Alexander v. Meek , 132 Miss. 298 ( 1923 )

Sykes, P. J.,

delivered the opinion of the court.

The appellants as complainants seek in their bill to rescind and cancel a contract for the purchase of about two hundred forty-five acres of land in Humphreys county. This land' was purchased by them from the appellees in 1919 for one hundred twenty-five dollars an acre. In their bill appellants offered to do equity and restore the status quo ante. The principal ground relied upon for rescission and cancellation is that one Garnett, agent of the appellees in the sale of the land, made false representations of a material fact as to the southern boundary of the land, and that the appellants relied upon this representation, which was one of the material reasons and inducing causes for their purchase of the land. The chancellor dismissed the bill, and the appellants prosecute an appeal from this deeree. The appellees also prosecute a cross-appeal which becomes unnecessary to consider.

The material facts in the case are not disputed. The appellants wanted to buy a small tract of land of about three hundred acres. • The appellees had placed for sale with the real estate firm of which Garnett is a member this tract of land. It is admitted that Garnett in the transaction was the agent of the appellees. Garnett took the appellant Alexander out to the land to show it to him with the idea of selling it to him. There is no dispute in the record but that the northern, eastern, and western boundaries of the land were well marked by lines of fences. Alexander had never seen the land before. The well-marked northern, eastern, and western boundary lines were pointed out by Garnett to Alexander. Alexander testifies positively that the southern boundary line was also pointed out to him by Garnett; that Garnett stated to him that this 'southern boundary line was a road and also a part of a fence which ran parallel with the road; that south of this road was a lake; that he asked Garnett about the southern boundary line, and Garnett told him it was the road and the fence; that all of the land in the place was north of this road except three or four acres in the southeast corner of the land which ran down to the bank of the lake; that he relied upon the statements of Garnett as to the boundary lines of the land; that Garnett pointed out to him as a fact all of these boundary lines. Alexander reported this fact to his partner, Johnson. Garnett also, told Johnson that the southern boundary line was this road and fence. Garnett upon his examination in chief as a witness for the appellees in one place testifies that he told Alexander that he'thought the j^oad.and fence was the southern boundary of the land. On cross-examination, however, when distinctly asked if he meant to deny the fact that he did not point out the southern boundary line to Dr. Alexander as stated by him, he said he could not say that he did not; that he did not remember. In other words, Garnett did not deny that he made the representations to Alexander as to the southern boundary line. Neither did he deny that he made the same representations to Johnson. Johnson was not with Alexander and Garnett when the land was inspected. He made no inspection of the land, but merely talked with Alexander, Garnett, and with Meek, one of the appellees, when the sale was consummated. A description of the land was furnished to the appellants, and Johnson, a lawyer, examined a map in his office which showed a stream near the southern boundary of the land. He also examined the map in the office of Mr. Garnett. Neither of which maps indicated that'any of the land was in the lake. There is some controverted testimony as to what appellee Meek said to the appellant Johnson about the southern boundary of the land. This being controverted, we will not discuss it in this opinion.

As a matter of fact, of this two hundred forty-five and a fraction acres at least twenty-four acres of it are in the lake; a few acres are south of the lake. That land covered by the lake is worthless. At the time of the' sale the appellee Meek knew that fifteen or sixteen acres of this land was in the lake. He said nothing about this fact to the appellants.

The testimony of the appellant Alexander is to the effect that, he relied upon the representations of Garnett as to the boundaries of the land; that he would not have purchased the land had he not believed that the road and fence as pointed out to him by Garnett were the southern boundary line of the place. Johnson testified that he would not have purchased the land had he believed that over two or three acres of it in the southeast corner were in the lake.

To us it is manifest that it was impossible for Alexander from his inspection of the land to have noted the fact that there was a shortage in the tract north of the road of twenty-five or thirty-five acres. The appellants were buying a tract of land of over two hundred forty-five acres, and it would be impossible from an inspection of the land to note this shortage. Neither was there any way for the appellant Johnson from an inspection of the two maps to discover the fact that.an appreciable amount of this land was in the lake. Iii other words, it is manifest to us that this is not such a patent defect as could have been discovered by the appellants by the use of reasonable care and diligence on their part, but is a latent defect. Furthermore, that they, had a right to rely upon the representations of Garnett as to the boundary of the land. It is further obvious, as is also shown by the uncontradicted testimony, that the fact that twenty-four or twenty-five acres of this land was in the lake and worthless for agricultural purposes, if known to the appellants, would have prevented them from purchasing the lands. Or in other words, the representation of the southern boundary line was a misrepresentation of a material fact which was one of the inducing causes of the consummation of the sale.

The witness Garnett testified that as a matter of fact he did not know the boundaries of the place. His want of knowledge, however, was not communicated to either of the appellants. We do not think that Garnett was trying to practice a fraud upon the appellants, but he merely made representations as to a fact which were false and about which fact he had no knowledge.

We have given the testimony in this case a thorough and painstaking investigation, and with the greatest deference to the views of the learned chancellor who tried the case in the lower court, we are satisfied that the uncontradicted testimony is clear and convincing that these representations of fact as to the southern boundary line were made by Garnett to the appellants, that they were material, that appellants were unable to discover the falsity of it by the exercise of due care and diligence, that they relied upon this representation, and consequently are entitled to a rescission and cancellation of the contract. ..The law governing the decision of this cause is well settled. In the case of Allen v. Luckett, 94 Miss. 868, 48 So. 186, 136 Am. St. Rep. 605, it is stated:

“It is immaterial Avhether actual fraud be imputed to appellant. The result is the same, if the transaction Avas the result of a mutual mistake. If the terms are stated according- to the intent of the parties, but there is an error of one or both in respect of the thing to which these terms apply — its identity, situation, boundaries, title, amount, value, and the like — then it is elementary that a court of equity may grant appropriate relief, provided the fact about which the mistake occurs was a material element in the transaction.”

Again, in Oswald v. McGhee, 28 Miss. 340, it is said: “This case depends principally upon the facts, the principles of law applicable to it in any point of view being Avell settled.

“The evidence sufficiently shows that the purchase Avas made by the appellee upon the faith of the representations of the vendor, and not upon his own judgment. If these representations were material, and Avere made either Avith or Avithout an actual fraudulent intent, and really did mislead the purchaser and induce him to make the bargain, relying upon them, the contract cannot stand. Story’s Eq. Jur. sections 191-193; Hazard v. Irwin, 18 Pick. (Mass.), 95; Hall v. Thompson, 1 S. & M. 443.”

Also in the case of Rimer v. Dugan, 39 Miss. 477, 77 Am. Dec. 687: “It is clear from the record that the complainant acted on the faith of defendant’s representation, and that such representation Avas false. Whether the false representation was made Avith a knowledge that it Avas false, or without a knowledge that it Avas true, is wholly immaterial. If, knoAvingly, he represented what was not true, there nan be no doubt he should be bound to make reparation. If, Avithout knowing whether his representation was true or not, he took upon himself to make it to complainant, and upon the faith of it complainant acted, he is not less bound, although he may have been only mistaken, and therefore comparatively innocent. 2 Tucker’s Lect. pp. 421, 422, citing 1 Brown’s Ch., c. 546; 6 Ves. 174, 183; 10 Id. 475; 1 Ves. & B. 355; 9 Ves. 21; and see 1 Story, Eq. section 193; (McFerran v. Taylor) 3 Cranch (U. S.) 270 (2 L. Ed. 436).

“The same doctrine has long been settled in this court. See Parham et al. v. Randolph et al. 4 How. 451 (35 Am. Dec. 403) ; Davidson v. Moss, 5 How. 684; Hall v. Thompson, 1 S. & M. 485; Clopton et al. v. Cozart et al., 13 Id. 363; Oswald v. McGehee, 28 Miss. 340; Lindsey v. Lindsey, 34 Id. 432.”

And in Davis v. Heard, 44 Miss. 50: “Fraud vitiates everything into which it enters, and the vendor who makes statements which he knows to be untrue, is guilty of a direct fraud, if the vendee is thereby ■ deceived to his prejudice. And if he undertakes to make statements without knowing whether they are true or false, this is also a fraud in law, and he must make those statements good. Hall v. Thompson, 1 S. & M. 485.

“Whether the party misrepresenting a material fact knew it to be false, or made the representation without knowing whether it was true or false, is wholly immaterial, for the affirmation of what one does not know or believe to be true, is equally, in morals and law, as justifiable as the affirmation of what is known to be positively false. And even if the party innocently misrepresents a material fact, by mistake, it is equally conclusive, for it operates as a surprise and imposition on the other party. 1 Story’s Eq. 225, section 193; Smith v. Richards, 13 Peters (U. S.) 36 (10 L. Ed. 42) ; Read v. Walker, 18 Ala. 332, and Shaeffer v. Sleade, 7 Blackf. (Ind.) 178; Bennett v. Judson, 21 New York, 238, and Shackelford v. Handley’s Executors, 1 A. K. Marshall, 496 (10 Am. Dec. 753) Oswald v. McGehee, 28 Miss. 340, and Rimer v. Dugan, 39 Miss. 483 (77 Am. Dec. 687).

“Upon a review of the authorities upon this subject, the doctrine seems to be well established that, when a party to a contract places a'known trust and confidence in the other party, and acts upon his representation, any misrepresetation by the party confided in, in a material matter constituting an inducement or motive to the act of the other party, and by'which an undue advantage is taken of him, is regarded as a fraud against which equity will relieve.

“The evidence sufficiently shows that the purchase in this case was made by the appellee upon the faith of the truth of the representations of the vendor, and not upon his own judgment. And, if these representations were material, and were made either with or without an actual fraudulent intent, and really did mislead the purchaser and induce him to make the bargain, relying upon them, the contract cannot stand, in case the appellee has made his application to rescind the same, within a reasonable time after the discovery of the facts that would warrant a rescission.”

To the same effect is Estell v. Myers, 54 Miss. 174. See, also, Vincent v. Corbett, 94 Miss. 46, 47 So. 641, 21 L. R. A. (N. S.) 85; McNeer v. Norfleet, 113 Miss. 611, 74 So. 577, Ann. Cas. 1918E, 436; Parham v. Randolph, 4 How. 435, 35 Am. Dec. 403; Ross v. Houston, 25 Miss. 591, 59 Am. Dec. 231; Markowshy v. Rubenstein, 124 Miss. 724, 87 So. 278; 2 Pomeroy, sections 852, 853; 9 C. J. 1166; Brown v. Coker, 129 Miss. 411, 92 So. 585.

The testimony shows that as soon as the attention of the appellants was called to the fact that some of the land was in the lake, they employed an engineer to survey it. They exercised reasonable diligence after ascertaining this fact to have the contract rescinded and canceled.

' The appellants are entitled to the relief prayed for in their bill. The cause will be reversed and remanded for an accounting, a settling of the equities between the parties, with instructions that the contract be rescinded and canceled.

Reversed and remanded.