Bradley v. Bosley

1 Barb. Ch. 125

Opinion

The Chancellor.

Upon a careful examination of the testimony in this case, I think the complainant succeeded in establishing the fact that the defendant was guilty of a misrepresentation as to the situation of the Illinois lot, and the quantity of wood and timber thereon, and as to the quality of the land; and that by such misrepresentation the complainant was induced to allow for that lot, upon the sale of the Le Roy farm to the defendant, much more than he would have done, if the facts had been truly stated to him. It is very evident, from the whole case., that the defendant knew he was dealing with a man who" was wholly unacquainted with the situation and quality of the land in the Illinois lot; and who relied upon his representation of those facts, to enable him to form a proper estimate of what he could afford to allow for that lot, in part payment of the price he had fixed upon the Le Roy farm. The defendant, therefore, if he knew the facts in relation to the situation and quality of the Illinois lot, and the amount of wood and timber thereon, should have stated them truly. And if he did not know them, so as to be able to state them substantially as they existed, he Should have frankly told the complainant so; in answer to the inquiries which the latter repeatedly made of him. It is true, a purchaser has no right to rely upon the price which a vendor asks for property, or even upon his statement of what it is worth, as evidence of its real value; but must form his own estimate of the value of the property, after ascertaining the facts upon which its value depends. Still, if the vendor, knowing that the purchaser is unacquainted with the land, makes a false representation as to any matter which, if true, would materially enhance the value of the jproperty, he is in equity bound to make good his representation.

The vice chancellor, however, is right in supposing that this contract ought not to be rescinded in part; so as to compel the defendant to keep the Le -Roy farm at the nominal price put upon it by the parties in this exchange of property, and to allow the complainant to rescind the contract so far as relates to the Illinois lot only, and to recover the whole $1100 at which that lot was estimated in the agreement for such exchange. Where a party has been defrauded by another in the purchase or sale of property, he may rescind the contract, so as to restore the parties to the same situation they were in when the contract was made,; or he may affirm the contract, so far as it has been exe-

cuted, and claim compensation for the fraud. But it must be a very special case which will authorize the injured party to come into a court of equity to have a' contract partially rescinded; and it must be one in which the court can see that no possible injustice will be done by such a course. In the present case, I am satisfied neither of the parties supposed the Illinois lot was worth $1100 in cash; nor would the complainant have been able to sell the Le Roy farm for the $4000 at that time, had he not agreed to receive the Illinois lands in exchange, at the rate of $5 per acre. The witnesses, who reside in the neighborhood of the Illinois lot, do not pretend that if it had corresponded, in all respects, with the defendant’s representations, it could have sold for $5 an acre; or that other lands in that section of country, of the same character and quality which this was represented to be, and which were wholly wild and unimproved, were selling at anything like that price. It would not be equitable, therefore, to rescind the contract as to the Illinois lot only, and to compel the defendant to pay for it at that price ; even if the allegation in the bill was true, that the lot was actually worthless and unfit for farming purposes, which is not the fact.

The complainant does not ask to rescind the whole sale; and to take back the Le Roy farm and refund to the defendant the moneys he has paid, with the interest thereon, after deducting therefrom the rents and profits received by the latter. He is only entitled, therefore, to be compensated for the difference between the actual value of the Illinois lot in the state in which it was, in November, 1839, and that value as it would have been, at that time, if the representations of the defendant bad been true ; with interest on such difference subsequent to that time. And the only remaining question for consideration is, whether the vice chancellor was right in supposing this court had not jurisdiction to give the complainant relief, upon the facts in this case.

The general rule is admitted, that in cases of fraud, a court of equity has jurisdiction, although the party may obtain relief in an action at law. In Hardwick v. Forbes’ adm’r, (1 Bibb’s Rep. 212,) the court of appeals in Kentucky decided that where a fraud had been committed in the sale of personal chattels, and where the complainant did not seek to set aside the sale in toto, but merely to recover for a rateable deduction in consequence of the fraud or misrepresentation of the defendant, his remedy was at law and not in equity; as the ascertainment of the amount of such deduction belonged properly to a jury. And that decision was confirmed by that court in the subsequent cases of Cocke v. Hardin, (Lift. iSel. Ca. 374,) and Blackwell v. Oldham, (4 Dana's Rep. 195.) These decisions appear to be founded in good sense. And I am disposed to follow them so far as to hold that a bill in equity, for the purpose of obtaining a compensation in damages merely, to be paid by the defendant personally, cannot be sustained; where the defendant makes the objection at the proper time, by demurrer or answer, that the complainant has a full and perfect remedy by an action at law against the defendant. It is true, Lord Eldon, in the case of Evans v. Bicknell, (6 Ves. Rep. 174,) seems to think a court of equity will sustain a bill for the mere purpose of recovering damages for a fraudulent misrepresentation, by the defendant, by which the complainant is deceived and injured in making a contract. His opinion in that case, however, is more than counterbalanced by that of the late Chief Justice Marshall, in Russell v. Clark's ex'rs, (7 Cran. Rep. 69.) I may add, that the opinion of the late Chief Baron of the exchequer in England, is also in conflict with that of Lord Eldon on this question. In the case of Newham v. Macy, (13 Price's Rep. 749,) the bill was filed by the purchaser of an estate, to compel the vendor thereof to pay the difference between the actual value of the property sold and the value.as it would have been, if the representation of the agent of the vendor, as to the amount of the rental, had not been false. And in reference to the question of jurisdiction, Alexander, C. B. says: “ It is not in every case of fraud that relief is to be administered, in a court of equity. In the case, for instance, of a fraudulent warranty on the sale of a horse, or any fraud upon the sale of a chattel, no one, I apprehend, ever thought of filing a bill in a court of equity. The cases of compensation in equity, I consider to have grown out of the jurisdiction of the courts of equity, as exercised in respect to contracts for the purchase ot real property; where it is often ancillary, as,incidentally necessary to effectuate decrees of specific performance. This, however, appears to me to be no more than a common case of fraud by means of misrepresentation, raising a dry question of damages—in effect a mere money demand.”

In the case of Burrowes v. Lock, (10 Ves. Rep. 471,) Sir Wm. Grant, the master of the rolls, deferred to- the opinion of the lord chancellor, in Evans v. Bicknell, as he was bound to do. But his decision in that case was right upon another ground. There the complainant was the purchaser of the interest of the defendant Cartwright, in a residuary fund; of which fund Lock, the other defendant, was the trustee under a will. The bill was therefore properly filed against both defendants, to obtain the portion of the trust estate which the vendor had not disposed of or incumbered previous to the sale. It was correct, then, to retain the suit for the purpose of also giving to the complainant full and perfect relief in relation to his whole claim, against the defendants, arising out of that contract; instead of compelling him to bring two suits, one at law and the other in equity therefor. For the same reason, the court of appeals in Virginia very properly sustained a decree, for the refunding of a sum which had been improperly obtained from the complainant, upon a fraudulent concealment of the quantity of the land sold ; the bill having been filed not only for the recovery of that amount, which had been overpaid, but also to restrain the collection at law of a much larger sum, for which the complainant had given his bond before the discovery of the fraud. (Anthony v. Oldacre, 4 Call’s R. 489.) So in the case which came before the courts of Tennessee, in 1834, (Haywood v. Marsh,) where the fraudulent vendees of property had disposed of a part of it before the fraud was discovered ; the court set aside the sale as fraudulent, and revested the title in the complainant as to the part of the land which the defendants retained, and directed a reference to ascertain the damages, which he had sustained by the fraud, in respect to the part of the land which they had sold to other persons before the filing of the bill. Indeed, it may be considered as a settled principle of this court, in all cases of fraud, that if the party who has been defrauded is entitled to come here for any relief arising out of the contract in which he has been defrauded, and where it is necessary for him to allege and establish the fraud in order to obtain such relief, he may obtain full relief here, without resorting to a suit at law; although as to a part of the relief claimed he had a perfect remedy in an action at law for damages.

I think the case under consideration comes within that principle. Here, the Illinois lands were a part of the consideration to be received in payment for the Le Roy farm, which was conveyed to the defendant. And the vendor has, in all cases upon the sale of real estate, an equitable lien upon the estate sold for the unpaid purchase money, as between him and the vendee, unless there is either an express or implied agreement to waive such lien, although it is otherwise as to personal property. And where, by the fraud of the vendee, a part of the price of the lands sold in fact remains unpaid, although the vendor supposed he had been paid in full at the time, there is no waiver of the equitable lien for the part of the price that actually remains unpaid. I Thus, if upon the sale of a farm, the purchaser should pay for the half of it in good money, and for the other half in the worthless bills of a broken and insolvent bank, from which nothing could be obtained, the vendee fraudulently representing such bills to be good and collectable, the vendor would have the right to elect, either to rescind the sale and have a reconveyance of the land, or to charge the land itself with the half of the purchase money which remained unpaid ; as an equitable lien upon such land. And a person having an equitable lien upon land for the unpaid purchase money, may come into this court in the first instance, to enforce such lien; without resorting to a suit at law to recover the amount. So in the present case, although the complainant is not entitled to rescind the contract so far as relates to the Illinois lot merely, and is only entitled to the difference in value between the lot as it actually was and what that value would have been if the defendant’s representation had been true, the price of the Le Roy farm remained unpaid, at the time of filing this bill, to the extent of that difference. The complainant, therefore, had a right to come into this court to enforce such equitable lien against the Le Roy farm ; and as an incident to that relief, this court must ascertain the amount of such lien.

The complainant claims such a lien in his bill. And though he is under a mistake in supposing he is entitled to the whole $1100 and interest, his general prayer is broad enough to enable the court to give him what he is actually entitled to, upon the case made by his bill and by the evidence in support of the same. The decree appealed from must therefore be reversed with costs. And a decree must be entered, declaring that the representations of the defendant, in relation to the situation and quality of the Illinois lands and as to the wood and timber thereon, as proved in this case, were false and fraudulent as to the complainant; and that the complainant has an equitable lien upon the Le Roy farm for the amount of the difference in value between the Illinois lot as it was on the 28th of November, 1839, and the value it would have had if those representations had been true; together with the interest on that amount. If the parties agree upon the amount, the decree will direct the payment thereof, together with the costs of this suit; and if it is not paid within thirty days, together with the costs of the complainant, that the Le Roy farm, or so much thereof as may be necessary for that purpose, be sold by a master, upon a six weeks notice. But in case the parties cannot agree upon the amount, an issue is to be made up and tried at the circuit in Genesee county, to ascertain the same. The costs of the trial of the issue in that case, as well as the general costs in the cause, and all questions and directions as to the sale of the Le Roy farm to satisfy the amount of the lien, and other questions and directions, are to be reserved until the amount to be paid, including interest up to the time of their verdict, shall have been ascertained by the jury. The depositions in this case, so far as they are applicable, are to be read before the jury; but with liberty to either party to produce before the jury any other evidence relevant to the question to be decided upon the trial of such issue.