Osborn v. Will , 183 Minn. 205 ( 1931 )

No exception can be taken to the general principles of law stated in the majority opinion. But I think plaintiffs' evidence brings this case under the rule stated in the last two sentences of the following quotation from Elphick v. Hoffman,49 Conn. 331, 332:

"If the alleged false representations did not induce the respondent to make the purchase, then it is a case of fraud without damage. If he refused to accept the representation unless put in the form of a guarantee, his only redress is on the contract. He is not at liberty to lay that aside and resort to fraud. But even if we may suppose that he is entitled to either remedy he is certainly not entitled to both. Electing to pursue one he waives the other."

When it came to signing the binding contract of purchase, plaintiffs inquired of defendant Will whether he would put in writing the representation that the basement was dry. On being assured that he would, plaintiffs' own lawyer drew a contract accordingly, and it took the form of a guaranty. Later this contract executed by the vendors was surrendered for another in the same language executed by Nicholson. Soon thereafter a heavy rainfall disclosed that water came into the basement through settling cracks in its walls and floor. Without any suggestion that they had been defrauded or were holding in reserve an action for deceit, plaintiffs at once demanded of Nicholson that the water be taken out and repairs made. The demand was complied with. The same course was pursued for over two years whenever during some extraordinary rain a leak let water into the basement. Plaintiffs' evidence shows that the last or one of the last repairs was very thorough and no doubt expensive. At any rate, on December 2, 1927, when plaintiffs executed a contract to sell the house and lot to one McDonald they therein stated and represented among other matters that they had resided in the house three years and that:

"With respect to the basement of said premises, first parties [plaintiffs] state and second parties [McDonalds] know that there has been from time to time water in said basement, but first parties agree, and said agreement is an essential part of this contract, that the basement thereof is now properly water-proof, tight and dry."

Thus by plaintiffs' own evidence it conclusively appears that they pursued their remedy under the contract until Nicholson put the basement into the condition he represented it to be when plaintiffs bought. Their contract with McDonald also evidences that they still intend to pursue their remedy on the guaranty against Nicholson, if further leaks should occur, for in such contingency notice must be given by McDonald to Nicholson. It would seem impossible under the circumstances to permit a recovery for false representations after there has been such a good faith expenditure of time and money in making them come true as the guaranty provided.

It seems also that plaintiffs failed to make a case against Nicholson under the rule of Neeland v. Hansen, 144 Minn. 228,175 N.W. 538. He was not the vendor. He merely happened to be present the second time plaintiffs examined the house with a view of buying; and, having built the house and sold it to Will, he stated to plaintiffs that the house was built right and that the basement was dry. There is no evidence that Nicholson then knew that water had ever entered it. The rule in the case last cited is that one not a party to the transaction is not liable for fraud or deceit where he honestly and to the best of his knowledge has given the information possessed by him. I think the order should be affirmed.

DIBELL and STONE, JJ.

We concur with Mr. Justice Holt.