises a fact presumption — makes an argument for claiming —-that there was an intent to deceive. It is absolutely immaterial that such recklessness is,' so to speak, a badge of an intent to deceive, if it must be found that, notwithstanding, there was no intent to deceive. Whatever may constitute evidence of such intent, no actionable fraud is made out unless, when that evidence is given due weight, it can in reason be believed therefrom there was a purpose to defraud. Suppose one declare that he knows a farmt he is selling contains 200 acres, when he has no knowledge whatever of what its size is, and after it is sold, it transpires that, when sold, it contained 300 acres, which, the day after the sale, shrunk to 100 acres, because a river cut off 200 acres. Here is your case of recklessly false affirmation, and of ultimate, loss. Here is, also, conclusive proof that there was no fraudulent intent: This illustration leads to the crux. Whatever conflict there is here, there is none over the intent of the plaintiff, the person charged with fraud. The evidence of his good faith utterly demolishes every presumption of fraud that could be raised upon resolving the conflict against him.
And I am not ignoring that it is no defense to fraud that the perpetrator profits nothing. If there be fraud perpetrated, one who knows he can gain nothing has not even the sorry excuse that gain tempted him. But, while lack of gain does not justify fraud, that the alleged perpetrator knows there can be no profit, and that he actually will suffer the greater loss if what he says is false, is most vital evidence on whether a fraud was intended. The underlying reasoning has been fully gone into in another connection. If one admitted having wilfully killed another, it would effect nothing
The majority makes a jury question out of whether one who did what he knew must injure himself mo|e than the other, intended to defraud that other.
I do not agree that the.abstract rule that credibility is for the jury controls here. This rule does not authorize the rejection of undisputed testimony, when nothing can reasonably be said to affect credibility. Of course, if the jury could find that a material claim of the plaintiff’s had no support save witnesses who were not credible, my premise fails. In that case, the inference of fraud has not been overcome, because of the' character of the testimony by which it is met. The plaintiff is not impeached because he may have been a co-conspirator — a “capper,”— nor because Harley may have returned to plaintiff all he paid — -plaintiff may have done murder. The trouble is there is as much evidence of one as of the other; that is, none, of either. There is none, unless it be the testimony of plaintiff that he had no arrangement with Harley for a rebate in price, none for a commission, and that he had received neither. He is not impeached because he was reckless enough to make a false assertion as to which he must have known that, if believed and acted upon, he would be injured most of all. Such assertion proves he is a reckless optimist, but not that he is a liar. That he was taking the greater risk in dealing with one who had married the sister of his wife, is no impeachment. There is no presumption that men deal crookedly, because the deal is with a brother-in-law. All that is material in this relationship is that it made it more reasonable for defendant to rely upon what plaintiff said. That is all that is effected by the fact that defendant had no knowledge of the value of the lots.
I think we should reverse, on the ground that the evidence shows conclusively plaintiff did nothing with fraudulent intent — did not commit the fraud charged. Defendant may not be without remedy, but he should not recover in this suit.