Cohron v. Woodland Hills Co. , 164 Ga. 581 ( 1927 )

Hines, J.

(After stating the foregoing facts.)

Fraud voids all contracts. Civil Code (1910), § 4254. Fraud by which the assent of a party has been obtained to a contract of sale voids the contract. § 4712. Fraud will authorize a court of equity to annul conveyances, however solemnly executed. § 4629. A contract may be rescinded at the instance of the party defrauded, if promptly upon the discovery of fraud he restores or offers to restore to the other whatever of value he has received by virtue of the contract. § 4305; East Tennessee etc. Ry. Co. v. Hayes, 83 Ga. 558 (10 S. E. 350). Fraud may exist from misrepresentation by either party, made with design to deceive, or which does actually deceive the other party; and in the latter case such misrepresentation voids the sale, though the party making it was not aware that his statement was false. Civil Code (1910), § 4113. So in this case, if the defendant, through its selling agent, represented to the plaintiff that a lot which he was, endeavoring to sell to her was located upon a popular residential thoroughfare in the City of Atlanta, when such representation was false, and if such representation was wilfully made to the plaintiff to induce her to buy said lot, and if she acted upon such representation in buying the same and in entering into a contract of purchase thereof with the defendant, and was thereby damaged, such false and fraudulent representation so made by the agent of the defendant, with knowledge of its falsity, was such fraud as would entitle the plaintiff to rescind the contract of purchase, if she was not for some other reason precluded from seeking its rescission. Misrepresentation as to a material fact, made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitutes legal fraud. Civil Code (1910), § 4623.

It is strenuously urged by counsel for the defendant that a court of equity will not afford relief to a party who, with all the means of protecting himself against the imposition of the other party, abandons them and relies upon his statement as to the location of the property purchased. To support this proposition counsel cite the cases of Newsom v. Jackson, 26 Ga. 241 (71 Am. D. 206), Allen v. Gibson, 53 Ga. 600, Stone v. Moore, 75 Ga. 565, Martin v. Harwell, 115 Ga. 156 (41 S. E. 686), and Hart v. Waldo, 117 Ga. 590 (43 S. E. 998). In Newsom v. Jaclcson the representation relied on by the plaintiff for recovery was that a third person was solvent and responsible, upon the strength of which the party to whom the representation was made extended credit to the person represented to be solvent and responsible, when in fact he was insolvent. The party extending the credit and the person to whom credit was extended did business in the same place, and the former had daily opportunity of ascertaining the financial condition of the person to whom he extended credit for nearly a year, intending to hold the person making the representation liable for the price of the goods sold. In that case this court held that a court of equity would not aid the creditor who did not use his own sense and discretion in ascertaining the truth of the representation that his debtor was solvent. In Allen v. Gibson, the purchaser of land acted upon the representation of the seller and another as to its value, and undertook to set up as a defense to the notes given for the purchase-money that he had paid too much for the land, relying upon such representation which was untrue. The land purchased adjoined that of the buyer, who had ample opportunity to examine the land and ascertain for himself its value; and this court' held that if, instead of examining and looking at the land himself before he purchased it, he relied upon the representation of the seller as to its value, he had no one to blame for his credulity and folly but himself, and that the courts would not relieve him. That decision cited Tindall v. Harkinson, 19 Ga. 448, in which case this court had ruled that “A contract for the sale of land will not be vitiated by a mere false assertion of the vendor, as to the quality and value thereof, where the buyer has full opportunity of forming a correct judgment, and is not prevented by the artifice of the seller from making the necessary examination; especially where the rescission is not applied for within a reasonable time after the injury is discovered.” In Stone v. Moore, the false representation was as to the soil, timber, or springs on lands, which were open to inspection, and the purchaser was wilfully negligent in failing to look and see for himself. This court held that neither law nor equity would relieve the purchaser from his want of diligence. In Martin v. Harwell, the representation was ,as to the quantity and-character of timber upon a described tract of land. The purchaser had ample opportunity to inspect the land for himself and ascertain the quantity and character of the timber thereon, and was not prevented by the seller’s fraud from so doing. He voluntarily chose to rely upon the representation of the seller as to these matters. In these circumstances this court held that he was not entitled to relief. Hart v. Waldo does not support this contention of counsel. What he quotes from that case in his brief is from a concurring opinion of one of the Justices of the court.

. In the above cases the representations had reference to the value, quality, or condition of the property purchased. Furthermore, in those cases, the sellers did nothing to prevent the buyers from examining the property purchased and from ascertaining its quality, value or condition. It is true one can not close his eyes to a condition in a thing purchased which is so patent that by mere inspection he could have ascertained its existence; but there is no rule of law or any decision of any court that goes to the extent of saying that one who has been imposed upon by a deceitful and false statement can have no relief, unless, before acting upon such statement, he had exhausted all means at his command to ascertain its truth. This would be in effect holding that scarcely under any circumstances would relief be granted to one who had been the victim of misplaced confidence in his fellow-man. In Reid v. Flippen, 47 Ga. 273, it was held that it was error in the court to charge the jury that the defendant 'in a suit to recover the purchase-money of mules could not set up false representations as to age in defense to the suit, unless it further appeared that he could not at the time have discovered the truth by using the ordinary caution of a prudent trader. In Southwestern Railroad, Co. v. Papot, 67 Ga. 675, the false representation was in reference to the freedom of property from encumbrances. In that case the trial court charged that the purchasers could rely upon the statement of the seller that the property was free from encumbrance; and that if such statement was false, the purchaser would be entitled to relief. In Brannen v. Brannen, 135 Ga. 590 (69 S. E. 1079), the vendor, at the time of the contract of purchase, misrepresented to the purchaser the location of one of the boundary lines of the tract purchased, whereby the purchaser failed to get a portion of the land which he contracted to buy. The misrepresentation was made by the seller to induce the purchaser to buy, and the purchaser acted thereon and was thereby deceived to his damage. This court held that the purchaser was.entitled to relief, In James v. Elliott, 44 Ga. 237, the false representation was as to the boundary of the land. In Elder v. Allison, 45 Ga. 13, the misrepresentation was as to the area of the land. In Smith v. Kirkpatrick, 79 Ga. 410 (7 S. E. 258), the misrepresentation was as to one of the boundaries of the tract of land sold. In Folsom v. Howell, 94 Ga. 112 (21 S. E. 136), the misrepresentation was as to the boundaries of a tract of land sold by an administrator. If a misrepresentation as to the boundary of a tract of land, made by the seller to induce the buyer to purchase, upon which the. buyer relied in making the contract of purchase, entitles the purchaser to relief at law or in equity, we see no reason why a misrepresentation as to the location of the land purchased would not entitle the purchaser to rescind the contract in a proper case. As to the distinction between the cases upon which -counsel for the defendant rely, and the cases cited by us in support of the position which we take, see Boyd v. Robinson, 104 Ga. 793 (31 S. E. 29). But if the principle for which counsel for the defendant in error contend is applicable, the plaintiff’s case falls within it. By a trick of the company’s agent she was prevented from discovering, before the contract of sale was closed, that this property was not on Highland Avenue. He took her by a circuitous route to the property, telling her that they could not go out Highland Avenue to see it. If they had gone out that avenue the plaintiff could have easily discovered that the lot was not located on that avenue, as the company’s agent had reported it to be; but by taking a blind route to it, the plaintiff was denied the opportunity of finding out that the agent’s representation was false.

It is next insisted by counsel for the defendant that the plaintiff is precluded, by her delay and laches, from seeking a rescission of the contract of sale. It is true that the duty rests upon a party who seeks to rescind a contract, upon the ground of fraud, to make such effort to discover the fraud as would amount to ordinary diligence in law. Massachusetts Benefit Life Association v. Robinson, 104 Ga. 256, 272 (30 S. E. 918, 42 L. R. A. 261); Reynolds etc. Co. v. Martin, 116 Ga. 495, 502 (42 S. E. 796). Equity gives no relief to one whose long delay renders the ascertainment of the truth difficult, though no legal limitation bars the right. Civil Code (1910), § 4536. We can not hold as a matter of law that the plaintiff is precluded, by her delay and laches in discovering the fraud, from prosecuting her suit for rescission. This misrepresentation was repeated by the company by inserting it in its bond for title to the purchaser, executed on April 11, 1922. It was embodied in each monthly note given by the purchaser to the company for the purchase-money of the lot. The acceptance of payment of each monthly note with this misstatement in it, and its delivery to the purchaser, in effect amounted to a repetition of- the misrepresentation. This continued up to the time the purchaser discovered its falsity and repudiated the sale. Of course a party who seeks to rescind a contract, upon the ground of fraud, must do so promptly upon the discovery of the fraud.

Applying the above rulings, the court erred in sustaining the demurrer to the petition.

Judgment reversed.

AW the Justices concur, except Gilbert, J., ivho dissents.