Russell v. Stoops

Boyd, J., delivered the opinion of the Court. This is an appeal from a judgment rendered against the ap ¹⁴⁰ pellant in favor of the appellee in an action of deceit. On May 12th, 1905, the appellant and the appellee, together with her husband, entered into an agreement for exchange of properties — that of the former being a farm containing about 131 acres of land, which was subject to a mortgage of $2,000 due to J. E. Hurlock, and that of Mrs. Stoops being a house and lot in Chestertown. The appellant also agreed to pay Mrs. Stoops $250 “for the landlord’s interest in the farm for the year 1905,” and to give her poesession on January 1st, 1906.

She had agreed to give him possession of the house and lot on July 1st, 1905. The deeds were duly executed and delivered — that of the appellant and his wife to the appellee containing this covenant; “And it is furthermore understood that said farm is subject to a mortgage to J. Edward Hurlock for two thousand ($2,000) dollars, which the said Hester V. Stoops agrees to assume and pay, and the said L. Bates Russell and Iola K. Russell covenant that they will warrant specially, except as to said mortgage, the above described lands and premises.” . The appellee gave the appellant possession of the house and .lot in June, 1905, and she took possession of a tenant house on the farm that month — the main house being occupied by a tenant who was entitled to possession until January 1st. The mortgage was dated August 3rd, 1901, and was payable one year after date, with interest from date, payable semi-annually, but it was still held by Mr. Hurlock who had agreed with the appellant to accept the interest annually.

It contained the usual provision in case of default in payment of the principal, interest or any part thereof, or in any covenant or condition in the mortgage, and required an insurance of $1,200 to be kept on the improvements for the benefit of the mortgagee. At the time the agreement was made, and when the deeds were delivered, interest was unpaid on the mortgage from August 3rd, 1904, and on August 30th, 1905, the insurance policy, which had been taken out for three years, expired. The foundation of this suit is that the appellee contends that the appellant falsely and fraudulently represented to her that all ¹⁴¹ arrears of interest had been paid to the date of the contract, that the mortgage debt bore interest only from that date, and that no interest would be demanded or required to be paid by her until after wheat harvest in 1906; that defendant knew the representations to be false, and made them with the intent to induce her to enter into the contract and exchange the properties, which she did, relying upon the representations. Shortly after the year’s interest became due (in August, 1905), it was demanded of the appellee, but she did not pay it and the mortgagee assigned the mortgage to John D. Urie on November 15th, 1905.

On the next day, which was Thursday, he wrote to the appellee to make some arrangement by the following Saturday. That not being done, Mr. Urie filed a bond on the next Monday and again notified the appellee “that her farm would be advertised unless she fixed up the mortgage.” The mortgage provided for one-half commissions if paid after the bond was filed, and $25 for preparing and furnishing the bond. The appellee failed to arrange for the mortgage, and Mr. Urie, as assignee, advertised the property and sold it the latter part of December, 1905, to the appellant for $2,450. The appellant had sold the property he had received from the appellee for $2,000 a few days after the transfer to him, in May, 1905.

He denied the statement about the interest, and claimed he had purchased and paid for the crops with the $250 in part to enable her to pay the interest, $120 of which would be due about August 1st, 1905. He also testified that after he had purchased the farm at the mortgagee’s sale he offered it to the plaintiff at what he gave for it and offered to let half of the purchase money remain on the farm. Which ever version was in fact true, the net result was that the appellant had sold the property he had received from the appellee for $2,000 a few days after the transfer to him, he then obtained his farm (which he valued at $4,000 in the sale to the appellee) for $2,450, whiph paid off the mortgage given by him, and he had only paid $250 in cash to the appellee. His total loss could not exceed the $250, plus the difference between the amount of the mortgage with interest thereon, ¹⁴² and such taxes as were then due on the farm, and the $2,450.

The appellee had received the $250, out of which she had to pay the expenses of seeding the wheat in the fall of 1905 (for which she received no return), and such other expenses as she incurred, and never did get possession of the entire farm which she had purchased. Mr. Urie, the appellant’s attorney, who drew the agreement but made no reference to the interest on the mortgage, sold the property under the mortgage within six weeks of the time it was assigned to him, and will receive the difference between what he paid for the mortgage ($2,154), plus expenses of sale, and the purchase price($2,45o). Without further comment on the facts, it is not surprising that a jury rendered a verdict for a substantial sum, but whatever we may think of such transactions it is, of course, our duty to determine the case according to the established principles of law without regard to results, if not within the protection of those principles. The questions before us are presented by a demurrer to the narr. and exceptions to granting the plaintiff’s prayer and rejecting the first and fourth prayers offered by the defendant. 1.

The declaration alleges the exchange of the properties, the false and fraudulent representations as to the interest, the demand of the interest from the plaintiff, her inability to pay it, and the sale in consequence thereof at a sum sufficient to pay the mortgage debt, interest and costs, that the defendant made such false and. fraudulent representations well knowing them to be false and with intent to induce the plaintiff thereby to enter into said written contract and to exchange'said properties, and that the plaintiff relying upon said representations of the defendant entered into the contract and did exchange the properties. It also alleges that the plaintiff was induced to believe that no interest was due and none would be demanded on the mortgage until after the wheat harvest in 1906, and hence she made no provision for it and could not pay it. It concludes “and that by reason of the said false and fraudulent representations of the defendant, the plaintiff was deprived of the ownership and possession of said house and lot of land ¹⁴³ and that the plaintiff suffered damage thereby. And theplaintiff claims $4,000.” It will thus be seen that the damages claimed in the narr. are not for the loss of the farm, but for the loss of the house and lot, while the fraud alleged was in reference to the farm.

If the allegations in the narr. are true the plaintiff was not deprived of the house and lot by the alleged fraud, but she was, at most, only deprived of the equity in the farm. It may be that the house and lot were worth more than the latter, even if there was only due the principal of the mortgage, and it is difficult to understand upon what principle, under the allegations made in the narr. she could have been entitled to recover for the loss of the house and lot, regardless of the question whether that could under proper allegations be the measure of damages, which we will refer to later. “The declaration or complaint must allege that plaintiff sustained damage by reason of the fraud, and should show that the relation of cause and effect exists between the fraud and the damage alleged.” 20 Cyc., 103, and cases cited in notes. It cannot properly be said that the loss of ¡.he house and lot was caused by the alleged fraud in reference to the interest on the mortgage and the demurrer ought to have been sustained. The plaintiff’s first prayer, which was granted, is defective by reason of its failure to instruct the jury as to the proper measure of damages.

After reciting a number of facts which the plaintiff alleged in the nar. and undertook to establish by proof, it concludes “then the plaintiff is entitled to recover in this action such damages