Watts v. British & Am. Mortg. Co.

60 F. 483 | 5th Cir. | 1894

McCORMICK, Circuit Judge.

On 27th December, 1889, C. L. Watts, one of the appellants, applied to an agent of the appellee for a farm loan on 820 acres of land in La Fayette county, Miss. This application was made on one of the regular forms used by appellee. The answers to the numerous questions in this form- were all written in by W. C. Pettis, one of the appellants. On the 16th January, 1890, the land was conveyed to C. L. Watts by Ben M. Pettis, described as containing 826 acres, more or less. This deed recited, “In consideration of eighteen thousand two hundred and sixty dollars, I here convey and warrant C. L. Watts the following described lands,” etc., “to wit.” A. C. Johnson, one of the appellants, inspected the land, and reported it to be of the value of $13,740, without the improvements, and to have on it a residence house, six tenant houses, and a gin house, with machinery, all of the aggregate value of $2,250. Shattuck & Hoffman were the agents, at New Orleans, of the appellee. They seem to have corresponded with W. A. Roane, Esq., of Oxford, Miss., and to have received from him abstracts of title to land in La Fayette county on which they made loans. Mr. Shattuck testifies that A. C. Johnson never was in the company’s (appellee’s) employ, and W. A. Roane never was the company’s attorney; that the company have no employes or attorneys or brokers in the country. Unless the inspection and report of A. O. Johnson was made for the company, it had none made by any one before it made the loan of $4,500 on this land. On January 25, 1890, C. L. Watts drew on Shattuck & Hoffman in favor of Benjamin M. Pettis, for the full amount of the loan. This draft was accepted 30th January, 1890, payable at the Louisiana National Bank. It is indorsed: “Benj. M. Pettis. W. C. Pettis. For collection, for acct. of Bank of Oxford, Oxford, Miss. Ben Price, Cashier.”

Benj. M. Pettis and W. C. Pettis are brothers. At the time of obtaining this loan they lived in the same house on a plantation a few miles from a farm on which C. L. Watts resided. The loan was completed January 30, 1890. In March, 1890, one H. C. Williamson examined the land and improvements, and reported to appellee’s agents at New Orleans that the land and improvements had been grossly overvalued in Watts’ application and in Johnson’s report, and that the real consideration for B. M. Bettis’ conveyance to Wafts was §3,000 of the money loaned by the appellee to Watts on the land. After efforts to obtain a rescission of the contract and the return of the money had failed, the appellee exhibited its bill, setting up the facts, and praying for relief on the ground of the fraud charged to have been perpetrated on it by the appellants. The utter want of care indulged by appellee in accepting the security mentioned should not escape notice, and, if it should result in a partial loss of the money loaned, retributive justice would hardly be more than satisfied.

After filing its bill the appellee advertised the mortgaged premises for sale under the deed of trust. The appellants insist that this was an affirmance after full knowledge of the facts. They support this contention by a reference to Grymes v. Sanders, 93 U. S. 55; McLean v. Clapp, 141 U. S. 429, 12 Sup. Ct. 29. It is sound doctrine that a party who desires to rescind a contract on the ground of subsequently discovered fraud must announce his purpose as soon as such discovery is fully made, and must adhere to it. He will not be permitted to vacillate, and play fast and loose. In this case the appellee did announce its purpose, endeavored to obtain a rescission and the return of the money without resort to a court of equity, and, failing in that, duly exhibited its bill, and has sped the cause. The sale was not attempted to be made. No other indication of a vacillating purpose is shown. Grant that this act is not adequately explained. Is it, under the circumstances, to be taken as a conclusive abandonment of appellee’s bill, and an affirmance of the contract which by the bill the appellee seeks to have canceled? In our view the adjudged cases and sound reason do not go to that extent.

Appellants contend that no injury is shown to have resulted to the appellee by the alleged fraud; that the security was and is adequate and ample. To our view the proof does not sustain this contention. The most that can be claimed for the evidence on the subject of value is that (be land is worth from eight to ten dollars an acre. No market value is shown. It appears that few sales of land in that neighborhood have been made since the loan was effected. The appellee, in making loans on farms, was not willing to take such security at more than one-third of its estimated value. It is matter of such common knowledge as not to require evidence that there is generally a great difference between landowners’ estimates of the value of farm lands in their neighborhood, and the price the lands would bring at public sale. The preponderance of the evidence indicates that had the land been put up at public sale at the time Watts’ application for the loan was made, or at anytime since then, it would not have brought in cash as much money as 'Wktts'borrowed on it. It is not extravagant to doubt if tbe appel-lee could, at any time since it made tbe loan, have realized one-third ■of tbe principal and interest, and tbe reasonable cost of a foreclosure, by a public sale, without reserve, of tbe mortgaged premises.

! It is insisted that the conspiracy charged is not proved; that it is abundantly disproved. Tbe complainant, in its bill, did not ■'waive an answer under oath. Tbe respondents, answering sep-■á'rately, each denies that be was a party to a conspiracy, as charged, and-denies that any such conspiracy existed. It is, perhaps, &■ ■nia,tter of definition. These are said to be good people. We do 'not deem it necessary to review the evidence. Our point of view may be so different, from that of the appellants that any summary 'of the proof we could make would appear to them to be harsh. We 'therefore only say the evidence satisfies us that the appellee should have the relief it seeks. It appears to us that all of the appellants, each doing his own part, acted together in procuring this loan; that ■'the'part each acted contributed materially to effect the common purpose. It is immaterial what disposition was made of the money, or who of them executed the writings sought to be canceled. Equity is not so restrained that it cannot do full justice in such a 'case as this.

The decree appealed from is affirmed.