Cooper, C. J.,
delivered the opinion of the court.
Prior to the year 1878, the appellee, M. S. Baldwin, was the owner of a tract of land in the State of Georgia comprising some sixty-eight thousand acres, upon which he had executed a mortgage to secure a debt of about forty thousand dollars due to one Loud. In the year 1878 he was adjudicated a bankrupt in Chicago, 111., and the appellee, Austin, was appointed assignee of his estate. By an order of court the assignee was directed to sell the equity of redemption. It was advertised, exposed to sale, and a report made to the court that it had been sold to one Howard at the sum of one dollar and a-half, and this sale, so reported, was confirmed. Baldwin, the bankrupt, was afterward discharged, under proper certificate, but there has been no final discharge of the assignee. The circumstances of the sale to Howard will be more fully referred to in a subsequent part of this opinion. In giving a history of the title it is now only necessary to say that Howard, soon after his purchase, conveyed the land to Austin by quit-claim deed. Austin and Baldwin agreed between themselves to divide whatever could be realized either by selling the equity of redemption to the holder of the mortgage given to Loud if he could be discovered (who, it was thought, would give something for it to avoid the necessity of foreclosing the mortgage) or by selling to others. In May, 1881, Baldwin learned that the mortgage had been assigned to parties in New York who had been adjudged bankrupts, and made a contract by which he could become owner of the mortgage [479]*479by paying about the sum of five hundred dollars. In June or July, 1881, Watson, Baldwin, and Austin were brought together by one Scriven. The appellant contends that Scriven was the agent of the appellees, sent out by them to inveigle him into their net, while the appellees claim that Scriven was the agent of the appellant hunting a bargain. The view we have taken of the case renders a considei’ation of this matter immaterial. So it was that the parties came together and the appellant agreed to give seven thousand five hundred dollars for a half interest in the land, if the mortgage could be secured and cancelled.
Before this contract was consummated Watson employed an attorney, Mr. Gardner, who examined such abstracts of title as were submitted to him, and, at his suggestion, a young attorney, Mr. Fessenden, was sent to Georgia to verify the abstracts, examine the title, and make .an examination of the land. Fessenden returned, and having made a favorable report, the purchase was consummated, Watson paying the agreed price and accepting quitclaim deeds from Austin and Howard. In a few months another proposition was made by Watson to purchase a half interest in the half interest which had been retained by the vendors in this tract, and also of a three-fourths interest in another tract of about four thousand acres, of which Austin and Baldwin had obtained control ; and after some further examinations of the property by Mr. Watson he became the purchaser of this interest, agreeing to pay therefor the sum of twenty-five thousand dollars. Of this sum he paid in cash three thousand dollars, and for the remainder executed four notes of equal sums. This suit, which is an attachment in chancery, is brought by Austin to enforce the payment of two of said notes. It was instituted on the 10th day of January, 1883, and soon thereafter Watson filed his answer. In the progress of the cause it was developed that Baldwin was interested in the notes, and upon motion of the defendant the complainant was required to amend his bill so as to make him a party to the suit. In March, 1885, Watson, by leave of the court, exhibited his cross-bill against the complainant and his co-defendant, Baldwin, praying for a rescission of the contracts of purchase made by him [480]*480and for a personal decree against Austin and Baldwin for the sums paid out by him on account thereof. The grounds upon which he seeks rescission are stated both in his answer and cross-bill. So far as they are necessary to be stated they are about as follows :
They may be classed under three heads, first, misrepresentations as to the character and value of the lands; second, misrepresentations as to the recorded title; and, third, fraudulent and injurious concealment of facts affecting the title which did not appear on record.
The misrepresentations of the first class as stated by Watson are that Austin and Baldwin assured him that the lands were finely timbered, all in a compact, unbroken body, and were accessible to transportation facilities by rail and water, and were of great value, while in truth they were not finely timbered but much of the timber had been cut off by trespassers; they were not accessible to transportation; they did not lie in a compact body, and were not of great value. The misrepresentations of the second class were that Austin and Baldwin furnished only a partial abstract of title, and withheld those portions which showed that a part of the lands had been sold by the grantor from whom Baldwin acquired them before his sale to Baldwin, and that Baldwin himself had sold several thousand acres to other persons before becoming a bankrupt.
It is sufficient to say, without going through with the many facts proved or disproved in the very voluminous recoi’d before us, that it is well established ■ by the evidence that Watson had caused an agent to be sent to Georgia before making either purchase to examine the land and the title thereto, as shown by the records in that State, and before the second purchase he himself had gone there, and must be held to have acted on the examination made by himself or his agent. If this examination was not as thorough as prudence would have seemed to require, it was his fault not to have made it more complete, and he cannot complain of a defect in a matter which he had undertaken to examine for himself and which would have been discovered by the exercise of the slightest [481]*481care. We speak now of the complaints made by him that the land was not well located, had been denuded of much of its timber, was not in a compact body, and was occupied by numberless intruders. The most cursory examination would have necessarily disclosed the truth in these respects.
Upon the second class of misrepresentations charged it is only necessary to say that the evidence is conflicting, and while Watson, declares that he never was informed of the prior conveyances made by Loud (Baldwin’s grantor) and by Baldwin, both Baldwin and Austin aver that he was fully advised, and Baldwin testifies that a reduction from the purchase price was made because of them. In any event, the extent to which he, Watson, could be relieved on this ground would be to have an abatement of a proportionate part of the purchase-money.
Before considering the remaining ground upon which the defendant seeks to be relieved, it becomes necessary to state other facts which have been heretofore omitted, because they can be more intelligibly set out in connection with the specific defense to which they give rise. This defense is, that the vendors fraudulently concealed matters en pais, which defeat or render doubtful and hazardous the title they undertook to confer upon the purchaser.
Free access — add to your briefcase to read the full text and ask questions with AI
Cooper, C. J.,
delivered the opinion of the court.
Prior to the year 1878, the appellee, M. S. Baldwin, was the owner of a tract of land in the State of Georgia comprising some sixty-eight thousand acres, upon which he had executed a mortgage to secure a debt of about forty thousand dollars due to one Loud. In the year 1878 he was adjudicated a bankrupt in Chicago, 111., and the appellee, Austin, was appointed assignee of his estate. By an order of court the assignee was directed to sell the equity of redemption. It was advertised, exposed to sale, and a report made to the court that it had been sold to one Howard at the sum of one dollar and a-half, and this sale, so reported, was confirmed. Baldwin, the bankrupt, was afterward discharged, under proper certificate, but there has been no final discharge of the assignee. The circumstances of the sale to Howard will be more fully referred to in a subsequent part of this opinion. In giving a history of the title it is now only necessary to say that Howard, soon after his purchase, conveyed the land to Austin by quit-claim deed. Austin and Baldwin agreed between themselves to divide whatever could be realized either by selling the equity of redemption to the holder of the mortgage given to Loud if he could be discovered (who, it was thought, would give something for it to avoid the necessity of foreclosing the mortgage) or by selling to others. In May, 1881, Baldwin learned that the mortgage had been assigned to parties in New York who had been adjudged bankrupts, and made a contract by which he could become owner of the mortgage [479]*479by paying about the sum of five hundred dollars. In June or July, 1881, Watson, Baldwin, and Austin were brought together by one Scriven. The appellant contends that Scriven was the agent of the appellees, sent out by them to inveigle him into their net, while the appellees claim that Scriven was the agent of the appellant hunting a bargain. The view we have taken of the case renders a considei’ation of this matter immaterial. So it was that the parties came together and the appellant agreed to give seven thousand five hundred dollars for a half interest in the land, if the mortgage could be secured and cancelled.
Before this contract was consummated Watson employed an attorney, Mr. Gardner, who examined such abstracts of title as were submitted to him, and, at his suggestion, a young attorney, Mr. Fessenden, was sent to Georgia to verify the abstracts, examine the title, and make .an examination of the land. Fessenden returned, and having made a favorable report, the purchase was consummated, Watson paying the agreed price and accepting quitclaim deeds from Austin and Howard. In a few months another proposition was made by Watson to purchase a half interest in the half interest which had been retained by the vendors in this tract, and also of a three-fourths interest in another tract of about four thousand acres, of which Austin and Baldwin had obtained control ; and after some further examinations of the property by Mr. Watson he became the purchaser of this interest, agreeing to pay therefor the sum of twenty-five thousand dollars. Of this sum he paid in cash three thousand dollars, and for the remainder executed four notes of equal sums. This suit, which is an attachment in chancery, is brought by Austin to enforce the payment of two of said notes. It was instituted on the 10th day of January, 1883, and soon thereafter Watson filed his answer. In the progress of the cause it was developed that Baldwin was interested in the notes, and upon motion of the defendant the complainant was required to amend his bill so as to make him a party to the suit. In March, 1885, Watson, by leave of the court, exhibited his cross-bill against the complainant and his co-defendant, Baldwin, praying for a rescission of the contracts of purchase made by him [480]*480and for a personal decree against Austin and Baldwin for the sums paid out by him on account thereof. The grounds upon which he seeks rescission are stated both in his answer and cross-bill. So far as they are necessary to be stated they are about as follows :
They may be classed under three heads, first, misrepresentations as to the character and value of the lands; second, misrepresentations as to the recorded title; and, third, fraudulent and injurious concealment of facts affecting the title which did not appear on record.
The misrepresentations of the first class as stated by Watson are that Austin and Baldwin assured him that the lands were finely timbered, all in a compact, unbroken body, and were accessible to transportation facilities by rail and water, and were of great value, while in truth they were not finely timbered but much of the timber had been cut off by trespassers; they were not accessible to transportation; they did not lie in a compact body, and were not of great value. The misrepresentations of the second class were that Austin and Baldwin furnished only a partial abstract of title, and withheld those portions which showed that a part of the lands had been sold by the grantor from whom Baldwin acquired them before his sale to Baldwin, and that Baldwin himself had sold several thousand acres to other persons before becoming a bankrupt.
It is sufficient to say, without going through with the many facts proved or disproved in the very voluminous recoi’d before us, that it is well established ■ by the evidence that Watson had caused an agent to be sent to Georgia before making either purchase to examine the land and the title thereto, as shown by the records in that State, and before the second purchase he himself had gone there, and must be held to have acted on the examination made by himself or his agent. If this examination was not as thorough as prudence would have seemed to require, it was his fault not to have made it more complete, and he cannot complain of a defect in a matter which he had undertaken to examine for himself and which would have been discovered by the exercise of the slightest [481]*481care. We speak now of the complaints made by him that the land was not well located, had been denuded of much of its timber, was not in a compact body, and was occupied by numberless intruders. The most cursory examination would have necessarily disclosed the truth in these respects.
Upon the second class of misrepresentations charged it is only necessary to say that the evidence is conflicting, and while Watson, declares that he never was informed of the prior conveyances made by Loud (Baldwin’s grantor) and by Baldwin, both Baldwin and Austin aver that he was fully advised, and Baldwin testifies that a reduction from the purchase price was made because of them. In any event, the extent to which he, Watson, could be relieved on this ground would be to have an abatement of a proportionate part of the purchase-money.
Before considering the remaining ground upon which the defendant seeks to be relieved, it becomes necessary to state other facts which have been heretofore omitted, because they can be more intelligibly set out in connection with the specific defense to which they give rise. This defense is, that the vendors fraudulently concealed matters en pais, which defeat or render doubtful and hazardous the title they undertook to confer upon the purchaser. The facts are, that at the sale made under the order of the bankrupt court, one Howard, who was a clerk or employee of Austin, the assignee, appeared at the sale and bid for the land, which was struck off to him at and for the sum of one dollar and a half; but he declined to consummate his purchase, paid no part of the bid, but permitted Austin, the assignee, to stand in his place, and made him a quit-claim deed to the land. This deed, and the fact that Howard had withdrawn from the purchase, were intentionally concealed by Austin from Watson. Austin states in explanation of this that he did not desire to have it known that he had title to the land for fear that Watson would demand of him a warranty deed, which he was unwilling to make. Throughout the whole negotiations Austin represented to him, Watson, that he was acting as the agent of Howard, and the deeds which were given to Watson were executed by Baldwin (from whom the title had passed by his [482]*482bankruptcy) and by Howard, who, if he had ever had any title, had before that conveyed it to Austin.
Austin admits that he represented to Watson that the title was in Howard, and it is evident that the first information to the contrary which he had was derived from a suit instituted by Howard against Austin, Baldwin, and Watson in Chicago, in November 1882. In that suit Howard charged that he had purchased the Georgia lands at the assignee’s sale, but that, as he soon afterward left the city of Chicago, he, at Austin’s solicitation, authorized him to sell them; that Austin, acting as his agent, had made sale to Watson, but had taken the notes payable to himself, had converted to his own use the cash paid by Watson, and declined to account to him, Howard, for any portion of the proceeds or to recognize him as entitled to any part thereof; he prayed an injunction against the payment of the notes to Austin or Baldwin, and that his rights be declared and preserved. In answer to this bill, Austin, by his sworn answer, states, “ that complainant never at any time held any title, legal or equitable, to any portion of the property in his bill mentioned, that is to say, he never paid anything whatever in the premises ; the assignee’s deed was never delivered to him, and was never in his possession nor in the possession of any one for him.” So in this case the defendant, Watson, plants himself upon the proposition that the assignee’s deed never having been delivered, Howard never had title, and that, having no title, he could convey none either to himself or to Austin, and that since he has acquired no title, by reason of facts- known to Austin at the time of the sale, but unknown to him and studiously concealed from him, he should not be required to pay the notes given in the belief that he was to acquire title. In the present bill, the defendant to the cross-bill, Austin, says in response to the allegation that the deed was never delivered, “that it was delivered to the complainant, Watson,” In his testimony he states that he does not recollect whether or not there was a delivery of the deed.
It is thus seen that it is, to say the least, left doubtful exactly what the condition of the title is. If there was, in fact, no delivery of the deed from Austin, assignee, to Howard, it must be true that [483]*483Howard never had title, for if anything can be considered and held as settled in law, it must be that delivery is necessary to the validity of a deed. We are not considering what is sufficient evidence of delivery, but the necessity of it as a fact. It certainly cannot be argued that a deed, though signed, sealed, and acknowledged before witnesses and before an officer, and retained in the possession of the grantor, can be said to be delivered against the express repudiation by the grantee and a consent to such repudiation by the grantor. Assuming for the present that Watson has not waived his right of rescission or defense, ought the court to require him to accept or to retain the title, clouded and impaired by the uncertainty which is cast upon it by these facts, known to Austin but unknown to him at the time of the purchase ? Would any prudent counsel advise a client to accept a quit-claim deed to property under such circumstances ? It appears by the evidence that there are many trespassers upon the land; suppose, now, that Watson should sue and recover possession. He is met by a plea of not guilty and is put upon proof of his title • necessarily he must deduce it through Baldwin, and his bankruptcy vests his title in his assignee. Would it not devolve upon him to show that it passed out of the assignee by a deed delivered to Howard ? What chance for recovery would he have if it be a fact that the purchase was repudiated by Howard, the repudiation assented to by the assignee, and the deed never delivered nor held by any one for him ?
Nor does it devolve on Watson to show that there was, in fact,, no delivery. It is sufficient for him to establish a well-founded doubt of the delivery, for by concealing the facts Austin must be held to have asserted in effect that there was nothing known to him which would cast a well-founded doubt upon the title he was agreeing to have conveyed to Watson, and when Watson shows that there is a well-founded doubt existing by reason of the concealed facts, he shows that he has not received what he contracted for, nor has Austin given what he agreed to give.
But suppose the facts to be, as we are strongly impelled to believe the truth is, that Howard was a mere figure-head, bidding at a sale made by Austin, as assignee, for the henefit of Austin as an [484]*484individual, or, what is the same thing, that Howard, having made his bid, permitted Austin to substitute himself in his place. Can it be said that if these facts had been stated to the bankrupt court it would have confirmed this sale ? Was not Austin while he held the lands, or Watson, now having notice of how he held them, liable to be converted into a trustee for the creditors of Baldwin ?
Whatever may have been Mr. Austin’s good faith in concealing these facts from Watson, it must be that they are full of danger to him either in asserting his title against those in the adverse possession of the lands or of defending it against the creditors of Baldwin. And since this danger was one which he did not undertake to incur, its existence must discharge him from responsibility to pay for a title thus surrounded with difficulties that which he agreed to pay for a title not thus imperiled.
We see nothing in anything done by Watson since discovering the defect noted that should preclude him from resisting the payment of the unpaid purchase-money. He seems to have made many efforts to adjust the litigation in which he has been involved, but -throughout all this time he has stood by his answer in which his defense has been asserted, and we are unable to deduce from any of his acts an affirmance of the contract.
We are, however, of opinion that the court properly refused to rescind the contracts of sale. .In the first place, the sale of the first half interest has no sort of connection with that of the other interest sold subsequently; it is a separate, independent transaction; secondly, Howard, the grantor, is not a party to this suit; thirdly, the settlement of the other notes was made pending the suit, and it is not clearly shown whether they were paid, or, as suggested by Watson, taken by him at an insignificant valuation from Baldwin in another transaction ; fourthly, we do not know what injury has been done to the property in Georgia by trespassers between the time that Watson obtained knowledge of the fraud and the time that he filed his cross-bill for rescission. Under these circumstances we think we go .far enough in denying relief to the complainant and in dismissing the cross-bill without prejudice to Watson, so that he may take such steps as he may be advised in the courts of [485]*485Georgia, in which alone can a lien be fixed in case a rescission is thought proper. Since Watson successfully defends against the notes for the unpaid purchase-money, it is but proper that Austin’s right shall be.recognized to proceed in-a proper suit to take an' account of the money paid by Watson, upon the repayment of which title should be reconveyed to the proper party.
Decree accordingly.