McKay v. Smith , 234 Mich. 367 ( 1926 )

In December, 1922, the plaintiff Max McKay was engaged in the practice of optometry in Bay City, Michigan. The defendants owned and occupied Sunrise farm, consisting of 40 acres located near Bay City, in Bay county. The plaintiffs wished to buy such a farm, and the defendants wished to sell. They were brought together by Guy Catto, a real estate broker of Bay City. An agreement was reached by which the plaintiffs were to purchase the farm for $15,500, and to make payment therefor as follows: $5,000 in cash, $6,000 by deed of their residence in Bay City, and their note for the balance secured by a mortgage on the farm in the sum of $4,500. In accordance with this agreement the sale of the farm was consummated.

After being on the farm for about four months the plaintiffs began this suit for a rescission of the contract, alleging in their bill that they were induced to make purchase of the property through fraud and misrepresentation on the part of the defendants. The alleged fraud consisted of false representations in regard to the drainage of the land, the age and condition of the apple and pear orchards, and the quantity and quality of fruit which they annually produced. The defendants answered denying each and every allegation of fraud. On the hearing the circuit judge found that the defendants had falsely represented that the land was thoroughly underdrained throughout, and he entered a decree for the rescission of the contract. The defendants have appealed.

In such cases the law places upon the plaintiffs the burden of proving the fraud alleged. Fraud cannot be lightly inferred, but especially when urged as a basis for the rescission of an executed contract, it must be shown by the evidence to the satisfaction of the court. The only question in this case is whether the plaintiffs have sustained this burden of proof.

As to the alleged misrepresentations in regard to the orchards, the circuit court was not convinced that the plaintiffs had established the fraud charged. Our examination of the evidence leads us to the same conclusion. The evidence is more convincing that misrepresentations were made in regard to the drainage of the farm, and that they were relied on by the plaintiffs. The plaintiff Max McKay testified that Mr. Smith represented to him that the farm was thoroughly drained and tiled and in excellent working order, that it was the only garden farm in that neighborhood that was drained, that this was the reason he had made such a success of it, that because it was so thoroughly underdrained he could get on his land earlier than his neighbors, which enabled him to put in his crops earlier and get the early market. Don McKay, a brother of the plaintiff, testified that he was present on one occasion during the negotiations and heard Mr. Smith say that the farm was thoroughly underdrained. Mr. Catto, the real estate broker who sold the farm for Smith, testified that Smith represented to McKay that the farm was all underdrained partly with wooden tile and partly with ordinary tile.

The defendant Merton E. Smith made no very positive denial of this testimony. He testified:

"Q. What is the fact as to there being drains on the farm?

"A. Well, it is — not all been underdrained, but all that I told Mr. McKay has been underdrained. There is a piece in the northwest corner of the place that I distinctly told Mr. McKay never had been any draining done. * * *

"Q. What, if anything, was said as to the drainage in the orchard being tile or wood or what?

"A. I told him they were underdrained.

"Q. What was said as to the character of the drains?

"A. Yes, I said part of it was tile and part box."

We think it clearly appears from the evidence that Mr. Smith represented to the plaintiffs that he was selling them a drained farm.

The plaintiffs bought the farm in December, 1922. They moved on to it early in April, 1923. It is claimed by them, and not denied by the defendants, that when the time came to put in crops the land was so wet that they could not work it. They complained to Mr. Smith and asked him to show them where the drains were. He was unable to do so. In his testimony he said, "The drains have not been good for the last few years, the outlets were not in shape to let them work. I think they could be cleaned, but perhaps some of them are decayed and in such shape they couldn't be good anyway. I don't know as to that." This and other testimony which it is not necessary to quote shows that the drains which had been put in many years before were practically useless when the farm came into possession of the plaintiffs.

Plaintiff McKay testified that he relied on these representations:

"Q. Did you buy it entirely on the representation?

"A. As far as drainage was concerned, I did; I could see some of the other things but I couldn't see the drainage, and wouldn't know how to judge it if I did."

The circuit judge made a correct disposition of the issues involved in this case. The evidence shows that the defendant Smith represented to the plaintiffs that the farm was thoroughly underdrained, that the representation was untrue, that it was a material representation, and that the plaintiffs relied on it. In view of this conclusion as to the facts, the plaintiffs are entitled to the relief given them by the decree of the circuit court.

A like decree will be entered in this court. The plaintiffs will have costs.

BIRD, C.J., and SHARPE, SNOW, STEERE, FELLOWS, WIEST, and CLARK, JJ., concurred.