Suter v. Mason , 147 Ark. 505 ( 1921 )

Hart, J.

(after stating the facts). We are of the opinion that the chancellor erred in holding the $3,000 to be a penalty and not liquidated damages. The contract provided for the sale of 720 acres of land for $54,000, the greater part of which was on deferred payments extending over a period of eleven years. The contract contemplated that only the $3,000 and an additional $5,000 should be paid within a short time after the contract was completed. In view of the magnitude of the transaction and the consequent risk of a monetary depression, it was not unreasonable that the parties should agree that the $3,000 should be liquidated damages in case the purchaser failed to carry out the agreement on his part.

We also think that the chancellor erred in holding that the plaintiff did not have a good and sufficient title because there was a public road running through the land and because the electric light company had' a right-of-way over the land for the erection of its .poles. An agreement to convey land clear of all incumbrances does not refer to permanent easements across the land visible to the purchaser. Mason knew that the public road ran across the land when he purchased it. He also knew that the poles of the electric light company were across the land. He purchased the property in contemplation of its physical condition and with reference thereto. Therefore, the defendant can not rely upon the existence of the road and right-of-way across the land as matters calling for a rescission of the contract. Skinner v. Stone, 144 Ark. 353; Geren v. Caldarera, 99 Ark. 260, and McCarthy v. Wilson (Cal.), 193 Pac. 578.

In Sandum v. Johnson, Ann. Cas. 1914 D, p. 1007, the Supreme Court of the State of Minnesota held that the existence of an easement for a rural public highway across the land conveyed by a deed containing a covenant against incumbrances is not a breach of the covenant. The case note cites many decisions sustaining the holding that the existence of a known easement for a public highway does not constitute a breach of a covenant against the incumbrances.

Upon the question of fraudulent representations, we will first take up the question as to the deficiency in the acreage of the cleared land. According to the testimony of Mason, Suter represented that there.were 720 acres of land in the tract and that there were 400 acres in cultivation. Mason believed this representation to be true, and the amount of the cleared land was a material inducement to him to make the purchase. After he had entered into the contract of purchase, he had the cleared land surveyed and ascertained that only 280 acres of the entire tract were cleared. Suter, himself, admitted that he told him that he thought that 360 acres of the land were cleared. Then, according to his own statement, there was a deficiency in the cleared land of eighty acres. The land was purchased for a farm, and the amount of cleared land on the tract was necessarily a factor in inducing the purchase. It is true that in transactions of this kind men are expected to exercise reasonable prudence and not to rely upon persons with whom they are dealing to protect their interests; but this requirement should not be regarded so that the law will ignore positive fraud. If the tract of land had been a small one and the parties had examined it, it might be said that, owing to the small area, the purchaser could not be deceived about the quantity of cleared land and could not rely upon the representations of his vendor about a matter which was patent to an ordinary observer and about which he could scarcely make a mistake if he relied upon his own judgment. This is not the case, however, in the sale of a large tract of land where the deficiency in the amount of cleared land is great in proportion to the whole number of acres conveyed. In such cases/ the vendor can not say that the vendee ought not to have trusted him, and that his statement with regard to the number of acres of cleared land was only a matter of opinion which could not be considered as evidence of fraud.

In-the present case Suter had had the land cultivated and had collected rent therefrom. The number of acres cleared and in cultivation was a matter peculiarly within Ms own knowledge, and it can not be said that Mason was negligent in relying upon his representations in this respect. On account of the size of the tract, it can not be said that Mason could judge of the area of cleared land by the eye. Suter represented that one-half of the land was in cultivation. His representations in this respect were material, and under the circumstances were equivalent to an assurance of an approximately accurate measurement. Mason relied upon his assertions and representations in making the purchase. Hi's representations could not be considered as a matter of opinion merely. Neither can it be said that Mason was negligent in relying upon them, and should have had the cleared land surveyed if he was not satisfied with his own measurement by viewing the land. When the size of the tract and situation of the cleared land is considered, Mason had a right to presume that Suter knew the amount, of cleared land in the tract and was justified in relying on Suter’s statement based on a better knowledge of the area of the cleared land than he could obtain by simply walking over it on one occasion. Neely v. Rembert, 71 Ark. 91; Kincaid v. Price, 82 Ark. 20; Cooper v. Merritt, 30 Ark. 686, and 39 C. J. 1270, and cases cited.

We tMnk the court erred in finding that a material part of the land was subject to overflow. The testimony is in direct and irreconcilable conflict on this point; but we are of the opinion that a preponderance of the evidence shows that only a very small quantity of the land was subject to overflow, and that no rescission of the contract should be had on this ground. However, chancery cases are tried de novo upon appeal, and, inasmuch as the chancellor found that the defendant, Mason, was entitled to a rescission of the contract because there was a material deficiency in the amount of cleared land, it can not be said that the decree should be reversed.

It is claimed by counsel for the plaintiff that the decree should be reversed because Suter offered to make good the deficiency in the amount of cleared land and to clear up an additional quantity of land so that one-half of the land in the tract would be cleared as he had represented it to be to Mason. This was not a matter, however, upon which Suter had the right to make an election. The election was for the purchaser. He might have accepted the contract and sued his vendor for an abatement of the purchase price on account of the damages suffered by him by reason of the deficiency in the amount of cleared land. On the other hand, he had the right to rescind the contract on account of the misrepresentations of his vendor as to the quantity of cleared land in the tract. As above stated, the deficiency was eighty acres, and under the circumstances the deficiency was great in proportion to the whole amount of cleared land in the tract. It follows that Mason had a right to rescind the contract, and the decree of the chancellor must be affirmed.