Raber v. Clark , 110 Or. 81 ( 1924 )

BROWN, J.

This suit is tried de novo on appeal, upon the record and transcript of evidence accompanying it: Sections 405, 556, Or. L.

Plaintiffs charge that their certain promissory note and mortgage in the amount of $1,750 was obtained from them by the defendants by means of false pretenses and fraudulent representations.

The evidence shows that about October 1, 1918, the plaintiffs purchased a tract of land in Deschutes County, Oregon, and that in the transaction the defendant E. L. Clark acted as the pretended friend, agent and representative of plaintiffs, thereby handling all details of the matter of the purchase of the land. It further appears that in carrying on the negotiation and purchase, Clark represented that he was doing so without profit and that he was impelled to act in the matter without price by reason only of his great friendship for plaintiffs. The plaintiffs fully believed in Clark’s integrity, and, relying upon his representations and having faith in his honesty of purpose, permitted him to perform all the details relating to the transaction involving the purchase of the land.

The testimony further shows that E. L. Clark fraudulently and designedly represented and pretended to the plaintiffs that the purchase price of the real estate was the sum of $9,500; that $4,250 thereof was payable in cash, the balance of the purchase price, amounting to $5,250, to be secured by a first mortgage, payable in five years from the date of the transaction. Plaintiffs were possessed of the sum of $2,500 in cash and were not able to comply with the terms as represented by Clark. They informed him of the insufficiency in the amount of their funds, whereupon he represented to plaintiffs that he would advance them the additional sum of $1,750 needed to make the first payment upon the purchase price and take, as security, their promissory note and second mortgage upon the real estate involved in the transaction. Plaintiffs accepted the offer, paid the sum of $2,500 in cash upon the purchase price of the land and executed to the vendor a note and first mortgage for $5,250 due in five years, and likewise executed a negotiable promissory note and a second mortgage for the sum of $1,750, due October 1, 1921, bearing interest at the rate of 7 per cent per annum, and payable to defendant M..A. Clark, the defendant E. L. Clark representing that his wife was furnishing the money to make the payment of $1,750 above referred to.

This is the note and mortgage involved in this suit.

The testimony further shows that at the time of the purchase of the real estate and the execution of the note and mortgage for $1,750, the plaintiffs had implicit confidence in the representations made by E. L. Clark that the purchase price of the land was $9,500, and that a cash payment of $4,250 was required, and was paid, and that E. L. Clark and wife were furnishing $1,750 of that amount.

About two years after the execution of the note and mortgage to defendant M. A. Clark, plaintiffs learned that they had been deceived and defrauded by E. L. Clark in relation to the purchase price of the land, in this: That the true amount of the cash payment was but $2,500; that the’first mortgage of $5,250 which plaintiffs executed and delivered to the vendor at the time of the purchase of the real property constituted the entire balance remaining due and unpaid as the purchase price thereof, and that neither the sum of $1,750, nor any other sum, was advanced by the defendants, or either of them.

It appears from the evidence that E. L. Clark knew, and his wife, M. A. Clark, from all the circumstances, also knew, at the time of the execution and delivery of the note and mortgage to them by the plaintiffs, that there was no consideration therefor, but that the making of the note and mortgage and the delivery thereof was procured without any consideration whatever and through the fraudulent and designedly false representations of the defendant E. L. Clark.

Plaintiffs’ amended complaint states facts sufficient to constitute a cause of suit in equity: Benson v. Keller, 37 Or. 120 (60 Pac. 918).

Where one gratuitously undertakes to act for another and performs, he is bound to complete the performance according to his agreement, regardless of consideration: 31 Cyc. 1216B. Clark was the agent of the plaintiffs and will not be permitted to take advantage of them through fraud, without regard as to whether or not they were satisfied with the transaction, as they understood it, at the time: Jones v. Shefler, 77 Or. 284 (151 Pac. 463).

Under the facts in this case, the law will imply that M. A. Clark knew of the fraudulent purpose of her husband, E. L. Clark: Robson v. Hamilton, 41 Or. 239 (69 Pac. 651); Calavan v. Bower, 61 Or. 298 (122 Pac. 300).

M. A. Clark, wife of defendant E. L. Clark, set up as an affirmative defense her good faith in the matter of acquiring the note and mortgage. The burden of proof was upon her. She has failed to establish her defense: Weber v. Rothchild, 15 Or. 385 (15 Pac. 650, 3 Am. St. Rep. 162); Carroll v. Gilham, 21 Or. 21 (26 Pac. 863).

This case is affirmed. Affirmed.

Bean, MoCoitrt and Rand, JJ., concur.