Richer v. Burke , 147 Or. 465 ( 1934 )

This action is based upon fraud alleged to have been committed by the defendant Burke, a real estate broker, employed by plaintiffs to exchange their property in Washington for certain farm property in Marion county, Oregon. The defendant insurance company was made a party defendant by reason of being a surety on Burke's statutory bond.

Plaintiffs were the owners of five lots in Everett, Washington, of an alleged value of $4,500, with an encumbrance thereon of $1,600. Through the services of Burke, this property was exchanged for 20 acres of land in Marion county. It is alleged that plaintiffs were induced to make this exchange on account of false and fraudulent representations in substance as follows: (1) That Burke represented the value of the Marion county property to be equal to the value of plaintiff's property in Washington; (2) that Burke represented that the Marion county property was encumbered only in the sum of $2,100; and (3) that Burke, without any intention of performance, represented that he would resell or exchange the contract of sale on the Marion county land for other property near Salem, Oregon, so that plaintiffs would realize the sum of $2,900, being the amount of their equity in the lots owned by them in Washington.

Plaintiffs allege that these representations were false and fraudulent in that (1) The property in Oregon had no value above the encumbrances thereon and was not equal in value to plaintiffs' equity in the Washington property; (2) that the 20-acre tract in Oregon was not free of encumbrance except the contract of sale for $2,100 — to be assigned to plaintiffs — but was also encumbered by a mortgage of $3,800; and (3) that Burke had no intention of reselling or exchanging the property but made such promise to induce plaintiffs to enter the agreement of exchange.

The cause was submitted to a jury and a verdict returned against defendants for $2,500 with an award of $250 as attorney fees for the prosecution of the action. From the judgment based thereon, the defendants appeal.

It is urged that error was committed in limiting the cross-examination of the plaintiff Robert Richer relative to his knowledge of land values in Marion county. This plaintiff had testified that he did not know "anything about land values here in this county". The record discloses the following cross-examination and the comments of the court in reference thereto:

"Q. When did you first come to Oregon? I will start out with that.

"A. When I first came to Oregon? In 1916, I went to Mill City.

"Q. How long were you up there? A. Just say that over again?

"Q. How long were you in Mill City? A. I was there about three months.

"Q. And then where did you go? A. Back to Washington.

"Q. When did you next come back to Oregon? A. I couldn't tell you.

"Q. About when?

"THE COURT: I am at a loss to understand this line of cross-examination.

"MR. ALLAN CARSON: This man says he was utterly unfamiliar with Oregon land. I am entitled to show he has been in the state for years.

"THE COURT: That wouldn't make any difference, he might have been in the state for years and still not know —

"MR. ALLAN CARSON: I except to the Court's remarks, I think we are entitled to show it.

"THE COURT: I think the cross-examination in some respects is going too far, it is delaying the case.

"MR. ALLAN CARSON: We would like an exception to the Court's remarks.

"THE COURT: Very well, you can have all you want. I have my own idea about some things, I think the cross-examination in that respect is going too far afield, and taking up too much time.

"MR. ALLAN CARSON: Are we to be limited in putting on our case?

"THE COURT: No, but I am trying to get the case tried.

"MR. ALLAN CARSON: I will attempt to hurry, but some of the delay hasn't been ours."

Plaintiffs charged that the defendant Burke had falsely represented the value of the Marion county property, that they "had no knowledge or information regarding land values in and about Salem, Oregon, and that they relied upon the judgment and statements of Burke with reference to the value of the Marion county property". Did the defendants not have the right to show that plaintiffs, in fact, relied upon their own judgment? Were they not entitled to show that plaintiffs did, in fact, know something about land values in this state? While much discretion is vested in trial courts relative to the extent of the cross-examination, we are constrained to hold that there was an abuse thereof in the instant case. A liberal rule should be followed where fraud is charged. Furthermore, the comments of the trial judge in the presence of the jury could result only in prejudice to the defendants. Counsel for plaintiffs made no objection to the cross-examination realizing full well that it was a proper line of inquiry. The right to cross-examine is a substantial one and when it pertains to a vital issue of the case we think reversible error results in its denial.

We think error was also committed in the giving of the following instruction:

"While a party is supposed to investigate and ascertain the truth of statements made to him, in so far as he is able to do so, yet this does not preclude such party from recovering for fraud, if he proves fraud by a preponderance of the evidence, if he also proves by a preponderance of the evidence he was prevented or dissuaded from making such investigation by reliance upon false and material representations made to him by the party charged, to his damage."

The record fails to disclose any evidence that the defendants, or either of them, said anything to prevent or dissuade plaintiffs from making an investigation of the property in Marion county. As a matter of fact, Robert Richer did inspect the same before entering into the contract of exchange. As an abstract proposition of law, the instruction may be correct, but it has no application to the facts involved in this case. We find nothing to the contrary in Aitken v. Bjerkvig, 77 Or. 397 (150 P. 278);Paulson v. Kenney, 110 Or. 688 (224 P. 634), and Greig v.Interstate Inv. Co., 121 Or. 15 (253 P. 877).

The judgment of the lower court should be reversed and the cause remanded for a new trial.

RAND, C.J., and BEAN, J., concur in this dissenting opinion.