Standard Steel Car Co. v. Stamm , 207 Pa. 419 ( 1904 )

Opinion by

Mb. Justice Bbown,

The material facts in this case are undisputed. Shortly before March 20,1902, W. D. George went to the town of Butler to procure options to purchase land in bis name, but intended really for the benefit of the Standard Steel Oar Company, which contemplated the erection of a large plant for the construction of steel cars. He employed W. D. Brandon, Esq., a member of the Butler bar, to assist him, but did not disclose the name of the company he represented. After George had procured options for a number of properties he found it important to procure one for the property of the defendant, which is the subject of this controversy, and, having so informed Mr. Brandon, his attorney, the latter called to their assistance J. F. Anderson, one of the appellants. ' On March 20, 1902, Anderson took Stamm, the appellee, to Brandon’s office and procured the following option: “ Received of J. F. Anderson this' 20th of March, 1902, five dollars for an option to purchase at any time within sixty days at the price of $14,000, a tract of land in Butler, Pa., bounded north by Pillow street, east by Willow street or Fair Ground Road, south by' Charles Duffy and west by public road; containing nine acres, more or less, with the appurtenances. Possession of the house and lot—the residence property—to be given in thirty days after acceptance of this option, and of the balance also in thirty days, except so far as it may be neqessary for him to operate his brick yard for the season for which purpose he retains possession until November 1, 1902, and thereafter of the kiln until he can remove his brick, which he agrees then to do with all reasonable diligence. Acceptance of this option to be in writing. The amount of purchase money to be paid eight thousand dollars on acceptance of option when deed clear of encumbrance is to be made, and balance in payments of $2,000 a year for three years with interest, to be secured by mortgage.

“ Attest: ' J. George Stamm:. (Seal)

“ W. D. Brandon. J. F. Anderson. (Seal) ”

On April 1,1902, the option was accepted in writing by Anderson, and subsequently he assigned it to the Standard Steel Car Company, the other appellant.

While Brandon and Anderson knew at the time the option was given that a manufacturing company contemplated locating its plant in Butler, its name had not been disclosed to either of them. When the option was given, the agreement was, that, if it should be exercised by Anderson, Stamm would go to the office of Mr. Brandon and execute the deed. He did not do" this, but there were interviews between him and Brandon and Anderson for the purpose of closing the contract, in which he expressed his willingness to perform his part of it, but excused himself for not promptly doing so on the ground that his wife was unwilling to join in the deed, and requested time for the purpose of inducing her to do so. Another reason given by him for asking for delay Ayas, that there was some trouble about car tracks over his land. He subsequently admitted that this latter reason was a mere pretext, and that, as the real reason for his delay was the unwillingness of Mrs. Stamm to join in the deed, he wanted a little more time to talk it over with her. On July 19, 1902, Brandon notified Stamm that the deed for the property would be accepted without its execution by his wife, but he refused to so execute and deliver it to the purchaser. On September 27, 1902, the purchase money of $8,000 and Anderson’s bond and mortgage for the balance, according to the contract, were tendered to the defendant, and he still refused to comply Avith his agreement. This bill was then filed on November 5, 1902, and, under the foregoing facts, was dismissed by the court beloAV, for the reason that, as Anderson had not disclosed to Stamm at the time the option was procured his knowledge of the fact that a manufacturing plant would probably come to Butler, such concealment Avas a fraud upon Stamm, in the face of which he ought not to be compelled to specifically perform his contract. The-words of the learned trial judge, in his conclusion that the bill ought to be dismissed for the reason stated, are: “ Under the undisputed facts in this case it would be inequitable to compel the defendant to convey the land to the plaintiff, the Standard Steel Car Company. The option when taken was not taken for the Standard Steel Car Company, nor by its direction, nor did said company have any knowledge that it was to be taken, or that it had been taken, for some time thereafter. Mr. J. F. Anderson, who took the option, was a volunteer; he had no interest whatever in the premises; he is not asking for a conveyance to himself; he has been in no way injured or wronged by the refusal of the defendant to convey the land; at the time he took the option he believed that a manufacturing plant was coming to Butler, and he had reason to believe that the defendant had no knowledge of the facts relative thereto; his conduct in his dealings with the defendant was in effect fraudulent as to the defendant; Mr. Anderson' testifies that he concealed the knowledge he had of the probable coming of some new industry, knowing or believing if he disclosed it, the defendant would ask a higher price for his land than he did; he knew if the plant did come it would greatly enhance the market value of the defendant’s property; and, as a fact, it has largely enhanced the value of said property; there is no evidence in the case of an imperative necessity that the car company should own the property of the defendant for the convenient and successful operation of its plant.” The -statement that Anderson is not asking for a conveyance to himself is an inadvertence, for the prayer of the bill is for a decree that a deed be executed and delivered to him or his co-complainant.

In Anderson’s negotiations with Stamm for the option it is not pretended that he made any misstatement or practiced any deception or imposition, or refused, at Stamm’s request, to disclose any information which he possessed. As a matter of fact, he was in possession of no definite information. It was limited to the probability that a company,- unknown and unnamed to him, might locate in Butler, and, among other lands, might need that of the defendant for its business purposes. As we gather from the testimony, he, with other citizens of the place, was anxious to have the manufacturing company come among them, and, most naturally, was willing to assist in the movement to induce it to do so. With not the slightest evidence of any intention to deceive Stamm or to practice a fraud upon him, he negotiated with him on a pure business basis. Each dealt with the other at arm’s length, the prospective seller trying to obtain the best possible price paid for his land, and the option was given only after the prospective' buyer had agreed to give all that was asked for it. There is nothing to show that the price agreed to be paid was not full and adequate at the time the option was given. And now, for no other conceivable reason than that the value of his land has greatly increased, the defendant would avoid performance of a contract in which there is involved nothing dishonest in law or in morals. Before the option was exercised the appellee heard that the manufacturing company might come to the town, but he made no objection on that account when Anderson notified him that he would exercise it. Such exercise turned it into a contract, enforceable by either party, whether the company came or not, and, if it had not come, Anderson would have had to pay the purchase money, though the same might have been much more than the property was worth and than anybody else would have paid for it. What Anderson is alleged to have concealed was nothing more than a rumor which might have been true or false. He concealed no fact then in existence that had actually affected the real market value of the property. But, even if he had, and the concealment under what took place between him and the prospective vendor had not amounted to actual deception, no fraud would have been practiced.

The complaint of the appellee is, that Anderson did not speak when it was his duty to speak. “ A concealment to be material must be the concealment of something that the party concealing was under some legal or equitable obligation to disclose : ” Kerr on Fraud (Am. ed.), 95. “ Concealment which amounts to fraud in the sense of a court of equity, and for which it will grant relief, is the nondisclosure of those facts and circumstances which one party is under some legal or equitable obligation to communicate, and which the other party has a right, not merely in foro conscientise, but juris et de jure, to know.” In Neill v. Shamburg, 158 Pa. 263, the plaintiff sought to set aside her sale of an oil lease, alleging qs one of her reasons concealment by the purchaser at the time of the purchase of the fact that oil was being produced upon a neighboring leasehold owned by him, and we held that the failure of the purchaser to make such disclosure was not a fraud upon her. If the information had been imparted to her, she might have refused to sell, or demanded more, but it was said by the present chief justice: “ Unless there is some exceptional circumstance to put on him the duty of speaking, it is the right of every man to keep his business to himself.” There was no exceptional circumstance here requiring Anderson to repeat to 'Stamm the rumor of the probability of the location of the manufacturing company in their town. On the contrary, common business prudence required him to remain silent, for, if he had spoken of the rumor, he might not have been able to negotiate at 'all. On this very point the learned trial judge says: “ Had Mr. Anderson frankly confided to Mr. Stamm the information and knowledge he had, and which was entirely proper that he should have done, it is scarcely possible this option Would have been given.”

If Anderson had been asked to speak on a material matter, and had answered falsely, Stamm would not be bound by the option nor the contract that flowed from it; and, if he had refused to speak when asked, Stamm would have dealt with him at his own risk. But such is not the situation. Harris v. Tyson, 24 Pa. 347, was a case in which the vendee did not disclose to his ignorant vendor the fact known by him, that there was a mine of chrome on the land he wished to purchase. The vendor subsequently would" have avoided his deed for the reason that the vendee had not informed him of the presence of the chrome on the property at the time he sold it, and Black, J., said: “ A person who knows that there is a mine on the land of another may nevertheless buy it. The ignorance of the vendor is not of itself fraud on the part of the purchaser. A purchaser is not bound by our laws to make the man he buys from as wise as himself. The mere fact, therefore, that Tyson knew there was sand chrome on Harris’s land, and that Harris himself was ignorant of it, even if that were conclusively established, would not be ground for impugning the validity of • the deed.”

In Guaranty Safe Deposit and Trust Co. v. Liebold, ante, p. 399, we said what we repeat as applicable to the facts here : “ In this commercial age options are daily procured by those in possession of information, from which they expect to profit simply because those from whom the options are sought are ignorant of it. When the prospective seller knows as much as the prospective buyer, options can rarely, if ever, be procured. . . . The prospective buyer seeks an option instead of at once entering into a contract for the purchase of land, because, no matter what information he may possess exclusively, he is unwilling to act upon it until it becomes a certainty. In the meantime, on the contingency of its becoming so, he makes his contingent bargain to purchase. This is fair in law and in morals: Hershey v. Keembortz, 6 Pa. 128; Harris v. Tyson, 24 Pa., 347.”

The reason given for dismissing plaintiffs’ bill and refusing a decree for specific performance is untenable and cannot be sanctioned in this practical age. The decree of the court below is reversed, and it is now ordered, adjudged and decreed that the bill be reinstated and that, upon the tender of $8,000 of the purchase money by J. F. Anderson to the appellee, and the execution and delivery by him of the mortgage to secure the three annual payments of $2,000 each—balance of the purchase money—the appellee, J. George Stamm, execute and deliver to him, the said J. F. Anderson, a deed for the land described in the bill, the.costs on this appeal and below to be paid by the appellee.