Palmiter v. Hackett

185 P. 1105, 95 Or. 12, 1919 Ore. LEXIS 251

• Court: Oregon Supreme Court
• Decided: December 30, 1919
• Status: Published

Opinions

BURNETT, J.

The vital contention in the suit is whether the representation of the defendants about the rentability of the property was fraudulent. The testimony is to the effect that the negotiations about the trade began early in December, 1918, and continued until January 27, 1919, when a contract was entered into outlining the terms of the exchange, followed by an exchange of deeds February 6, 1919. When the transaction was first broached, the defendants told the plaintiff Palmiter that the property was rented, the upper story as an apartment wherein a family was residing, and the ground floor as a garage, each at $25 per month, totaling $50 per month. The building was of wooden frame construction, sided with rustic and only partly ceiled. During the pendency of the negotiations the plaintiff husband examined the property and saw its physical condition. Meanwhile, the city authorities had waited upon the agent of the defendants in charge of the property and informed him of the ordinance which forbade the use of such a building simultaneously as a garage and as a residence. The agent immediately communicated this to the defendants and under instructions from his principal notified the tenants of the upper story to vacate. In all subsequent negotiations, however, although this warning from the city officials was known to both Nelson and W. A. Hackett, they scrupulously avoided saying anything to the plaintiffs about the matter. The latter were ignorant of the ordinance and of the notification which the city officials gave to the agent of the defendants and which was by him communicated to the defendants. The evidence is plain that the building was not rentable simultaneously as a garage and as a dwelling place; that this was known to the defendants and not to the plaintiffs; and that the representation about the availability of the property for leasing was made to induce the exchange on the part of the plaintiffs.

In Boelk v. Nolan, 56 Or. 229 (107 Pac. 689), the plaintiff had left his realty in Tillamook County in charge of a friend and had gone to California for the benefit of his health. He had not been heard of for several years and in his interest the friend, fearing he was dead, allowed the property to go to sale for taxes and bought it in for the purpose of holding it in trust for the plaintiff. The defendant managed to ascertain where the plaintiff was, went to California and bought the property for a trifling sum, representing to him that his land had been sold for taxes; that his title was gone; and that he, the defendant, wanted the deed from the plaintiff to confirm a title which he himself had acquired. Although well known to him, the defendant said nothing about the attitude and purpose of the friend whom the plaintiff left in custody of the property. The court there held:

“It was the duty of the defendant, when he undertook to inform plaintiff about the condition of the latter’s title to the land, to make a full, truthful and complete'declaration of all the conditions, within his knowledge, affecting it; and his failure so to do amounts to such a fraud as entitled plaintiff to a cancellation of his" deed. ’ ’

1. The substance of the holding is that when a defendant opens his mouth to make declarations respecting the property involved, he must speak the whole truth, and that a suppression of part of the fact is fraud when made to induce a purchase. This does not infringe upon the rule that individuals dealing at arm’s-length must look out for themselves and that' mere silence is not fraud where no duty is imposed upon one to speak. A half truth, however, spoken with a design of influencing the opposite party where he has not equal means of knowledge, is in itself fraudulent. See, also, Weikel v. Stearns, 142 Ky. 513 (134 S. W. 908, 34 L. R. A. (N. S.) 1035).

2, 3. It is contended by the defendants that the plaintiffs were bound equally with them to know the city ordinances. It is an old saying that, “Every man is presumed to know the law.” But this applies to the general laws of the land. It is said in 28 Cyc. 393:

“The general rule is well settled that municipal ordinances and by-laws are not laws of which judicial notice will be taken, but facts to be pleaded and proven. If not duly pleaded, they cannot be proven; and if duly pleaded and not proven in legal method, the action must fail no matter how notorious the ordinance may have been. The general rule, however, is held not to apply to proceedings brought in a municipal court, for here the ordinance is the peculiar law of the forum, of which the court is bound to take judicial notice, and this obviates any necessity for pleading the ordinance.”

The litigation in hand has no relation to any proceeding in a municipal court and must be determined by the general law of the land. Our statute, Section 90, L. O. L., requires city ordinances to be pleaded as facts, which shows that the courts will treat them as facts. Moreover, the plaintiffs did not have equal opportunity with the defendants to know about the ordinances, because the attention of the latter had been especially called to the matter, through their agent, by the city authorities. The defendants were in possession of knowledge affecting the rentability of the property, which was not possessed by the plaintiffs, and it was manifestly concealed with the purpose of inducing the trade. The action of the defendants in keeping that knowledge from the plaintiffs constitutes a fraud in law sufficient to vitiate the transaction.

4. In Owen v. Jones, 68 Or. 311 (136 Pac. 332), the opinion quotes with approval from a decision rendered by Mr. Chief Justice Moore in Crossen v. Murphy, 31 Or. 114 (49 Pac. 858), as follows:

“The maxim that ‘he who seeks equity must do equity’ is evidently not violated by the failure of the plaintiff, in a suit to rescind a contract for fraud, to allege a restoration of, or an offer to return, the consideration, or a willingness even to do so, for by his application to the court for equitable redress he concedes that before it will be awarded he must do equity, which will compel him to account for everything of value he may have received, thereby tacitly inviting the court to protect the rights of the defendant by decreeing a restoration in consideration of the rescission.”

The principles thus enunciated control the determination of the issue here. The decree of the Circuit Court will therefore be reversed and one here rendered to the effect that the defendants reconvey to the plaintiffs the Hood River County property and that the plaintiffs reconvey to the defendants Nelson Hackett and W. A. Hackett the Portland property, and return to said defendants the promissory note for $400 taken as part of the exchange, together with $600 cash paid thereon; each conveyance to be delivered to the clerk of the Circuit Court for the opposite party within ten days from the entry there of the mandate of this court; and that in default of so doing, the decree shall stand and operate as and for the required conveyance.

Reversed. Decree Rendered.

McBride, C. J., and Benson and Harris, JJ., concur.

Filed January 16, denied January 27, 1920.