Steele v. Kinkle , 3 Ala. 352 ( 1842 )

ORMOND, J.

The facts of this case are, that in January, 13.37, the defendant, Lehr, purchased of the defendant, Kinkle, a lot of land in Huntsville, at the price of four thousand one hundred dollars, of which sum, one thousand one hundred dollars was paid down, and the residue secured by tlwee notes of one thousand dollars each, falling due in one, two and three years; Kinkle executing a bond to make title on payment of the pui’chase money; at the .time of the purchase, a mortgage existed for a large sum of money on the lot in question, and other property created by Kinkle, but of which Lehr, at the time of the sale, had express notice.

In December, of the same year, Lehr sold the land to the complainant, for four thousand dollars, payable in equal instal-ments in four years; two bonds for one thousand dollars each, being executed, payab le to Kinkle, and received by him in lieu of two of the notes held by Kinkle on Lehr: at the time of the sale, the complainant received from Lehr the title bond, which Kinkle had executed, with an indorsement thereon, by Lehr, by which he “ insured” that the title should be made to Steele, according to the stipulation of the bond. At the time of the sale, Lehr did not disclose to the complainant, the existence of the mortgage, nor does it appear that he had any knowledge of it.

On the first January, 1839, the complaihant offered to Kin-kle to pay his note due at that time, and any balance remaining due of the first note of Lehr to Kinkle, and demanded a title, which Kinkle being unable to make, in consequence of the mortgage, he declared his intention to abandon the premises, and rescind the contract, and did so accordingly; and the object of this bill is to have the contract rescinded, and the notes for the purchase money delivered up and cancelled.

It is not charged in the bill, that their was any unfair practiec resorted to on the part of Lehr, to prevent the complainant from being apprised of the mortgage on the land, which it is stated in the answer of both defendants, had been duly recorded, and was a matter of general notoriety in the town of Huntsville, in which all- the parties lived, and the question is, whether in a case like the present, the mere omission, on the part of Lehr, to state the fact of the existence of the mortgage, will in law, amount to fraud.

Where a vendor professes to be able to make a clear title in fee, either by a direct assertion to that effect, or while 1??’ offers to make such a title, by concealing the fact of his inability to do so, his conduct cannot be otherwise than fraudulent. It cannot be reconciled with fair dealing, because he knows at the time, that a disclosufo^ of the truth of the case, would prevent the sale, and therefore in such a case, if the purchaser is not chargeable with negligence, the contract may be rescinded by him even before an eviction; as was held by this Court in the case of Young v. Harris, 2 Ala. Rep. See also Edwards v. McLeay, Cooper, 308.

Here, there was no charge that there was express fraud by false assertion, or any device resorted to, to put the complainant off his guard, and prevent inquiry into the true state of the title; nothing in short, existed which could, be considered “ industrious” concealment. The mere silence of Lehr, at the time of the sale, will not of itself, in our opinion, be a fraudulent concealment. A fraudulent concealment, is the failure to disclose a material fact, which the vendor knows himself, which he has a right to presume the person he is dealing with, is ignorant of, and of the existence of which the other party cannot, by ordinary diligence, become acquainted. Although fraud may be inferred from other facts, it is never presumed, and it would be the grossest injustice to infer fraud from the mere silence of a vendor of the existence of an incumbrance, where the abstract of the title was sufficient to put the purchaser on enqui-ry. In the case cited of Edwards v. McLeay, and which is one of the strongest in favor of relief to be found in the books stress is- laid on the fact, that the defect of title, could not be collected from the abstract.

In this case, the complainant knew that the title was in Kinkle, and by inquiry, could have ascertained its condition; his failure to do so, is chargeable only on himself, and is a want of that common or ordinary diligence, which a Court-of Chancery always requires, in cases like the present, before its. aid can be obtained. In the case of Young v. Harris cited from 2 Ala.Rep. where there was a fraudulent concealment, the contract was rescinded, expressly on the ground that the purchaser could not by ordinary diligence, have discovered the defect of the title, and the same principle was-again affirmed in the case of Camp. v. Camp, 2 Ala. Rep.

It may be added, that a Court ©f Chancery will not impute fraud, when the facts and circumstances out of which it must arise, may consist with pure intentions;. but to create such an imputation, the facts must be such, that they are not explicable on any other reasonable hypothesis. .^Yet, it is perfectly consistent with all the facts stated in the bill, that Lehr was acting with entire good faith.

By the original contract between Lehr and Kinkle, it was stipulated that the notes for the payment of the land, which became due in January, 1838, 1839 and 1840, might be discharged in-the notes of solvent men in North Alabama- The case has been argued, as if'these notes could be tendered at any time, and a title demanded; but it is very certain, that Kinkle stipulated to retain the title until, the last period of time arrived, otherwise it might happen that the person whose notes was tendered, though solvent at the time, might not be so when the notes became due, yet the title was not to be made until the notes were paid and satisfied. This stipulation being for the benefit of Kinkle, he might waive, and it is insisted he has done so.

The allegations of the bill admitted by the answer, which are supposed to establish this proposition, are the following; “ Your orator made a contract with said Lehr, whereby your orator purchased of him the parcel of ground aforesaid, with an express understanding, between said Lehr and your orator, that a good and clear fee simple title should be made thereof, to your orator, so soon as the notes made by said Lehr to said. Kinkle, for said ground, should be discharged as aforesaid, in pursuance of which the said Lehr, on the day and year last aforesaid,, by his written instrument, signed by him on the back of said title bond, assigned the said title bond to your orator, as. follows: I assign to G. M. Steele, the within bond, for a title, and all- the benefits to which I am entitled under the same, and hereby insure that the title shall be made according to said bond, excepting that the same shall be made to said Steele.

“ As part of the consideration of your orators said purchase, and for the purpose of performing said Lehr’s contract of purchase aforesaid, your orator, pursuant to an agreement between himself, said Kinkle, and said Lehr, to that effect, and in accordance with the terms of your orator’s said purchase, executed his two writings, obligatory on the day and year last aforesaid, and bearing that date to said Kinkle, in payment of the two instalments (rom Lehr to Kinkle, which were payable according to the- condition of the said title'bond, on the 1st January, 1839, and 1840.”

There is certainly some ambiguity in the facts here stated, but a very slight examination will show, that it was not the intention of the parties, by this arrangement, to make any other change in the original contract, than to substitute the complainant for Lehr, in the purchase of the land — which arrangement was obviously intended for the security of the complainant; that no further charge in the original contract was contemplated by the parties, is evident, both by the assignment of the bond and the terms in which it is conceived. If, as now contended for, the delivery to Kinkle of the notes of the complainant, discharged the condition of the bond for title, why was the bond assigned to the complainant, and the benefits to be derived therefrom to Lehr, conveyed to the complainant? And especially, what propriety would there be in requiring Lehr to “insure” that the title would be made according to the bond? Certainly, all this imports that the title should be made in future, by the performance of the condition of the bond.

That condition was, to pay in notes of solvent men, in North Alabama, at stipulated periods of time. It ife not necessary now to inquire, whether on the delivery of the last note to Kinkle, of a man then solvent, he would have been required immediately to make title, or whether the true meaning of the contract is not, that the title was not to be made until the solvency of the makers of the notes was ascertained by payments, because, at all events, it is very certain that the meaning of the contract is, that the persons whose notes could thus be given in discharge of the contract, were to be solvent at the time they were due, and payable.

The bonds were executed by the complainant, on the 4th December, 1837, for the payment of one thousand dollars on the 1st January, 1830, and a like sum on the 1st January, 1840. If these bonds, as is now contended, were received in satisfaction of the obligation of Lehr, and thereby discharged the condition of the bond for title, Kinkle became himself the guarantor of the continuing solvency of the complainant. If there had been such a radical change as this, rdade in the contract originally entered into, it should have, been stated explicitly and plainly, so that it could have been met and answered, and not left to doubtful and ambiguous interpretation. It was also incumbent on the complainant, to have explained the incongruity and inconsistency of the contract now set up with ihe fact of his taking an assignment of the title bond to Lehr, with the warranty of the latter, that ihe title would be made according to its terms.

The answers of both defendants, are opposed to any such construction of the contract. They both deny the ignorance of complainant, of the existence of the incumbrance which they say was matter of general notoriety in the place where all the parties lived, and was there recorded; and Kinkle says, that he refused to make title when demanded by the complainant, because he was not bound to do so, until after payment of the whole amount due him ; language which is irreconcilable with the contract now set up by the complainant.

It appears that Kinkle is now able to make title to the lot, and tenders a title in his answer, but the view of the case here taken, renders it unnecessary to consider that, and other questions made at the bar. Let the decree of the Chancellor, dissolving the injunction, be affirmed.