Hallen v. Martin

167 N.W. 314, 40 S.D. 343, 1918 S.D. LEXIS 73
South Dakota Supreme Court·Decided April 12, 1918·No. File No. 3587·Published·Cited by 6 cases

Opinions

McCOY, J.

Ini December, 1909, the plaintiff, pursuant to an agreement in writing theretofolre made, conveyed -to' defendant, subject to incumbrances, 360 acres of New Mexico land, and a lot in thie oi:ty of Brookings, S. D., and gave defendant a -bill of sale of a blacksmith shop on said lot. As¡ a consideration therefor plaintiff received- a deed -of 640 acres -Of New Mexico land, -and gave to defendant a mortgage of $2,880 thereon. Plaintiff took up hi.s residence upon his liewfy 'acquired- l'andl in January, 1910, and 'in Jume, 191-1,’ disposed of thie sarnie-. In 1912 he brought thi-s action for $10,100 damages for fraud and' deceit in defendsantis representations -as to the kind, quality, v-al-ue, and fitness ficlr .agriculture -of 'the' land -traded for, whereby' he -w-as induced to enter into the agreement for exchange. Trial' was [346] (hlad to th-e jury, which- rendered a verdict-for plaintiff in the s-u'm of $3,680, •with interest. Brom the jud^^ment and an arder denying a new trial defendant appeals.

Motion) to' diiislmliis-s appeal -has been made based on the ground that since tíre appeal was' perfected the appellant has taken a plasMon (inconsistent with his right to) further maintain- this appeal’; but a majority olf the membersi of this court are of tire view that s-uicih motion is without merit, and the sarnie is therefore denied.

There was. much 'conflict in tíre evidence upon the issues of fact, 'as we view the evidence, the same was sufficient to sustain tihle verdict.

[1] A vital question urged1 by appellant is that tire trial •court, by instructions, submitted toi the jury an erroneous measure of damages. The tidal court instructed the jury that the measure of plaintiff’s damages was the difference between what the property be traded for was; worth and what it would have been worth if it had been as represented. Appellant contends that tíre measure of plaintiff’s damages was the difference in value between what plaintiff got and wlfait' he parted with. This is a tort action, sounding in damages, for fraud and deceit. Plaintiff alleged, .and the jury so. found, that defendant fraudulently deceived plaintiff as to the quality of the New Mexico, land:. Plaintiff didi not seek a rescission of due contract of sale, but, electing. toi stand on tíre contract, brought this action for fraud and deceit. The only question here involved is, what is tire proper rule or measure of damages applicable to a case of this character? There 'is what .is -termed a “majority” andl a “minority” rule. 153 Iowa, 274, 133 N. W. 709, 38 L. R. A. (N. S.) 465, Ann. Cas. 1913E, 274. Under the minority rule in such cases, ¡the measure of damage is the difference between the actual value of tire property sold at the time of sale and- the price paid therefor by plaintiff. The “minority” seem is to be the -rule adhered to by s-ome of the federal courts and a very few of the state courts. The “minority” rule is well stated! in Smith v. Bolles, 132 U. S, 125, 10 Sup. Ct. 39, 33 L. Ed. 279. By reason of the overwhelming weight of judicial decision of the state courts, -th-e views of -the best text book writers, and the provisions of our Code, we are inclined ito the view) (that the “majority” rnl-e is the [347] sounder and the'one established in this state by our Civil Code. Under the “majority”' -rule, the measure of damages, in tort actions for fraud and deceit, is the difference between the actual value óf the property as it was at 'the time of -sale and what it would have been worth if the representation® bad been true. In Stoke v. Converse, 153 Iowa, 274, 133 N. W. 709, 38 L. R. A. (N. S.) 465, Ann. Cas. 1913E, 270, a very recent case, .the Supreme -Court of Iowa said:

“The overwhelming weight of authority in this' country approves'the allowance, as the measure of-damages, of the difference between the actual value of the property at the time of the purchase andi its value if it -had been what it was represented to be.”

'The opinion in this Iowa case by Mr. Justice Ladd is well ■considered!, review® the authorities thoroughly, and should be carefully read anld considered in passing upon this .rule.

In Gunderson v. Mining Co., 22 N. D. 329, 133 N. W. 554, the Supreme 'Count of North Dakota, with a Civil Ooidle .precisely the same as exists lin this state, said:

“This ¡is an action for deceit, not for 'rescission. There is a vast difference between the actions, and ¡the difference must conistamtly be kept in mind. * *• * The plaintiff * * * demands that the representations of the sellers be made good in damages. * * * His damages would be the difference between -what his stock would have been worth at the time of the sale if as represented and what At was ¡actually worth at that time. Or, stated a little differently, hie can compel the sellers -to make good their- representation's by paying ¡damages fiotr those things they have misrepresented. We must go- back to the day the stock wlas sold, and determine how much more plaintiff’is ¡stock wlould have been worth had the statements made to him been true.”

In Fargo Coke Co. v. Fargo Elec. Light Co., 4 N. D. 219, 59 N. W. 1066, 37 L. R. A. 593, a prior decision, the Supreme Court of Niaritb Dakota also ¡said:

“It is obvious .that ¡these two¡ mies cannot ;be reconciled. One gives to the party deceived thle full' benefit otf his bargain. • Tire other does not. We are -clear that the best reason is with the doctrine that, where one is deceived and defrauded, he can recover as damages the difference between thie value of what he would have obtained had the statement 'been- true and the value [348] of what he actually .received. This represents his actual lo’ss by ■reason off the fraud of the seller, on the theory that he does not rescind' the 'contract. Of course, if hie sees fit to rescind' for fraud, he can. only recover back what he has paid. But if he desires to stand by tine agreement, as he has a perfect right to d'oi, he can logically say to tire wtfongdber: 'If jtou had told me the truth, the property would have 'been worth bo much. It 6s not worth so much, because it is not as you represented it. I demand that you make good1 the difference in money/ ”

Tire logic and reasoning of this Ntorth Dakota decision by Mr. Justice Corliss seems to ns to he unanswerable. In Spreckles v. Gorrill, 152 Cal. 383, 92 Pac. 1011, the Supreme Court of California, under a Civil Code also precisely the same as sections 2293 and 2312 of the Civil Code of this state, speaking of this rule, said:

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Hallen v. Martin, 167 N.W. 314, 40 S.D. 343, 1918 S.D. LEXIS 73 (S.D. 1918).

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