Bell v. Harrison ( 1920 )

Walker, J.,

after stating the case: There was ample evidence to support the finding of the jury, that the deed executed by the plaintiffs to the defendants was obtained by fraud, that is, that defendants falsely represented to the plaintiff, A. B. Bell, the value of the estate with the intention of inducing him to part with his share of it at a greatly reduced price, and that he was persuaded to do so by reasonably acting upon the representations, which he believed to be true. The defendants stated to him that they had investigated the affairs of the estate, which they had in charge, and knew its value. The jury could well infer that they intended to take advantage of his known ignorance of the true situation, and to mislead him as to the correct value of his interest in the estate, with a view to acquire it for their own benefit at an undervalue. There is evidence that he placed full confidence in what they said to him about the value of the estate, and this they well knew, and took advantage of it, and of his ignorance, and lack of business judgment and capacity to make a large profit on the transaction. He seems to have been an easy prey to their allurements, and to have quickly succumbed to their insidious practices and deceptive inducements. It must be done at once, they said to him, so as not to worry their mother, Mrs. Harrison, and he was asked not to tell any one of it, not even his wife. This was done to prevent detection of their scheme to defraud him by his consulting others wiser than he, and whose advice might defeat their purpose. For this reason, too, they started early to lay their plans, even before the burial of the intestate. If the jury believed the plaintiff’s witnesses, as it appears was the case, it was rather a bold case of fraud.

The case, in its main and essential features, is not, in principle at least, unlike Walsh v. Hall, 66 N. C., 233; Hodges v. Wilson, 165 N. C., 323; Dixon v. Green, 178 N. C., 205; Modlin v. R. R., 145 N. C., 218; Whitehurst v. Ins. Co., 149 N. C., 273; Sprinkle v. Wellborn, 140 N. C., 163; Griffin v. Lumber Co., 140 N. C., 514. It was said in the White-hurst case that it is not always required for the establishment of actionable fraud, that a false representation should be knowingly made. It is well recognized with us that, under certain Conditions and circumstances, if a party to a bargain avers the existence of a material fact recklessly, or affirms its existence positively, when he is consciously ignorant whether it be true or false, he may be held responsible for a falsehood; and this doctrine is especially applicable when the parties to a bargain are not upon equal terms with reference to the representation, the one, for instance, being under a duty to investigate, and in a position to know the truth, and the other relying and having reasonable ground to rely upon the statements as importing verity, citing Modlin v. R. R., supra; Ramsey v. Wallace, 100 N. C., 75; Cooper v. Schlesinger, 111 U. S., 148; Pollock on Torts (7 ed.), 276; Smith on Frauds, 3; Kerr on Fraud and Mistake, 68. And it is further held there, on the authority of Pollock on Torts, supra, that in order to create a right of action for deceit there must be a statement made by the defendant, or tbe person charged with the fraud, and with regard to that statement the following conditions or elements must be present and concur: It must be untrue in fact; the person making the statement, or the person responsible for it, must either know it to be untrue, or be culpably ignorant (that is, recklessly and consciously ignorant), whether it be true or not; it must be made with the intent that the other party should act upon it, or in a manner apparently fitted for that purpose, or calculated to induce him to so act, and, finally, that he does act in reliance on the statement in the manner contemplated, or manifestly probable, and thereby suffers damage. And Smith on Frauds, supra, is quoted in support of the principle as follows: “The false representation of a fact which materially affects the value of the contract, and which is peculiarly within the knowledge of the person making it, and in respect to which the other party, in the exercise of proper vigilance, had not an equal opportunity of ascertaining the truth, is fraudulent. Thus representations made by a vendor to a purchaser of matters within his own peculiar knowledge, whereby the purchaser is injured, is a fraud which is actionable. Where facts are not equally known to both sides a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he, impliedly, states that he knows facts which justify his opinion.”

Kerr on Fraud and Mistake, supra, refers to the doctrine in this language: “A misrepresentation, however, is a fraud at law, although made innocently, and with an honest belief in its truth, if it be made by a man who ought in the due discharge of his duty to have known the truth, or who formerly knew, and ought to have remembered, the fact which negatives the representation, and be made under such circumstances or in such a way as to induce a reasonable man to believe that it was true, and was meant to be acted on, and has been acted on by him, accordingly, to his prejudice. If a duty is cast upon a man to know the truth, and he makes a representation in such a way as to induce a reasonable man to believe that it is true, and is meant to be acted on, he cannot be heard to say, if the representation proves to be untrue, that he believed it to be true, and made the misstatement through mistake, or ignorance or forgetfulness.”

The general rule seems to be established in recent years that where an action for damages will lie for a deceit, in the sale of land, a suit in equity, now a civil action, may be maintained to set aside the deed for the fraud. It is so held in Walsh v. Hall, supra, which is approved in Griffin v. Lumber Co., supra, where the Court said: “Whatever doubt may have existed in regard to the right to maintain an action for deceit relating to contracts for the sale of land respecting acreage, title, etc., is removed by the decision in Walsh v. Hall, 66 N. C., 233. Dick, J., after noting the general rule of caveat emptor, says: ‘But in cases of positive fraud a different rule applies. . . . The law does- not require a prudent man to deal with every one as a rascal, and demand covenants to guard against the falsehood of every representation which may be made as to facts which constitute material inducements to a contract. ... If representations are made by one party to a trade which may be reasonably relied upon by the other party — and they constitute a material inducement to the contract — and such representations are false within the knowledge of the party making them, and they cause loss and damage to the party relying on them, and be has acted with ordinary prudence in the matter, be is entitled to relief in any court of justice.’ ”

The rule as to actionable deceit was originally stated in Pasley v. Freeman, 3 Term Rep., 51 (2 Smith’s Beading Oases (5 Am. Ed.), margin page 55), as follows: “A false affirmation, made by the defendant with intent to defraud the plaintiff, whereby the plaintiff receives damages, is the ground of an action upon the case in the nature of deceit. In such an action it is not necessary that the defendant should be benefited by the deceit, or that be should collude with the person who is.”

Chancellor Kent said of the rule, as thus stated, that the case went not upon any new ground, but upon the application of a principle of natural justice, long recognized in the law, that fraud or deceit, accompanied with damage, is a good cause of action, and that it is as just and permanent a principle as any in our whole jurisprudence. And the doctrine is equally well settled in equity that fraud will avoid a contract when a party is misled without bis fault, and to bis prejudice, by the dishonest practices of another to bis prejudice, which were calculated and expected to deceive him into acting imprudently. The rule is clearly stated by another Court, which held that fraud in the procurement of a contract avoids it; and where a party intentionally or by design misrepresents a material fact or produces a false impression in order to mislead another or to entrap or cheat him or to obtain an undue advantage over him, in every such case there is positive fraud in the truest sense of the term— there is an evil act with an evil intent — and the misrepresentation may be as well by deeds and acts as by words, by artifices to mislead as by-positive assertions. Tolley v. Poteet, 62 W. Va., 231. See, also, Butler v. Watkins, 13 Wallace, 456 (20 L. Ed., 629); Laidlow v. Organ, 2 Wheaton, 178 (4 L. Ed., 214).

In a court of conscience a deliberate falsehood, or deliberate concealment, it being equivalent thereto, as to a material element in the contract of sale, which is calculated to deceive and mislead another into making the same, and so intended, will induce the court to intervene in behalf of the injured party, to prevent a consummation of the fraud, or to restore bis rights to him. Crosby v. Buchanan, 23 Wallace (U. S.), 420. It will be observed that in some of the cases we have cited, the courts were dealing with a fraudulent concealment of material facts where the offending party was under a duty or obligation to disclose them to the other contracting party, but this case is stronger than those, because here the representation of value was knowingly false, .and actually misled the plaintiff into conveying his interest in the estate to the defendants, whereby he lost, and they gained, a large sum. It is a clear case of fraudulent deception and circumvention, if we accept the evidence of the plaintiffs as true, which the jury did. The plaintiff had no substantial knowledge of the facts in regard to the value of the estate, and defendants knew that he was ignorant of it. They took advantage of this ignorance by misleading him as to its true value, stating, in order to inspire confidence in them, that they had actually investigated the matter and knew what it was worth, and hurried him into acting, so that he could not acquire correct information of its value before signing the deed, or take the advice of his friends. They will not be heard to say, under the circumstances, that he should not have believed or trusted them, for they were stating positively a fact as within their knowledge, and he, having confidence, in their integrity, as he stated, relied upon their statement, and was thereby prevented from making any investigation in his own behalf. They were shrewd traders, and he was not, having had little or no experience in business affairs. As the jury evidently found the facts to be, a case of intentional fraud was completely made out, and the charge, in respect to that feature, was correct, and the court gave all the instructions to which defendants were entitled.

In regard to the instruction as to the effect “of a grossly inadequate consideration alone being a fact from which fraud could be inferred,” if it be true, when the whole charge is considered, that the court so instructed the jury, and that it was erroneous to do so, the record shows that the court was responding to a request from the defendants as to what would constitute such a consideration, and as to its effect upon the question of fraud; and its sufficiency, of itself, to show fraud. A party cannot complain of an instruction given at his own request; nor will an assignment of error be sustained which conflicts with the statement of the case upon the question whether the instruction was so given. The judge’s statement, as to what was done, must stand, in the absence of any correction of the record by certiorari or otherwise.

The court correctly told the jury that they might consider the inadequacy of the consideration upon the question of fraud. Hodges v. Wilson, supra, and the jury, it would appear, based their finding, not alone upon the inadequacy of consideration, however “gross” it was, but upon the allegations of the complaint, and the entire evidence supporting them, so that it is found that the false representations were made by defendants with intent to deceive the plaintiff, who was induced thereby to convey his land to them for an inadequate consideration, and, in that view, if the instruction had been given by the judge without any request from defendants, and was erroneous, it did no harm.

We have carefully reviewed this case, and find no error therein of which the defendants can justly complain.

No error.