Pearce v. Ware ( 1892 )

Montgomery, J.

This is a bill filed to foreclose a mortgage for $8,000 given on lands in the county of Marquette to secure a portion of tlie purchase price thereof. The ••complainant Pearce is named as trustee in the mortgage; the complainant Hyde is the real owner of the security. The defendant filed an answer, and claimed the benefit of -a cross-bill, alleging that there was fraud perpetrated upon the defendant in the sale of the lands by. the complainant Hyde and one Alonzo L. Foster, who, as tenant in common with Hyde, conveyed the lands to defendant.

The facts appearing by the testimony are that complain•ant Hyde and Foster held the legal title to the lands in question. It appears, however, that one Warrick Price was .a partner with Foster in the lumber business, and was also interested with him in these lands. It is very doubtful whether Hyde knew anything of this relation, but this is immaterial, as we shall see later on. In April, 1890, Warwick Price, who had had some deal with defendant before,' informed him that he knew of a good bargain in the Upper Peninsula, and that he had got the lands traded for Iowa lands, which he could sell at a large advance, and proposed •to defendant that, if he (the defendant) would furnish the .money, he (Price) would pay 5 per cent, on the money .•advanced on the Michigan lands, and divide the profits in the property with defendant, and defendant assented to this -arrangement. In these negotiations Price stated that the Michigan lands could be bought for $20,000. . Subsequent negotiations resulted in a meeting between Price, Foster, •complainant Hyde, and the defendant. . Defendant testified that previous to this he had said to Mr. Price that, before •closing any deal, he desired to see the owners of the land; to quote his own language, “I says I want to see these principals in Michigan which you claim to represent.” On the occasion of the meeting of the three, it is claimed that Hyde and Foster misrepresented the character and value of the lands in question; and because of these misrepresentations, and of the misstatements of Price, defendant now seeks to rescind the contract, and defeat the foreclosure of the mortgage in question.

Defendant testified as follows:

“He came to me after these gentlemen came down that, morning, and said he had made them an offer of $2,000 less than he had agreed to sell me. I had agreed to put. it at $20,000 the day before. When Mr. Hyde and Mr-Foster came down, Mr. Price came in, and told me he had pressed them down $2,000; it was $2,000 our way; instead of being $20,000, he had bought it of them at $18,000. I says, 'All right. You have Avon $2,000 for us.’ He says, 'Yes, I did that. That goes to profit and loss account.”’’

It is contended by defendant that complainant Hyde is; bound by the representations of Price, for the reason that, he has profited by the fraud which it is claimed Price perpetrated upon defendant. But it seems to us that the-defendant does not occupy a position entitling him to> maintain this claim. If the defendant’s testimony as to-Price’s position as agent is true, then it amounts to this:He (defendant) combined Avith Hyde and Foster’s agent to-buy the land of the principals, and to take advantage of’ the betrayal of trust by the agent, and profit to the extent, of $2,000 reduction from the price Avhich he had previously agreed with the agent to pay. If, under these circumstances,, he was deceived by the agent, a court of equity will not. relieve him.

We think, aside from the false statements of Price, if any, the fraud charged in the cross-bill is not made out-by a preponderance of evidence.

But another reason why the relief prayed in this ansAver cannot be granted is that the proper parties are not before the court. After the sale to Ware, Foster indorsed the note, which was given to Foster and Hyde jointly, to Hyde. The consideration for the land Avas $18,000, of which $10,-000 Avas paid in cash. One thousand dollars of this, and the note, were retained by complainant Hyde, and the.'other $9,000, in cash, was paid to Foster. Before a rescission of this transaction could be decreed, Foster was a .necessary party, and upon defendant’s theory Price was .also a necessary party. No attempt was made by defendant to bring in these parties; and upon the case and pleadings, as they stood, no decree of rescission could be properly made by the court below.

The decree will be affirmed, with costs.

The other Justices concurred.