13 Colo. 428 | Colo. | 1889
Lead Opinion
The object of this suit was to rescind and set aside the sale and purchase of the undivided three-eighths of the property, on the alleged ground of fraud on the part of defendants Dunn and wife in making the sale by misrepresenting the condition of the mine and its value, and by the suppression of facts alleged to have been known by defendants and unknown by plaintiffs, whereby plaintiffs were misled and deceived in regard to the value of the property, and induced to pay far more than its worth.
In order to properly determine the questions presented, it becomes necessary to find from the evidence and attendant circumstances the relation of the parties to each other and the property over which the controversy arose, and the knowledge and opportunities of knowledge of the parties, respectively, regarding its value.
There are several pertinent facts about which there is no controversy: First. That plaintiff E. A. Wheeler
Prior to plaintiffs’ leaving the mine, they, with Dunn, made a contract for a lease of the property to George Ingersoll and Bennett, by which, they were to work the mine, paying the owners a royalty of twenty-five per cent. Bennett testified, and his testimony was undisputed, that they commenced work on the mine about the 10th of September. He said: “I saw Mr. Dunn at the mine once after that, — once after we commenced, — within a week. ” According to the evidence of Dunn, it was only from one to four days. The knowledge he obtained by that visit, made almost immediately after plaintiffs left (in regard to the condition of the mine), is shown to be all he had more than that possessed by plaintiffs.
The basis upon which the alleged fraud is predicated is: First. The alleged statement of J. O. Dunn, often repeated and reiterated, to plaintiffs, that at the time of his last visit ‘ ‘ it looked about the same as when they were there.” Or, in the language of Dr. Wheeler: “He said the mine looked about the same; in fact, that was the stereotyped reply to all such questions,'— ‘ about the same as when we were there.’ ” Second. In effect, that such statement was known by Dunn to be untrue, and that he knew the ore had been worked out by the lessees, and that they had quit work before he left the mine, and that he concealed the fact from the plaintiffs, and fraudulently agreed or conspired with the lessees to conceal the fact from their knowledge.
If such a statement as charged was made and reiter
It cannot be said that the fact of the making of the al
(a) It is alleged in the complaint that Dunn remained at the mine' four weeks after plaintiffs left. The evidence shows he only remained about two weeks or less. (6) Thai at the time' Dunn left he well knew Ingersoll and Bennett had abandoned work on the mine, and suppressed the fact from the plaintiffs, (c) That Ingersoll and Bennett quit the mine about the time Dunn left because there was no ore, and informed Dunn of the fact, and Dunn suppressed it. (d) That Dunn, Ingersoll and Bennett agreed to say nothing of the failure of the ore in the mine, and that Dunn suppressed the fact that Ingersoll and Bennett had abandoned their lease.
It is shown by the evidence that at the time Dunn left the mine Ingersoll and Bennett were working it, and taking out ore. Bennett testified that he came to Denver and saw Dunn in the city before September 25th. That they quit work on the mine the last of October, and that the last ore — thirty-four sacks — was taken away from the mine October 31st. In argument counsel attempted to predicate the knowledge of Dunn that the ore in the mine had been worked out and exhausted, and his concealment of the fact, upon the evidence of Roberts, who packed the ore from the mine, who said that some time after the 20th of the month he met Dunn, who asked him in regard to the ore with which his pack-train was loaded. He said it was not Veta Madre ore, but was Highland Mary ore, and, when asked by Dunn why he was not loaded with the ore from their mine, he said there was no ore there. The latter part of his testimony is entirely ignored or overlooked. In cross-examination he says that he did not refer to the fact of there being no ore in the mine, but to the fact that there was no ore at the mine for transportation on that day; and also adds that he continued to pack ore at intervals from-that
The last of the above allegations is not wholly unsupported by testimony, but is contradicted. That work had not been suspended at that time is shown above; consequently there could have been no agreement for conspiracy to suppress the fact. The lease had not been abandoned. It will be remembered that Ingersoll and-Bennett entered the next work under a parol contract for a lease. Bennett testified that he came to Denver after Dunn left the mountains, and saw Dunn, the Wheelers and Kavanagh about the lease. This fact also appears in the evidencé of plaintiffs and Kavanagh. Bennett also testified that on that occasion he wanted the royalty they were to pay reduced, and that he informed them that the mine was not looking as well as when they left, which fact is also testified to by Kavanagh. It also appears that Bennett came down in November to see about the execution of the lease, but for some unexplained reason no lease was made. At that time the lease had not been abandoned. Bennett said: “They did not know but what I was going to work it another year; we did not know but we would ourselves.” It is unnecessary to say more of these allegations.
Theré are two or three other matters in regard to the condition of the mine after the owners left, in the fall of 1887, that should be noticed, — facts, if not of themselves sufficient to inform the plaintiffs in regard to the condition and character of the mine, certainly sufficient to put them upon inquiry, and cause an investigation which would have given them all the necessary information previous to the purchase in the following April. Although the lessees were to pay twenty-five per cent, royalty, Dr. Wheeler testified to his knowledge of the fact that they had quit work (although he places it at a date muela earlier than it occurred), and says: “Ingersoll and Ben
In Clapham v. Shillito, 7 Beav. 149, Lord Langdale said: “Cases have frequently occurred in which, upon entering into contracts, misrepresentations made by one party have not been in any degree relied on by the other party.. If the party to whom the representations were made himself resorted to the proper means of verification before he entered into the contract, it may appear that he relied upon the result of his own investigation and inquiry, and not upon the representations made to him by the other party; or if the means of investigation and verification be at hand, and the attention of the party receiving the representations be drawn to them, the circumstances of the case may be such as to make it incumbent on a court of justice to impute to him a knowledge of the result, which, upon due inquiry, he ought to have obtained, and thus the notion of reliance on the representations made to him may be excluded.” See, also, Lowndes v. Lane, 2 Cox, 363; Pickering v. Dowson, 4 Taunt. 779; Jennings v. Broughton, 17 Beav. 234. In White v. Seaver, 25 Barb. 235, the court says: “A pur
In order to properly examine all the questions presented on this branch of the case, it is necessary to state the general principles of law applicable. It is said in Bigelow on Frauds, 466, that a fraudulent misrepresentation is made up of five elements: (1) A false representation. (2) Knowledge by the person who made it of its falsity. (3) Ignorance of its falsity by the person to whom it was made. (4) Intention that it should be acted upon. (5) Acting upon it, with damage.
An action at law for damages for deceit requires all these elements. In equity a case may be made without the second, and sometimes without the fifth. Very nearly the same enumeration of the elements going to make up a fraudulent misrepresentation is given in 2 Pom. Eq. Jur. 357. Regarding the character of the alleged misrepresentation it is said: ‘ ‘ The real consideration is whether of itself the representation is such as would be apt to induce action on the part of the average man.” See Bigelow, Frauds, 470. In Smith v. Corporation, L. R. 28 Ch. Div. 7, Lord Justice Bowen said: “In a case where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion; * * * but, if the facts are not equally known to both sides, then a' statement of opinion by one who knows the facts best involves very often a statement of a material fact.”
Probably the most clear and comprehensive statement of the elements necessary to constitute a fraudulent misrepresentation is given in Kerr, Fraud & M. 73, 74, where it is said: “In order that a misrepresentation may sup
It is stated by one witness, in speaking of the Veta Madre mine (the one in controversy): “It was considered a wonderful thing. Prof. Hayden gives at least two-pages describing it. It has made a good deal of talk in that country.” He said of the ore, after describing the width of the vein: “ It was in small chunks, disseminated through the vein, from' the size of a bean or marble up to three or four inches square.” Mr. Wheeler, in his testimony, in speaking of the mine, said it was fifteen feet between walls, interspersed with the ore;” and of the character of the ore, and necessity of concentration, “that they thought it would probably go, without any selection at all, twenty tons into one; that it would be an easy matter to sort it down to twelve, and easier still to six, into one, when its value would be at least $200 a ton for the concentrates.” It appears that plaintiffs, or at least Mr. Wheeler, early realized the low grade of the ore by reason of its dissemination in small quantities through a large amount of gangue, and the necessity of concentrating it. He testifies that in the fall of 1886 he went back to the mine expecting to do considerable in putting up the concentrating mill at that time, and that he had been in Denver to raise money to prosecute the work. Dunn thought it too late in the season, and he acquiesced. It is evident, though perhaps inferentially, that in the ’fall of 1881 he was more fully impressed with the necessity of having concentrating works in connec
This is all the evidence in regard to her participation in the affairs. That the Dunns were willing and anxious to sell is inferable; that plaintiffs were anxious they should sell is well established by their own testimony. To carry out the project and secure a mill, the parties entered into negotiations with Terry & Jessup, whereby they (Terry & Jessup) were to buy Dunn’s interest in the mine, and a portion of the Wheeler interest, for $75,000; they to put up a concentrating mill, and plaintiffs to build a tramway to offset the cost of the mill. This arrangement or negotiation was entered upon some time in the early winter of 1887, and resulted in a contract whereby the purchase was to be made and the mill and tramway built. Terry was the mill man and' Jessup supposed to be the capitalist. He was to 'make the first payment on the property izi May. He failed to get the money, and the scheme for selling was abandozied, azid he dropped it. The arrangement for the retaining of Terzy and the building of the mill continued; hence it became necessary to buy out the Dunns.
Mrs. Wheeler testified: “The inducements which led us to make the contract with Dunns were to save the entire deal from falling through, as I understand it,— to take Jessup’s place.”
It becomes apparent from the foregoing that whatever statements were made, if any, prior to March, 1888, could not have been made for the purpose of influencing the plaintiffs, but Terry and Jessup, and whatever influence they could have had could only have been by their reiteration after that time. That plaintiffs did not rely upon the statements of the defendant in regard to the value of the property, to their injury, is apparent from their own testimony. It appears from the testimony of Dr. Wheeler that, long prior to the alleged statements, he offered to exchange certain property in Denver, of the estimated value of $40,000, for the interest of Dunn. It also appears from the testimony of both plaintiffs that while the negotiations with Terry and Jessup were pending, the parties got together and proceeded to work out on paper the value of the ore exposed in the mine by the actual development on the date of the last visit of plaintiffs on September 6th. The conclusion was unanimously reached that allowing twenty tons to be concentrated into one, and the concentrated ton to be of the established value of $200, the value of the ore exposed was from $40,000 to $50,000. This was testified to by both plaint
It is also in evidence, by the testimony of both plaintiffs, that defendant Dunn was reprimanded by Dr. Wheeler for a statement made to Terry wherein he was supposed to have underestimated the value of the exposed ore and size of the mine. The testimony of both is essentially the same. Dr. Wheeler said: “ I have not told all the language used by Mr. Dunn. At the first meeting with Mr. Terry Mr. Dunn described the mine, saying: ‘ We have twelve feet that will go six into one.’ I spoke up and said: ‘ Why, Mr. Dunn, it is just as bad to lie under as to lie over. If you know the vein is fifteen feet feet wide it is just as bad to say that it is twelve as to say that it is twenty;-’ and he said, ‘ Well, I would rather put it mildly, so as to have people agreeably disappointed.’ I thought he was not telling the truth. I thought the vein was fifteen feet at the shaft.”
It is apparent that the conclusions reached in the above matters were not reached through or by reason of any representations made by the defendants, but from well-established data, as they supposed, in the possession of plaintiffs, about which, it was conceded, there could be no controversy. The supposition that it. was a united effort on the part of all the parties to mislead Terry could not be entertained, as it is rebutted by the subsequent conduct of the plaintiffs. We are bound to conclude that it was a clear case of self-delusion or deception, and the exaggerated estimate of the value of the mine and the amount of ore exposed, from what was supposed to be correct data, was so at variance with results and subsequent facts as to clearly establish this conclusion.
By putting twenty tons of crude ore into one the value of the ore was fixed at $200; consequently the value of one ton of crude ore was $10. To produce $40,000 would have required four thousand tons. To have mined it out between the 10th of September, when lessees commenced
It is in evidence by Dr. Wheeler, that, by a visit to and an examination of the mine, he learned of the alleged fraud in the latter part of May, 1888. It is a well-settled rule of law that a party wishing to rescind must do so at once, on learning of the fraud. If he does not do'SO, he will be held to have affirmed the transaction. To avoid this conclusion it is alleged in the complaint “that, immediately upon plaintiffs discovering the fraud practiced upon them, they at once set about attempting to find proof, if possible, that said Dunn knew of the condition of said mine when he left there, in the fall of 1887. That owing to the fact that men who knew the facts as to the condition of said mine were scattered, arid to the further fact that they were indisposed to give information upon said point, although questioned and requested so to do by said plaintiffs, plaintiffs failed to get any tangible testimony upon that point until about the middle of July, 1888, when plaintiff Byron immediately returned home from said mine, and proceeded to tender said deed hereinbefore stated. ”
An examination of the record will show that if he, as stated, succeeded in finding such testimony, he neglected to avail himself of it upon the trial, as before shown. ISTo attempt was made to prove the facts by Bennett and others who testified, and, as will be seen by the examination of the record, the alleged worked-out, depleted and worthless condition of the mine after lessees quit work rests entirely upon the evidence given by Mr.
We have reviewed this part of the case at great, and perhaps unnecessary, length; but the amount involved, and its importance to the parties, as well as the necessity of a thorough examination of the pleadings and evidence for a proper application of the law, seemed to render it necessary. We are clearly of the opinion that plaintiffs failed to establish the allegations in the complaint, and make a case warranting a decree of rescission. There can be no doubt that the plaintiffs paid more than the value of the property (if the evidence is reliable), and the transaction may be financially disastrous; but courts cannot relieve against the carelessness, inattention or self-deception of parties. “A failure in a speculation does not constitute ground for relief.” Turner v. Navigation Co. 2 Dev. Eq. 236. For these reasons the case should have been dismissed.
The suit at law in Wyoming was brought previous to the bringing of this. Was at that time pending and undetermined. There had been no adjudication. There was no judgment. The attempted rescission of the contract of sale was on July 27th, by the acts of plaintiffs. The following day the suit for damages was instituted in Wyoming for the alleged fraud and deceit. This suit was brought subsequently to rescind by decree of courfi The bringing of the suit at la'w after the attempted rescission was a tacit admission that there had been no legal rescission by the acts of the parties that could be so regarded and sustained in the courts. The object of the plaintiffs on the 27th of July, and in this suit, was to disaffirm the contract of purchase. The legal effect of the action at law was to affirm it. In Bigelow, Frauds, 65, it is said: “If, however, two proposed proceedings are inconsistent, the law will allow but one of them. If the two are pending at the same time, the law will re
In Jewett v. Petit, 4 Mich. 511, the court says: “ One who has been induced to enter into a contract by the fraudulent representation of the other party may, on discovery of the fraud, disaffirm the contract. He has his election in the first instance, but it is well settled that he cannot do both. The assertion of the right to affirm is a renunciation of the right to disaffirm, and vice versa.” In 2 Add. Cont. 777, it is said: “And whenever a party to a contract has a right to elect whether he will avoid it, or treat it as a subsisting contract, his election may be manifested by acts as well as by words, and when once made is final, and cannot be retracted.” The theory of the law seems to be that the two proceedings are inconsistent, incompatible and contradictory, and this position is further sustained by the following authorities: Com. Dig. “Election,” ch. 2; Ward v. Day, 33 Law J. Q. B. 13; Selway v. Fogg, 5 Mees. & W. 83; Strong v. Strong, 102 N. Y. 69; Bowen v. Mandeville, 95 N. Y. 237; Moller v. Tuska, 87 N. Y. 166; Mallory v. Leach, 35 Vt. 156; Heastings v. McGee, 66 Pa. St. 384; Whitney v. Allaire, 4 Denio, 554.
The court properly concluded that plaintiff Wheeler, by bringing his action at law after the attempted rescission of July 27th, had made his election, abandoned his
It is contended by counsel that the court erred in dismissing the suit on the third plea of defendants, for the reason that the suit in Wyoming was by Mr. Wheeler alone, while the suit here was by both himself and wife. We are not aware that the leaving out of one plaintiff in Wyoming or adding one here is a matter of very grave importance. If Mrs. Wheeler was a necessary party in Wyoming, the failure to put her in could probably have been corrected in the course of the proceeding. If unnecessarily made a party in this suit, it being in equity, no harm could be done. The identity of suits can only be determined by the subject-matter of the controversy. In this instance there can be no question of identity. To hold otherwise would allow the same controversy to be litigated in several different courts at the same time simply by adding parties at the will of counsel; but, as counsel seems to rely upon the point, we will attempt to determine whether she was a necessary and indispensable party in this suit. Whether she was in the Wyoming suit must be determined by that court.
In 1 Perry on Trusts, § 183, p. 149, it is said: “ There must be an actual payment from a man’s own money, or what is equivalent to payment from his own money, to create a resulting trust, and the money must be advanced and paid in the character of a purchaser; for if one pay the purchase money by way of loan fox-another, and the conveyance is taken to the other, no trust will result to the one who thus pays the purchase money.” To same point, Bartlett v. Pickersgill, 1 Eden, 516; Crop v. Norton, 9 Mod. 235; Dudley v. Bachelder, 53 Me. 403; Wheeler v. Kirtland, 23 N. J. Eq. 13; Tunnard v. Littell, id.. 264; Page v. Page, 8 N. H. 187; Reeve v. Strawn, 14 Ill. 94. In White v. Carpenter, 2 Paige, 217, 265, it is said: “ Such a trust, cannot be raised in favor of a person by the mere payment of the purchase money, if it is not the intention of either party that the legal estate should vest in him. The office of a resulting trust is to carry into effect the intention of the parties, not to defeat that intention.” Citing and approving St. John v. Benedict, 6 Johns. Ch. 111, where the whole question of a resulting trust is elaborately discussed by the learned chancellor.
I concur: Pattison and Richmond, 00.
For the reasons stated in the foregoing opinion the judgment of the court below is affirmed.
Affirmed.
Rehearing
ON PETITION FOR REHEARING.
The judgment of the district court against plaintiff was abased exclusively upon the third defense, which was that plaintiff had elected not to rescind the contract. By affirming this judgment parties are left at liberty to prosecute or defend any other kind of action or proceeding in reference to the subject-matter of this litigation, as they shall be advised. In any such action or proceeding neither the finding of the district court upon the evidence, nor the discussion and conclusion thereon by Mr. Commissioner Reed, shall prejudice the rights of either party. The judgment of the district court is accordingly affirmed, the former opinion per curiam is modified, and the petition for rehearing is denied.
Rehearing denied.