Corry v. Sylvia y Cia , 192 Ala. 550 ( 1915 )

SOMERVILLE, J.

This case was tried and determined in the lower court upon the theory that, under the circumstances here exhibited it was the duty of the defendant vendor to inform the plaintiff vendee, at or before the consummation of the sale, that he had previously made an assignment of the ship’s freight to the holder of the disbursement draft, and that the defendant’s silence in that regard knowing that the plaintiff ' was ignorant of such assignment, was a fraud upon the plaintiff, and amounted to an actionable deceit. The price paid for the ship, including the freight, was $33,-810. The value of the freight was $18,800, and was known to both parties. The disbursement draft and assignment was for approximately $18,500. The head of the plaintiff firm is a Brazilian who does not speak English, and the negotiations were conducted by him through his son, with whom he was temporarily residing at Gulfport, Miss.

(1) In every sale of personal property in the possession of the vendor, the vendee not being informed to the contrary, and m'eans of knowledge not being open to him, the vendor must be understood as representing to the vendee that, S0‘ far as he then knows, he is the owner of the property, that he has a right to sell it, and that he has not incumbered it with any superior claim in favor of a third person. This is not only sound in morals, but it is equally sound in logic and in law. It results inevitably from the duty of disclosure under such circumstances, and is we think, deducible from the best considered authorities.

“While it may be more difficult to define, with clearness and precision, the distinction between suppression and falsehood, as constituting actual fraud, it may be said, generally, that silence, in order to be an actionable fraud, must relate to a material matter known to the party, and which it is his legal duty to communicate to the other contracting party, whether the duty arises from a relation of trust, from confidence, inequality of condition and knowledge, or other attendant circumstances. Though a concealment may be tantamount to a misrepresentation, and equally effective to deceive or mislead, every omission to disclose facts, though material, is not necessarily fraudulent. The rule best adapted to the proper conduct of business transactions lies between the two extremes — the rule of the civil law, which requires the seller to disclose every defect known to him that effects the merits of the contract, or which the purchaser is interested in knowing; and the rule adopted in some cases that it is incumbent on the purchaser, if he does not take a warranty, to ask for information, and that he cannot complain of a failure to communicate facts which he could have learned by inquiry.” — Jordan v. Pickett, 78 Ala. 331, 338.

Quoting further from the same authority: “Though the intention (to defraud) is a question for the jury; where the fact and its materiality are known to the seller, and the suppression is willful or intentional, it may be regarded as done with an intention to deceive or mislead, and the purchaser, not having equal access of information, may be regarded as defrauded.”

In one of our early cases it was said:

“But the law is not so destitute of morality as not to require each of the contracting parties to disclose to the other all material facts of which he has knowledge, and of which he knows the other to be ignorant, unless they are open to common observation, and not to for bid any intentional concealment or suppression of the material facts necessary to be known, and to wbicb the other has not equal access or means of ascertaining.” —Camp v. Camp, 2 Ala. 632, 636 (36 Am. Dec. 423).

So in another case it was said: “Where a vendor pro- - fesses to be able to make a clear title in fee, either by a direct assertion to that effect, or, while he 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 disclosure 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.” — Steele v. Kinkle, 3 Ala. 352, 356.

“The implication when property is placed in the hands of a * * * broker for sale, is that the owner has a good title thereto, and that the purchaser can get the property unincumbered. * * * The inducement to buy is that the purchaser may acquire a good and indefeasible title.” — Birmingham I. & L. C. v. Thompson, 86 Ala. 146, 5 South. 473.

Commenting on the duty of contractors in general, Mr. Parsons has justly observed that: “Although one may have a right to be silent under ordinary circumstances, there are many cases in which the very propositions of a party imply that certain things, if not told, do not exist.” — 2 Pars. Contr. § 777.

And he adds: ‘In these cases, and in others which come within this principle, the suppressio veri has the same effect in law as the expressio falsi.”

Judge Cooley notes that there are cases “in which silence is fraudulent, because the silence amounts to an affirmation that a state of things exists which does not, and the party is deprived to the same extent that he would have been by positive assertion.” — 2 Cooley on Torts (3d Ed.) 912 (559).

The foregoing authorities state the general rule with respect to the vice of concealment, by contracting parties in general. With respect to vendors and defects of title known to themselves, this court long ago adopted the rule as stated in Sugden on Vendors, c. 9, p. 564, viz: “Although the purchase money has been paid, and the conveyance is executed by all the parties, yet, if the defect does not appear on the face of the title deeds, and the vendor was aware of the defect, and concealed it from the purchaser, * * * he is in every such case guilty of fraud, and the purchaser may either bring an action on the case, or file his bill in equity for relief.” — Bryant's Ex’r. v. Boothe, 30 Ala. 311, 315, 68 Am. Dec. 117; Cullum v. Br. Bank. 4 Ala. 21, 35, 37 Am. Dec. 725.

It is hardly necessary to note that this rule does not apply to sales of real estate by quitclaim merely.

In Cullum v. Bank, supra, it was said: “In all cases of purchase there is a trust and confidence by the purchaser in the vendor that the estate is not. impaired in value or incumbered by any act done by him. Indeed, by offering to sell an estate the vendor virtually represents it as not incumbered by himself, or, if incumbered, he will free it before the sale is executed; and, if he wishes to discharge himself from the consequences of this implied representation, it lies with him to show that the purchaser was informed or otherwise knew of the incumbrance.”

In the development of this rule that a failure to disclose is per se fraudulent a clear distinction is recognized between incumbrances and defects in general and such as have been knowingly created or suffered by the vendor himself.

In the case of Morgan v. Patrick, 7 Ala. 185, which is directly in point, the defendant suffered a judgment lien to be fastened on his land in another state, and afterwards sold it to the plaintiffs without informing them of the incumbrance. Said the court: “In this case, according to the facts agreed upon, the defendant sold to the plaintiffs a tract of land, knowing at the time it was incumbered by a judgment of which the purchasers were ignorant. There is no question but that this was a fraud upon the purchasers for which they had a'remedy, although there might be no covenants of general warranty or against incumbrances.”

See, also, the case of Van Arsdale v. Howard, 5 Ala. 596, for a clear discussion of the general rule.

In the instant case the defendant had made a written assignment of the freight earnings of his ship just two weeks before he executed the bill of sale to the plaintiff. It was fresh in his mind and memory, and he knew that he had no right to sell the freight to the defendant as long as that assignment stood, and that in the natural course of events it would be lost to the plaintiff by reason of that assignment. He was bound to know also that, Avhatever the value of the ship might be, $18,000 of freight Avas a vital part of the consideration moving to the plaintiff, and that the plaintiff expected to become the oAvner of it in actual substance, and not merely in empty form.

Under these circumstances, the trial court did not err in instructing the jury that, if the defendant failed to disclose to the plaintiff the existence of the draft and assignment, and the plaintiff Avas ignorant of their existence, and this draft Avas actually paid by the plaintiff out of the freight, then the plaintiff Avas entitled to recover the damages sustained.

(2) Two of the Avritten charges embodying this proposition authorized the jury, in their discretion, to award punitive damages also. The validity of this part of the charge need not, hoAvever, be considered, since the verdict shoAvs quite clearly that only actual damages were awarded.

(3) “When a draft is drawn by one person upon and payable out of a particular fund derived from freight to be collected by another, the production by such other person of the draft after the date Avhen it Avas payable raises the presumption that it has been paid out of such fund.” The above-quoted instruction was given to the jury by the trial judge, and, as applied to the evidence, we think it Avas clearly correct. It is, of course, immaterial Avhether this draft Avas paid out of the freight due to the plaintiff’s ship or out of general funds. It was a valid charge upon the ship as well as the freight, and its possession by the maker or any one succeeding to his rights in this property was prima facie evidence of its payment by the possessor to the person entitled to receive payment. — Potts v. Coleman, 67 Ala. 221; Hill v. Gayle, 1 Ala. 175. In this case the possession of the draft by the plaintiff’s agent, Gardner, Avho Avas not personally interested therein, Avas prima facie the possession of the plaintiff, his principal. We do not think it is of any importance whether the instrument be called a draft or a note. Its function was the same in either case. Very clearly, if the defendant furnished funds for its payment, the burden is upon him to show it,

(4) The first actual holder and payee of this draft was the First National Bank of Gulfport, by whom it was regularly indorsed to a Liverpool firm. The fact that no one had ever demanded payment from the bank, and that the bank had not. paid the draft, was some evidence, however slight, confirmatory of the plaintiff’s claim of payment by himself. For the same purpose it was proper for the plaintiff to show by the cashier of this bank that when he next saw this draft it was in the possession of one Gardner, the plaintiff’s attorney.

(5) Moreover, the only ground of objection to either of these items of evidence — that it was not the best evidence of the payment of the draft — was wholly inapt. The objections were properly overruled.

(6) The plaintiff’s witness Sylvia, Jr., testified that he mailed a certain letter material to the case to the defendant. The letter was mailed by dropping it in an iron mail box on a street corner in New York City, and was properly stamped and addressed to the defendant at his place of business — Gulfport, Miss. We judicially know that the federal government provides and maintains iron mail boxes on street corners in cities for the convenient posting of letters, and it will be presumed prima facie that any “iron mail box” thus located is a government box. It will be further presumed that a letter posted therein had been taken up in due course, carried to a government post office, and duly sent- upon its way. In such a case, therefore, the ultimate delivery of the letter to the addressee will be presumed just as if it had been mailed in the post office itself. — Casko Nat. Bank v. Shaw, 79 Me. 376, 10 Atl. 67, I. Am. St. Rep. 319; McCoy v. New York, 6 Hun (N. Y.) 268. The motion to exclude this letter was properly overruled.

(7) So the delivery of a message to a telegraph company for transmission properly addressed raises a presumption prima facie that it was received in due course by the addressee. — Oregon S. S. Co. v. Otis, 100 N. Y. 446, 3 N. E. 485, 53 Am. Rep. 221; Eppinger v. Scott, 112 Cal. 369, 42 Pac. 301, 44 Pac. 723, 53 Am. St. Rep. 220; 16 Cyc. 1071.

(8) After testifying that he had sent a cable message from Lisbon, Portugal, to the defendant at Gulf-port, Miss., the plaintiff’s witness Sylvia, Jr., was asked whether lie had ever been notified that it was not received. The defendant’s objection to this question was overruled, but it does not appear that the question was answered, and hence the error, if any, was harmless.

(9) In view of the fact, however, that, the plaintiff had written a letter to the defendant informing him of the sending of the cablegram, the answer to the question would have been relevant evidence tending, if in the negative, t.o show an admission by the defendant that he had received the cablegram.

It remains only to consider whether there was any erroneous ruling with respect to the pleadings, and, if so, whether it was prejudicial to the defendant.

(10-12) Under the code form for an action for deceit in the sale of chattels, it is sufficient for the plaintiff to claim damages in a certain sum for deceit in any specified sale, with an allegation merely that the defendant knew of the defect misrepresented at the time of the sale. — Civil Code, p. 1198, § 21. Count 7 is in code form, and not subject to any of the grounds of demurrer. Time, it contains no allegation of defendant’s scienter, but its existence is a necessary legal implication from the facts alleged. Under this count the burden was upon plaintiff to prove every element of an actionable deceit as defined by law. It is, of course, to be noted that in chancery pleading, for which no abbreviated code form is provided, all the elements of actionable deceit must be severally alleged. — King v. Livingston Mfg. Co., 180 Ala. 118, 60 South. 143.

The objection to count 9, as noted in appellant’s argument, is that no affirmative or active deception is alleged, and no facts are alleged showing defendant’s duty to inform plaintiff of defendant’s previous assignment of the freight. Under the principles heretofore stated, the facts alleged in this count unquestionably show a breach of defendant’s duty in the particular named, and the objection urged is without merit.

(13) Defendant filed a number of special pleas, to all of which, with a single exception, demurrers were sustained. All of the matters thus specially pleaded were, so far as relevant, available to defendant under his plea of the general issue, and there was no need in this case, if, indeed, there can ever be such a thing as the confession and avoidance of an actionable deceit, for special pleading. There was no prejudicial error with respect to these pleas.

(1, 15) The fact is stressed by defendant, in pleading and in argument, that there was in the bill of sale an express warranty of title to the ship, and silence as to the title to the freight; and hence, it is urged, the implication of a warranty as to the freight is rebutted. The authority relied on is Barnes v. Blair, 16 Ala. 71. In that case a bill of sale described the slave sold as “sound and healthy; the title to the same I fully guarantee;” and it was held that the representation of condition was not intended as a warranty, and would not support an action in assumpsit. This decision has never been cited in later cases, and seems to be opposed to the generally accepted rule that an express warranty of a chattel in one particular does not exclude an implied warranty as to another and different particular. —35 Cyc. 392, 393. But, however, this may be, the rule does not apply to wholly distinct chattels, as in this case. And, moreover, we are dealing here with an implied representation of fact and a concealment, and not with an asserted warranty.

(16) It is insisted also that the allegations of some of the counts of the complaint that defendant had sold the freight, are not supported by proof that defendant had assigned the freight as security for the payment of the disbursement note or draft, and that, as to those counts, defendant was entitled to the general affirmative charge. It is certinly true that the conditional assignment of this freight was not technically a sale, as that term is most narrowly defined by the law. Nevertheless, in a general sense, and for all the purposes of this case, the conditional assignment shown is the equivalent of a technical sale, and sufficiently supports the complaint. The distinction urged as a variance is too technical and too unsubstantial to merit judicial recognition.

We have examined all the questions presented by the assignments of error, and we are of the opinion that there was a fair trial of the issues of fact in accordance with the principles of law that govern the case, and that no error was committed by the trial court which was prejudicial to appellant.

Let the judgment be affirmed.

Affirmed.

Anderson, C. J., and Mayfield and Thomas, JJ., concur.