Hayter v. Hudgens , 268 S.W. 480 ( 1924 )

The assignment of error controlling the appeal is the one questioning the sufficiency of the evidence to warrant the verdict against the appellant. In passing upon the assignment of error, regard must be had to the pleading and the special facts and circumstances in proof relied on as creating the appellant's liability. As pleaded, liability against appellant was based, in effect, upon the ground that the real estate agent, in the course of the agency, was guilty of fraud and concealment, and that the appellant was a party thereto acting in collusion with the real estate agent, inducing the appellee to sell his land for $2,500 less than he could have realized therefrom. The acts and statements relied upon by appellee appear in his evidence as follows:

"About the middle of November, 1918, after listing the land with Mr. Edens, I went down to see if anything had been done. He [Mr. Edens] told me that he could not sell the land from fact that if a man had that much money he did not want to pay it for the place, and that if he did not have the money he could not pay the interest, ``and I don't believe I can sell it. But Mr. Hayter deals in land, and if you can sell it to him there will be no commission.' Mr. Edens said no more than that Mr. Hayter was a man that dealt in land, and if I sold to him there would be no commission charged; that probably Mr. Hayter might buy it. Mr. Edens never told me anything about the Hargrove deal, and I did not know of it at the time."

It was the above-stated conduct and statements of Mr. Edens, in response to appellee's inquiry, that induced appellee, as he says, to make the sale of the farm to appellant for $7,500. At the time the statements above were made to appellee, the land had been in Mr. Edens' hands as a real estate broker for about 60 days. During that period of 60 days Mr. Edens had diligently tried, it appears, to sell the land, and specially so, to several different parties whose names are given, for the price asked of $10,000 cash, and he had failed to find a purchaser ready and able to pay that sum of money in cash. There was no evidence to the contrary. The proposition of Mr. Hargrove to purchase was admittedly not for $10,000 cash, or any considerable part of it cash. It conclusively appears that Mr. Hargrove was financially unable to pay that sum, and was 74 years old and without much means on hand or available to him in the future. The representation, then, of Mr. Edens, was not wholly untrue, or shown to be nonexistent in fact, that "I don't believe I can sell it," and "I could not sell it," meaning, as both parties understood, for the price of $10,000 cash. So far, then, as the prospects of a cash sale of the land for the fixed sum of $10,000 cash was concerned, it undeniably appears that Mr. Edens imparted correct information. If it be true, as appears in the record, that a cash sale for $10,000 had not been made, or could not likely have been made, at the time the statement was made, then, in such circumstances, it was not a breach of duty nor a fraudulent act on the part of Mr. Edens to merely refer appellee to the appellant as a man who "deals in land," and who "probably might buy it," meaning, as both the parties fully understood, for a cash price. Nor was it an act inconsistent with fair dealing for Mr. Edens to offer to make no charge of "commissions" in case the appellee himself brought about a sale of the land to Mr. Hayter. And the appellant, under such circumstances, could buy the land from the appellee and not be held liable in damages for so doing, since he did not misrepresent the value of the land or obtain the land for a gross undervaluation, nor commit or become a party to any fraud in this respect to its acquisition.

The appellee was the owner of the land, and had been on the land and was fully acquainted with its value; and there is affirmative evidence that the price of $7,500 paid by the appellant was the market value of the land at that time. The case therefore against appellant, if a case exists at all, lay in the further contention that there was shown a collusion between Mr. Edens and appellant and fraud and concealment were practiced, to deprive appellee of the benefit of a negotiated sale of the land to W. H. Hargrove for $10,000. In this respect it affirmatively appears that Mr. Edens did undertake to negotiate a sale of the land to Mr. Hargrove, and that he did not, in response to appellee's inquiry, state to appellee "anything about the Hargrove deal," and that appellee was ignorant of that fact at the time of sale to appellant. Mr. Hargrove, though, it is conclusively shown, did not offer to pay $10,000 cash for the farm, and, as the record shows, he was wholly unable financially to pay that amount in cash. His offer was to buy the land on terms, to pay $1,000 cash, transfer vendor's lien notes on land in Hopkins county aggregating $3,000, and give his notes for the balance of $6,000, payable $700 each year thereafter for 9 years. This offer of Mr. Hargrove was accompanied with the suggestion to Mr. Edens that "if Mr. Hudgens wanted all cash, he will have to get somebody to take up the notes and make it a cash transaction." Mr. Edens made the reponse to the suggestion, "I would have to find some man to take up these notes." The next day Mr. Hargrove came back to Mr. Edens' office, it appears, and Mr. Edens then informed Mr. Hargrove "that Mr. Hayter would take up the notes, provided the notes were made payable directly to him." Under these circumstances an oral executory agreement was entered into between Mr. Edens and Mr. Hargrove, by which Mr. Hargrove agreed to put up $1,000, evidenced by his personal check, as earnest money to carry out the offer of purchase under the terms stated, and according to the condition that Mr. Edens could find "some man to take up the notes" so as to "make it a cash transaction to Mr. Hudgens," and Mr. Edens agreed to take the check and to effectuate the sale and purchase according to the said terms and condition. Mr. Edens then, it appears, forwarded the check for collection, and it was duly returned with the notation by the bank on which the check was drawn, "insufficient funds." After the check was returned unpaid, Mr. Edens made no further effort whatever to effectuate a sale or comply with the said proposed plan or conditions to bring about a sale. Mr. Edens testified: "After his check was turned down I considered the trade absolutely off for him, to be absolutely done away with."

In view of these facts it is clear that Mr. Edens was not acting in the scope of his authority in undertaking to negotiate a sale of the land to Mr. Hargrove. Mr. Edens' authority from appellee was to find a purchaser for the land at the fixed price of $10,000 cash, and he was not authorized to sell or to negotiate a sale on wholly different terms. Consequently, if Mr. Edens did make an executory agreement with Mr. Hargrove to sell him on the terms proposed, the agreement was beyond his authority, as a special agent with limited authority, to make, and could not have been enforced against appellee in a suit of specific performance brought by Mr. Hargrove. And, too, the agreement with Mr. Hargrove being of no legal force against appellee, as without authority to make, Mr. Edens could, as against appellee, abandon it without incurring legal liability therefor to appellee. Then Mr. Edens was under no legal duty, in virtue of his special agency, to inform the appellee of the proposal of Mr. Hargrove, and he could not be held liable, as for a legal wrong, in failing to do so. It may be that appellee had the right, if he desired, of carrying out or repudiating the proposal of Mr. Hargrove, but he could refer the failure to exercise the election to the violation of no legal duty owing him by Mr. Edens. It is a known rule that fraud cannot be predicated upon the nonperformance of acts complained of which by law a party is not bound to do. Ins. Co. v. Humphrey, 65 Ind. 549, 32 Am.Rep. 78. And besides, the evidence, when all of it is considered, strongly shows a simple failure on the part of Mr. Edens to disclose to appellee the proposal of Mr. Hargrove, rather than a concealment of the fact in the sense of a fraudulent design or purpose. He had ample ground, in the exercise of reasonable care, to refuse, as in his discretion, to refer or recommend to appellee the proposed buyer as one able to carry out the terms of purchase. His check had been returned unpaid, he was without much means or available means, and was 74 years old, dependent upon his own exertions in farming for support and maintenance. If on this account Mr. Edens dropped, as he did, the negotiation with Mr. Hargrove, then fraudulent concealment, as ground for liability, cannot be imputed to him through simple failure to disclose to appellee the fact of negotiation with Mr. Hargrove.

But assume that Mr. Edens was bound to inform the appellee of the proposal of Mr. Hargrove, and he failed in the duty, Mr. Edens alone would be liable to appellee for failure to do his duty to his principal. For the facts and circumstances show, at best, only a possible purpose on the part of appellant to collude with the real estate agent in fraud of appellee, either in misrepresentation or concealment. A mere conjecture, suspicion, or surmise is not sufficient to authorize a finding to that effect, but there must be some substantial evidence to support a finding of its existence. The legal presumption is in favor of good faith and honesty, wherefore fraud is not presumed, but must be established by proof, positive or circumstantial, the burden being on the party pleading it. Sparks v. Dawson, 47 Tex. 138; Ney v. Rothe, 61 Tex. 374; Rider v. Hunt, 6 Tex. Civ. App. 238, 25 S.W. 314.

On the former hearing of the case, 236 S.W. 232, it was specially noted that "appellants did not offer any testimony at the trial, and it is apparent that the case, even from appellee's viewpoint, was not fully developed." The ruling there was, as stated, upon the "meager testimony adduced." The present record fully develops the case.

We conclude that the judgment should be reversed so far as it pertains to appellant, and that judgment should be here rendered that appellee take nothing as against him, and it is accordingly so ordered. The cost of appeal is taxed against the appellee.