Kefuss v. Whitley

Wiest, J.

(dissenting). Claiming that defendants, by false and fraudulent representations, led him to pay them $28,000 on account of a certain real estate *70transaction, plaintiff filed the bill herein to have his contract relations with them rescinded, and a decree granted for the money so paid. In the circuit he was granted relief and the case is here on appeal taken by defendants.

We do not agree with the determination reached by the learned circuit judge, and will, as briefly as possible, point out our reasons for dismissing the bill. At the time the relations between the parties commenced it was evidently believed that Marysville, in St. Clair county, on account of the Wills-Lee automobile factory being located there, bid fair to become a large city, and real estate, including nearby farm lands, was subdivided into numerous lots. Defendants held an option on an 80-acre farm upon which they had paid $8,000, and were to pay $48,000 more, and, being in the real estate business in Detroit, first planned to plat the land and sell lots. Without doing this, however, they gave another real estate dealer named McDonald the right to sell the 80 acres at a price of $72,000.

Plaintiff resides at Hudson in this State, is a man 59 years of age, engaged in the custom milling business, had been a member of the board of directors of one of the banks there, and mayor of the city. He had invested in real estate in the city of Detroit, making the purchase of one piece at $34,000, and it is now worth about $50,000, and he bought and sold another piece of real estate in Detroit.

Nathan E. Cook, a cousin of plaintiff, was in the real estate business in Detroit and had aided plaintiff in his investments in real estate in that city. On or about April 18, 1920, plaintiff visited Mr. Cook in Detroit, to advise with him about the sale of some of his Detroit property, and there met Mr. McDonald who informed him about the Marysville property and the prospect of profits to be made therefrom and in*71vited him to the office of defendant Whitley to investigate.

The plaintiff’s version of what occurred in Mr. Whitley’s office in substance-follows:

“Mr. Whitley said that they had this piece of land up there at Marysville and that they had several pieces of land up there and that they were short of money; that he was short of money, and if one could furnish $25,000, why, he would go on and sell that, and I think they made out about 500 lots or 550. I told Mr. Whitley right then just the- same as I told Mr. McDonald upstairs, that I could scrape up $25,000, and that I wouldn’t go into it without they would agree to sell these lots because I was not a real estate man and didn’t know the first thing about it, and it would be foolish for me to put my money into a thing I knew I couldn’t sell, and he said there would be no trouble and he would guarantee the sale of it and I would have nothing to do with it whatever. They would sell it from 80 to 90 days. They would sell it within the 90 days. I wouldn’t be required to put anything more than $25,000 in there. * * I told Mr. Whitley to write that down on a piece of paper so I would know just in regard what to expect he would do and he took a piece of paper and a pencil and wrote down there.”

About April 22d the plaintiff, accompanied by Mr. Rumsey, who had been cashier of a bank in Hudson, and in whose business judgment he had confidence, visited Detroit with reference to this matter, and Mr. Rumsey asked Mr. Whitley some questions and asked him if he would be willing to give a bond. Mr. Whitley invited plaintiff and Mr. Rumsey to go to Marysville to look around and see what was there, and they visited Marysville, examined the property in suit, talked with an owner of property in the vicinity and returned to Detroit and to the office of Mr. Whitley. Mr. Rumsey asked him again about a bond and plaintiff claims that Mr. Whitley said:

“That he didn’t believe that he needed to give a *72bond or wouldn’t give a bond because his word was good; and he agreed to sell these lots and he would sell them.”

Plaintiff further testified, he (Whitley) said in all three of these talks that he would sell these lots and that he had sold off quite a number of subdivisions and that there would be no question whatever.

Plaintiff claims:

“If I hadn’t believed and relied upon the representations that Mr. Whitley made, I wouldn’t have entered into the contract that I afterwards did with him and would not have paid him this amount of money. After 'this talk, I didn’t conclude to enter into the deal right at that minute. I told him that I was going home that night and I would take it under advisement.”

He left with Mr. Cook a check for $1,000, payable to Mr. Whitley, and said he would let him know in the morning whether he should pay it or not.

On April 26th plaintiff again visited Detroit. In the meantime Mr. Cook had delivered the check to Mr. Whitley. At that time he paid $9,000 to Mr. Whitley, and was to pay $15,000 on May 10th. Plaintiff claims that defendant Whitley again guaranteed to sell the lots and that he would have half of the lots sold before the second payment was due on May 10th. Defendant Davey was present at that time and plaintiff claims he informed Mr. Davey, in substance, of the understanding with Mr. Whitley. At that time a contract was drawn reciting the purchase of the property on land contract, by plaintiff, in which defendant Whitley agreed to devote his best energies toward making speedy sales, and fixed the commission to be paid Mr. Whitley at 30 per cent, of the selling price, and Mr. Whitley might retain one-half of any sums due to plaintiff to apply on the payment of four notes totaling $17,000 to be given by plaintiff to defendants. On the same day a land contract was executed *73by defendants to plaintiff. The consideration being $72,000, to be paid as follows :

“Ten thousand ($10,000.00) dollars at the date hereof, and the remaining sixty-two thousand ($62,000.00) dollars as follows: $15,000.00 on or before the 10th day of May, 1920; on which date there is also to be paid $17,000.00; in four notes payable $5,000.00 July 26, 1920, arid $4,000.00 October 26, 1920, $4,000.00 January 26th, 1921, and $4,000.00 April 26th, 1921; said notes to bear interest at 6% per annum; the balance of $30,000.00 to be payable $5,000.00 or more yearly, the first of said yearly payments to be due and payable 1 year from date hereof with interest from date on all sums at any time unpaid hereon at the rate of 6 per cent, per annum till due, and thereafter at the rate of 6 per cent, per annum till paid, payable semi-annually herefrom.”

Plaintiff claims there was a verbal agreement in which defendants agreed:

“That this $17,000 that they had of their equity, should be paid out of the sale of these lots, and of course when they made this contract they changed that, that is, they changed that $17,000 there, but I still insisted all the time that that should come from the payments on the lots, and Mr. Whitley said to me when I told him that I didn’t have any more money to pay this $17,000, he says ‘Don’t worry, Mr. Kefuss, the payments on these lots will take care of that?’ I relied upon that and believed him. That was made in Mr. Davey’spresence.”

The plaintiff paid the $15,000 on May 10th and about two weeks later he received a letter from Mr, Davey asking him to execute the four notes mentioned. Plaintiff then visited Mr. Whitley and claimed to him he was not to pay any notes, that the payment of notes was to come out of the proceeds of sales of lots, and Mr. Davey came in and insisted that he should give the notes and he gave them. He claims that Mr. Whitley guaranteed him he would not have the notes to pay, and that Mr. Davey said:

*74“Mr. Whitley can sell those lots and will sell those lots and that I wouldn’t have those notes to pay: that would come from the sale of the lots. After that I gave those notes and delivered them to Mr. Davey. I believed absolutely the statements of Mr. Whitley and Mr. Davey, and relying upon that, was what induced me to give those notes. * * * The first thing I knew I got notice from the bank that they held my note there for $5,000 and it would be due on the 20th. It was not to, be due until the 26th. Mr. Whitley and Mr. Davey were on their promise to sell these lots and I paid them $25,000 to kind of carry it along. I thought they were going to be able to sell the lots. * * * Later I paid $500 more. Still he was claiming he was going to sell these lots and would sell them.”

The bill herein was filed October 28, 1920, and it was only two or three days before that plaintiff made up his mind the defendants were not going to carry out their agreement to sell the lots.

The plaintiff was no novice in business affairs. He was capable of engaging in speculative real estate ventures. The deal in question was purely speculative, just as plaintiff’s friend Rumsey advised him, contingent for success upon the continuation of the local boom at Marysville, and when the bottom fell out of the boom, as it evidently did, plaintiff awakened from his dream of easy and quick money. His claim of child-like reliance upon the assurance that the farm could be cut into lots and sold within 90 days and Pet him $100,000 on an investment of $25,000, would show a credulity almost equal to seeking the pot of gold at the foot of the rainbow, were it not for the fact that he wanted a bond guaranteeing the fulfillment of the golden dream, and when this was rer fused, he decided, after mature deliberation, to take the chance. He took the chance and lost and now wants his money back and to be relieved from his written obligations.

*75If he is granted relief upon this record on the theory that the parties were not evenly matched and, therefore, plaintiff got the worst of the deal, then we will have a new factor; in the law of contracts.

Plaintiff appears to have taken his own time to investigate the prospect; he called in his business friend, Mr. Rumsey, and they visited Marysville, looked at the land, made such local inquiries as they desired, and against the warning of Mr. Rumsey that it looked speculative and after he had requested and been refused a bond guaranteeing success, he went into the deal and right at the start gave his notes for $17,000 more than he now claims he was to pay. It seems to have taken plaintiff a long time to discover the alleged fraud, and it is a significant coincidence that his discovery appears to have come when there ceased to be any demand for the lots.

We have said but little about the connection of Mr. Cook with the matter. Plaintiff did not see fit to make him a defendant. We find no fraud on the part of defendants in the fact that Mr. Cook demanded and received from them a commission. We find it unnecessary to discuss the defense made. The defendants denied all the fraud alleged and gave their version of the whole transaction.

There appears no equitable reason for granting the relief prayed and the decree entered in the circuit should be reversed, and a decree entered here dismissing the bill, with costs to defendants.

Clark and Moore, JJ., concurred with Wiest, J.