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"In the pleadings and arguments on the side of the complainants the case has been heavily weighted with denunciation of the German Savings & Loan Society as a fraudulent conspirator with an unnatural father to wrongfully appropriate the inheritance of minor children, all of which I consider as unnecessary and untrue.
• Tull, however, regarding the property as the product of his own business enterprise, he had to face the probable loss of all, or the best part of it, by the foreclosure of mortgages and liens to which it was then subject, unless he could make it produce an income by completing the building.
Under the advice and guidance of his lawyer, Mr. Tull undertook to rescue the estate from threatened ruin by first removing the legal impediments, and then mortgaging the property and using the money thus obtained to clear off existing incumbrances and complete the building."
The Supreme Court of the state, in its decision, was of the same opinion. Speaking of the previous guardian's sale of this property by order of the probate court, the illegality of which was the basis of that decision, the court said:
"It may be conceded that there was no intention and we think it is a facton the part of the attorneys, the probate judge. Tull, and the respondent, to injure the appellants, and that they acted from the best of motives.” Dormitzer v. German Savings & Loan Society, 23 Wash. 220, 62 Pac. 862.
The appellant having acted in good faith in loaning its money to F. M. Tull to save the property and make improvements, and having also acted in good faith in purchasing the property at the foreclosure sale, we think it is entitled to have its equities considered and determined in these partition proceedings; or, to state the proposition in another way, the appellant is entitled to ask the court of equity in these proceedings to require the complainants to do equity as a condition incident to the decree of partition. In the case of Leake v. Hayes, 13 Wash. 213, 43 Pac. 48, 52 Am. St. Rep. 34, the Supreme Court of Washington reached the same conclusion in a partition suit with respect to similar equities claimed by a co-tenant for improvements placed upon the premises. The court said:
"We also think that the court should not have awarded a partition of the premises without first having ascertained the value of the appellants' improvements thereon. While it is a well-settled general rule of law that one tenant in common cannot, at his own suit, recover for improvements placed upon the common estate without the request or consent of his co-tenant, yet a court of equity will not, if it can avoid so inequitable a result, enable a co-tenant to take advantage of the improvements for which he has contributed nothing. When the common lands come to be divided, an opportunity is offered to give the co-tenant who has enhanced the value of a parcel of the premises, the fruits of his expenditures and industry by allotting to him the parcel so enhanced in value, or so much thereof as represents his share of the whole tract. It is the duty of equity to cause these improvements to be assigned to their respective owners (whose labor and money have thus been inseparably fixed on the land), so far as can be done consistently with an equitable partition. Freeman on Cotenancy and Partition (2d Ed.) § 509. This principle is but an exemplification of the ancient and well known maxim that he who asks equity must do equity. Now, if this be true, as appellants allege, that at the time of the death of Charles Washburn the land was almost wholly in a wild state, and therefore unproductive, and that they have not only put valuable and permanent improvements upon it, but have cleared it for cultivation, and made it capable of yielding valuable profits. and have done all this in good faith under the belief that Mrs. Hansen was the absolute owner, it seems to us that it would not only be extremely unjust
and inequitable to allow them nothing for their expenditures and labor, but contrary to reason and the great weight of the authorities."
And, after quoting from Pomeroy's Equity at section 1210, and citing other authorities, the court proceeds, as follows:
“The respondent can lose nothing by the application of this just principle. The improvements have cost her nothing, and, if the appellants are allowed their present value in case partition cannot be made without prejudice to the interests of the sereral owners, or are awarded the particular portion of the premises which are thereby enhanced in value, she will receive all she would have received if appellants had permitted the land to remain unimproved, and that is all she can justly claim."
In Hall v. Piddock, 21 N. J. Eq. 313, the doctrine of equitable partition is stated as follows:
“The rule that a tenant in common, who has made improvements on the land held in common, is entitled to an equitable partition, is well established, and is hardly disputed by counsel. The only good faith required in such improvements is that they should be made bonestly for the purpose of improving the property, and not for embarrassing his co-tenants, or incumbering their estate, or hindering partition. And the fact that the tenant making such improvements knows that an undivided share in the land is held by another, is no bar to equitable partition."
In the case of Bright v. Boyd, 1 Story, 478, Fed. Cas. No. 1,875, Mr. Justice Story, referring to the right of a bona fide purchaser to be allowed compensation for improvements, says:
“It appears to me, speaking with all deference to other opinions, that the denial of all compensation to such a bona fide purchaser, in such a case, where he has manifestly added to the permanent value of an estate by his meliorations and improvements, without the slightest suspicion of any infirmity in his own title, is contrary to the first principles of equity. Take the case of a vacant lot in a city, where a bona fide purchaser builds a house thereon, enhancing the value of the estate to ten times the original value of the land, under a title apparently perfect and complete. Is it reasonable or just that in such a case the true owner should recover and possess the whole, without any compensation whatever to the bona fide purchaser? To me it seems manifestly unjust and inequitable thus to appropriate to one man the property and money of another who is in no default. The argument, I am aware, is that the moment the house is built it belongs to the owner of the land by mere operation of law; and that he may certainly possess and enjoy his own. But this is merely stating the technical rule of law by which the true owner seeks to hold what in a just sense he never had the slightest title to; that is, the house. It is not answering the objection, but merely and dryly stating that the law so holds. But then, admitting this to be so, does it not furnish a strong ground why equity should interpose, and grant relief?
The case was referred to a master to take account of the enhanced value of the premises in controversy by reason of the meliorations and improvements placed thereon by the plaintiff. Upon hearing the report of the master the court held the improvements to be a lien or charge upon the estate for the increased value, and made the following statement in connection therewith:
"I wish, in coming to this conclusion, to be distinctly understood as affirming and maintaining the broad doctrine, as a doctrine of equity, that, so far as an innocent purchaser for a valuable consideration, without notice of any infirmity in his title, has, by his improvements and meliorations, added to the permanent value of the estate, he is entitled to a full remuneration, and that such increase of value is a lien and charge on the estate, which the
absolute owner is bound to discharge before he is to be restored to his original rights in the land. This is the clear result of the Roman law, and it has the most persuasive equity, and, I may add, common sense and common justice, for its foundation." Bright v. Boyd, Fed. Cas. No. 1,876.
I am of the opinion that the appellant's equities are in line with these cases, and entitle it, upon a partition of the property, to such an equitable division as will allow it the benefit of the improvements placed upon the one-half interest owned by the Tull heirs. But, if such a division cannot be had, then the property should be sold, and out of the proceeds of the sale the appellant should be allowed one-half thereof, and, in addition, such further sum as the value of one-half of the improvements bears to the value of the entire property. There should also be an accounting of rents, issues, and profits for the period the property has been in the possession of the appellant, to wit, from April 23, 1896, and such proportion thereof awarded to the appellees as is provided herein for the distribution of the proceeds resulting from the sale of the property.
W. P. WALKER & CO. v. WALBRIDGE.
(Circuit Court of Appeals, Fifth Circuit. March 14, 1905.)
No. 1,340. FBAUDULENT REPRESENTATIONS-ACTION FOR DECEIT-MEASURE OF DAMAGES.
A declaration in an action of deceit which alleges that plaintiffs purchased from defendant a ranch for the lump sum of $20,000 in reliance upon defendant's representations, which were supported by an abstract of title produced by him, and the certificate of a county clerk that the ranch contained 43 sections of land, including 13 sections of state land held under a long-term lease, which representation was false, in that de fendant had no lease or other title to 11 of such 13 sections, and that plaintiff obtained none, states a cause of action for the recovery of the value of the leasehold interest in said 11 sections, bad defendant held title thereto as represented.
Shelby, Circuit Judge, dissenting on the ground that the measure of damages recoverable for deceit inducing a purchase of property is the amount of plaintiff's loss by the purchase, and that a declaration does not state a cause of action for such recovery unless it alleges that the property obtained was not worth the price paid. In Error to the Circuit Court of the United States for the Western District of Texas.
W. M. Walton, Geo. S. Walton, A. B. Storey, and P. J. Greenwood, for plaintiffs in error.
T. W. Gregory and R. L. Batts, for defendant in error.
McCORMICK, Circuit Judge. The declaration in this case avers, substantially: That the plaintiffs and the defendant about July 1, 1901, entered into negotiations for the purchase by the plaintiffs of a ranch owned by the defendant, known as the "Old Murphy Ranch, situated in Jeff Davis, Presidio, and Brewster counties, Tex. That the defendant at that time represented to the plaintiffs that the ranch contained between 41 and 43 sections of land, held by the defendant under various titles; some of them being by fee-simple title, other parts by tax title, and still other parts as leased lands. That the plaintiff G. C. Walker and the defendant at the time of entering on this negotiation made a partial personal examination of the ranch, during which examination Walker stated to the defendant that it would be fruitless for him (Walker) to attempt to ascertain the location and size of the ranch from a personal examination, as he was a stranger in the country, and might be shown over only a small portion of the land, and not know but that he had seen all of it; and, upon inquiry of the plaintiffs, the defendant again assured the plaintiffs that the ranch contained between 41 and 43 sections of land, of the kinds above described. An understanding was finally reached, by the terms of which the plaintiffs agreed to purchase a ranch of the size and character mentioned by the defendant for the lump sum of $20,000 for the land, and so much per head for certain cattle thereon. lifference in price was fixed, agreed on, or understood in regard to the several different kinds of land constituting the ranch; but the ranch, as a whole, consisting of from 41 to 43 sections of the various kinds of land above described, was valued at, and sold by the defendant to the plaintiffs for the agreed price of, twenty thousand dollars, which sum was paid to the defendant. On July 6, 1901, a written agreement between plaintiff G. C. Walker and the defendant in regard to the sale of the ranch was signed. This written agreement included the terms and price of the land, but did not specify the quantity of land which the ranch contained, because of the request of the defendant that this item should be omitted, and the obligation upon his part to furnish the necessary abstracts of title; and although the plaintiff at the time requested that the written contract should show the number of acres of land contained in the ranch, and to be transferred by the contract of sale, upon the repeated assurances of the defendant that the ranch contained between 41 and 43 sections of land, and that defendant would furnish to plaintiffs the leases, title papers, and abstracts showing the amount of land in the ranch, the specification as to the number of acres in same was omitted from the written contract; and, relying upon the assurances of the defendant, plaintiffs waived the insertion in the contract of the quantity of land contained in the ranch, the title to which was to pass to plaintiffs by the sale. That at no time prior to the consummation of the sale did plaintiffs know the quantity of land in the ranch, except as the same was represented by the defendant, but that they relied implicitly on the representations and statements of the defendant. That, as an inducement to the plaintiffs to purchase the ranch, defendant represented to them that the ranch contained, among other lands, as many as 11 or 13 sections held by the defendant under a 10-year lease from the state, which had yet more than 9 years to run; that the 10-year leases were very valuable, as the state had lowered the lease period, and no more 10year leases could be secured; that the 10-year lease land was situated in Presidio county, and was included in the ranch; that the defendant would furnish abstracts showing therein everything concerning the lands constituting the ranch, including that land held under the leases; that these representations made by the defendant in regard to the
quantity of 10-year lease lands included in the ranch were confirmed in defendant's presence by the defendant's agent, Stewart, by showing plaintiffs a list including 13 sections of land in Presidio county held, according to that list, under a 10-year lease from November 2, 1900. That these representations were made by the defendant to the plaintiffs prior to the execution of the contract of sale. The plaintiffs believed the same to be true, and, relying implicitly upon the truth of the same, were induced to buy the ranch because of these representations. That the defendant did furnish and deliver to the plaintiffs abstracts of title to all the lands represented by the defendant to be in the ranch. That, according to the abstract so furnished plaintiffs by the defendant, the ranch contained 43.3 sections of land, among which were included 13 sections of land lying in Presidio county, purporting to be held by the defendant from the state under 10-year lease contracts, dating from November 2, 1900. That, in addition to the abstracts, defendant also furnished plaintiffs a certificate from D. Alarcon, county clerk of Presidio county, showing the leases to have been made as claimed by the defendant, and as shown by the abstracts, only in that 2 of the sections were by the certificate shown to be in one block, and the remaining 11 in another block, whereas in the abstracts all 13 were shown to be in one block. That, believing the representations made by the defendant to the plaintiffs as to the number of sections of land in the ranch to be true, and believing the abstracts furnished by the defendant to the plaintiffs to be true and correct, and relying upon the truth and correctness of the representations, abstracts, and statements, the plaintiffs did on October 5, 1901, enter into a contract of purchase of the ranch, and paid to the defendant the agreed price, and received the title papers, abstracts, etc., and that thereupon the defendant reiterated his assurance to the plaintiffs that the ranch was as defendant had represented it to be, and plaintiffs went into immediate possession of the ranch. That on January 1, 1902, for the purpose of paying the amount due the state on the leased lands represented by the defendant to be included in the ranch, and so shown to be by the abstracts, etc., furnished the plaintiffs by the defendant, and which the plaintiffs relied upon as true, and verily believed to be true, the plaintiffs forwarded to the State Treasurer the amount so due the state, including the amount due on the 13 sections lying in Presidio county, held under the 10-year lease contracts. That thereupon plaintiffs discovered for the first time that the ranch, instead of containing the 13 sections of 10-year lease land, as represented by the defendant, contained only 2 sections of 10-year lease land. That plaintiffs immediately made full investigation, and discovered for the first time that the ranch contained less land than had been represented by the defendant and shown by the abstract furnished by the defendant, and that the shortage thus appearing for the first time was made up wholly of the 10-year lease lands represented by the defendant to be included in the ranch. That plaintiffs implicitly relied upon the statements and representations made by the defendant, and upon the abstracts of title and the clerk's certificate, as to the number of sections of land included in the ranch, and verily believed and thought that they were buying a ranch containing 43 sections of land. That they in fact bought and paid for 43