Carty v. McMenamin & Ward

216 P. 228, 108 Or. 489, 1923 Ore. LEXIS 67

• Court: Oregon Supreme Court
• Decided: June 26, 1923
• Status: Published

Opinion

BROWN, J.

The bill of exceptions discloses a number of assignments of error relating to the reception of evidence to which we make no reference in this opinion. We deem all assignments of error not referred to in appellants’ brief to have been waived.

In the case of Tracy v. Juanto, 103 Or. 416 (205 Pac. 822), this court, speaking through Mr. Justice Band, said:

“Where no argument is presented in appellant’s brief upon an assignment of error, it is deemed to have been abandoned and waived. See Miller Limber Co. v. Davis, 94 Or. 507, 515 (185 Pac. 462); Donohoe v. Portland Ry. Co., 56 Or. 58, 61 (107 Pac. 964); Cody v. Black, 97 Or. 343, 345 (191 Pac. 319, 192 Pac. 282).”

To like effect are Hahn v. Mackay, 63 Or. 100 (126 Pac. 12, 991); Domurat v. Oregon W. R. & N. Co., 66 Or. 135 (134 Pac. 313).

The first question presented is: Does the complaint state facts sufficient to constitute a cause of action?

The defendants, in their opening brief on appeal, say:

“Prom an inspection of the pleadings this action was brought by respondent, apparently, to rescind the contract of assignment of the said pasturage and recover the entire consideration paid therefor.”

The plaintiff’s theory of the case is, that it is not a suit for rescission of the contract, but an action for damages for false and fraudulent representations which induced the plaintiff to enter into the contract. At no time did the plaintiff attempt to rescind the contract. He chose to affirm the contract and get what feed he could for his sheep upon the leased range and bring an action for damages against the defendants for their alleged fraudulent representations. The plaintiff had a right to elect the remedy to be pursued in this litigation: Scott v. Walton, 32 Or. 460, 464 (52 Pac. 180, 181); Seech v. Jakel, 71 Or. 35 (141 Pac. 211, L. R. A. 1915A, 679; and the cases there collected).

“It is often difficult, especially under the Code system of pleading, to determine the real cause of action set out in a pleading alleging fraud. But, where the facts stated establish a cause of action for deceit, it is ordinarily immaterial by what name the action is designated. Since an action of deceit based on fraud in the procurement of a contract proceeds upon the theory of affirmance of the contract, the fact that the contract is set out as a matter of inducement does not stamp the action as one ex contractu; * * and an averment indicating that the action is based on contract may be disregarded if there are1 substantial averments of fraud. Where the complaint states a good cause of action for fraud and deceit, allegations relating to a rescission of the contract may be disregarded.” 27 C. J., §145, p. 29.

The complaint in the instant case could not sustain a suit to rescind the contract. When Carty made his alleged discovery of fraud, he made no offer to return his right to graze the lands under the contract, promptly, or at all. But, on the other hand, he retained possession of the lands and exercised his right to depasture his sheep thereon, and filed this action for damages on account of the averred fraud practiced upon him by the defendants.

In Riddle v. Isaacs, 97 Or. 404 (192 Pac. 398), this court, by Mr. Justice Burnett, wrote:

“In order to be a good pleading of fraud, the representations claimed to be false must be stated. The truth must be averred, so that the court may determine the falsity of the representations alleged to be fraudulent. It must appear that the individual making them knew they were false, and that he intended thereby to perpetrate a fraud; and, finally, that the party seeking to be relieved from the fraud relied upon such representations. This is the doctrine taught in Rolfes v. Russell, 5 Or. 400; Dunning v. Creson, 6 Or. 241; Wimer v. Smith, 22 Or. 469 (30 Pac. 416); Martin v. Eagle Development Co., 41 Or. 448 (69 Pac. 216); Bailey v. Frasier, 62 Or. 142 (124 Pac. 643); Smith v. Anderson, 74 Or. 90 (144 Pac. 1158); Waller v. City of New York Ins. Co., 84 Or. 284 (164 Pac. 959, Ann. Cas. 1918C, 139).”

Measured by the established rule of a good pleading of fraud, the complaint in the instant case is sufficient. It sets forth the representations claimed to be false, and their materiality. It avers the falsity of such representations and knowledge upon the part of the defendants of their falsity. It avers what it claims to be the truth. It alleges that the defendants knowingly made the representations with the intention that the plaintiff should act upon them, and that he did act in full reliance upon such representations, to his injury. The demurrer to the complaint was properly overruled.

There is no merit in the defendants’ assignment of error involving the ruling of the court in denying the defendants’ motion to require plaintiff to elect upon which ground of action he would rely in the trial of the case. The complaint shows that Carty is relying upon his charge of fraud and deceit upon the part of the defendants, and his complaint states but one cause of action: Summers v. Geer, 50 Or. 249 (85 Pac. 513, 93 Pac. 133).

In support of their motions for a nonsuit and a directed verdict, defendants urge that the plaintiff ought not to recover because he was negligent in not examining the range. There is evidence in the record that makes' the following language appropriate:

“Where one assumes to have knowledge of a subject of which another may be ignorant, and knowingly makes false representations regarding it, upon which the other relies to his injury, the party who makes such statements will not be heard to say that the person who took his word and relied upon it was guilty of such negligence as to be precluded from recovering compensation for injuries which were inflicted on him under cover of the falsehood.” David v. Moore, 46 Or. 148, 156 (79 Pac. 415, 417).

To similar effect is Steen v. Weisten, 51 Or. 473 (94 Pac. 834).

In the instant case the land was situate seventy-five miles from the residence of plaintiff, and, being unable to make a personal examination of the same, he was induced by defendants to rely upon their representations as to its character.

In furtherance of their contention, the defendants invoke the following provision of the contract between the parties as precluding oral proof of the representations made by defendants to the plaintiff in the matter of the quality and value of the range.

“The second party (McMenamin & Ward by F. A. McMenamin) makes no representation herein as to the value or grazing quality of said range.”

Defendants’ position is untenable. The law is otherwise. If a party is guilty of fraud in making a contract, he cannot exculpate himself from the consequences of his own wrong by a provision in writing that his fraudulent oral representations shall not be used as evidence against him in a case in which fraud and deceit is the gist of the cause.

“Parol evidence of false and fraudulent representations inducing one to enter into a written contract is admissible, notwithstanding the contract contains an express recital that there have been no representations, or that all oral representations shall be inoperative.” 14 Am. & Eng. Ency. of Law (2 ed.), 200.

The case of Dieterich et ux. v. Rice, 115 Wash. 365 (197 Pac. 1), is a valuable one illustrating the principle under consideration. That case involved a written contract whereby one Dieterich agreed with the defendant Bice for the purchase of certain lands. The contract contained the following clause:

“This land is sold to second party subject to any and all county roads, and with the understanding’ that he has personally and carefully inspected said premises and is purchasing the same by said inspection, and not from any other sayings or inducements by first party or his agents, and there has been no other inducements other than recited herein, and that no changes or verbal agreements now or hereafter will be binding on either party, unless reduced to writing and signed by both first and second parties.”

Thereafter, Dietexich prosecuted a suit to rescind and annul the contract and to recover the sum paid by him on the purchase price. The plaintiff’s cause was based on fraud and deceit. After reciting the contents of the complaint and stating the question before the court, Mr. Justice Fullerton wrote:

“But it is said that the appellants are estopped to urge these representations as fraudulent by the clause of the contract which we have heretofore set forth at length. This contention is so effectually answered by the Court of Appeals of New York in the case of Bridger v. Goldsmith, 143 N. Y. 424 (38 N. E. 458), that we feel justified in quoting from it somewhat at length. * * The contract of sale was reduced to writing and executed under seal. It contained the following clause: ‘It is expressly understood and agreed between the parties hereto that the said party of the first part has not, in any manner or form stated, made or represented to the said party of the second part, for the purpose of inducing the sale of the said business or the making of this agreement, any statements or representations, verbally or in writing, in respect to the said business, other than that the said party of the first part has been engaged in the piano business in the City of New York since 1867.’ ”

The excerpt quoted from the New York court is, in part, as follows:

“The question now is whether it (clause relating to representations) can be given the effect claimed for it by the learned counsel for the defendant, to preclude the plaintiff from alleging fraud in the sale and pursuing in the courts the remedies which the law gives in such cases. It cannot operate by way of estoppel, for the obvious reason that the statements were false to the defendant’s knowledge. He may, indeed, have relied upon its force and efficacy to protect him from the consequences of his own fraud, but he certainly could not have relied upon the truth of any statement in it. A mere device of the guilty party to a contract intended to shield himself from the results of his own fraud, practiced upon the other party, cannot well be elevated to the dignity and importance of an equitable estoppel. If the clause has any effect whatever, it must be as a promise or agreement on the part of the plaintiff that, however grossly he may have been deceived and defrauded by the defendant, he would never allege it against the transaction or complain of it, but would forever after hold his peace. It is difficult to conceive that such a clause could ever be suggested by a party to a contract, unless there was in his own mind at least a lingering doubt as to the honesty and integrity of his conduct. * * Public policy and morality are both ignored if such an agreement can be given effect in a court of justice. The maxim that fraud vitiates every transaction would no longer be the rule, but the exception. It could be applied then only in such cases as the guilty party neglected to protect himself from his fraud by means of such a stipulation. Such a principle would in a short time break down every barrier which the law has erected against fraudulent dealing * * .”

It is the law of this state that a nonsuit will not be granted whenever there is some competent evidence produced by the plaintiff in the trial of a cause supporting each material allegation of his complaint. This court has frequently declared that a motion for a nonsuit is in the nature of a demurrer to the evidence, and that such a motion admits not only all that the evidence proves, but all that it tends to prove: See Collins v. United Brokers’ Co., 99 Or. 556, 559, 560 (194 Pac. 458, 459), and local citations.

The defendants’ motion for a directed verdict presents the same question as does their motion for a nonsuit, so far as it relates to the evidence. As said by this court, speaking through Mr. Justice Harris, in Ridley v. Portland Taxicab Co., 90 Or. 529 (177 Pac. 429):

“A motion for a directed verdict presents the same question for decision as does a motion for a judgment of nonsuit; but the plaintiff is of course entitled to the benefit, not only of his own evidence, but also to the benefit of any evidence favorable to him, though introduced by the defendant: Huber v. Miller, 41 Or. 103, 110 (68 Pac. 400); Merrill v. Missouri Bridge Co., 69 Or. 585, 593 (140 Pac. 439). While a motion for a nonsuit and a motion for a directed verdict give rise to the same inquiry, the result of an approving decision is not the same. A judgment of nonsuit operates merely as a dismissal of the action: Section 184, L. O. L.; Malloy v. Marshall-Wells Hdw. Co., 90 Or. 303 (175 Pac. 661); but a judgment on a directed verdict concludes the controversy: Huber v. Miller, 41 Or. 103, 110 (68 Pac. 400). A motion for a directed verdict as well as a motion for an involuntary judgment of nonsuit challenges the legal sufficiency of the evidence.”

The testimony offered by the plaintiff in support of his complaint is strenuously controverted by defendants. But, in the absence of authority to weigh the evidence, we are precluded from determining who has made the better case.

It is asserted that no fraud has been proved, and that “the transaction was square.”

The boohs afford many illustrations of expressions uttered by the courts relating to the degree of proof required to establish fraud. Some of the courts have said that fraud must be established by strong, cogent and convincing evidence, by clear and convincing evidence, by satisfactory and convincing proof: 27 C. J. 64; 12 R. C. L., § 183, p. 436.

Under our Code, in a civil action fraud must be established by a preponderance of the evidence, such as is necessary in other civil cases. The rule set down by our Code of Civil Procedure, Section 868, subdivision 5, provides, in effect, that a preponderance of the evidence controls in a civil case. That rule applies in this case, which is a civil one, in which fraud is alleged. "While the law casts the burden of proof on the plaintiff to sustain the averments of fraud contained in his complaint, the jury are the exclusive judges of the credibility of the witnesses for the plaintiff and the defendant, and of the weight to be given to their testimony adduced upon the trial.

"We have with care read all of the testimony adduced in the trial of this cause, and find that the record discloses some competent evidence in support of each material averment contained in the complaint. Finally,—

“No fact tried by a jury shall be otherwise reexamined in any court of this state, unless the court can affirmatively say there is no evidence to support the verdict.” Section 3c, Art. VII, Constitution of Oregon.

This case is affirmed.

Affirmed. Rehearing Denied.