Opinion
11-28-1903
STOLL v. WELLBORN et al.
McCarter, Williamson & McCarter, for complainant. Alvah A. Clark, for defendants.
Suit by Joseph A. Stoll against Charles E. Wellborn and others. Decree for complainant.
McCarter, Williamson & McCarter, for complainant.
Alvah A. Clark, for defendants.
REED, V. C. This is a suit to have rescinded certain conveyances executed in performanceof the terms of an agreement entered into between Joseph A. Stoll and Charles E. Wellborn on March 16, 1900. By the terms of this agreement Stoll was to convey a property at Weston, Somerset county, N. J., consisting of 82 acres of land, with a fine house and several cottages and outbuildings thereon, and to transfer the furniture in the house and the live stock upon his place. The real estate was to be subject to a first mortgage of $5,000. In consideration for the conveyance of this property Wellborn agreed to transfer to Stoll the following property: (1) Forty thousand gallons of Canoe Club Whisky, according to letters and certificates attached to and made part of the contract. (2) Six lots of land in Railway, N. J., 25 by 100 feet. (3) One hundred and twenty-eight acres of land In Florida, adjoining the town of Eau Gallie, facing along the Indian river, and intersected by the 11. C. Florida Railroad; said tract better described in an attached description; the property to be free from incumbrances. (4) One bond and mortgage for fourteen hundred and odd dollars, given by one Mingle to Wellborn, and secured upon his farm of 160 acres, located at ——. (5) A bond and mortgage for $2,000, given by William P. Varley upon first mortgage upon his place of 100 acres in Wayne county, Ga., near the city of Brunswick. (6) Seven acres of land, with buildings, known as the "Alta Vista Plantation," subject to an incumbrance of $4,000. Conveyances were made of these several properties in conformity with the terms of this agreement. In all the negotiations leading up to the execution of the agreement, Mr. Baudet conducted the trade for Mr. Stoll, the latter in no way personally appearing in the transaction. Soon after the trausfers of the various properties Mr. Baudet became dissatisfied with the deal, charging Mr. Wellborn with having secured the execution of the agreement by false representations respecting the character and value of the properties transferred to Stoll in consideration for his deed of the Weston property. The particular property which went to make up that consideration, and which has received the most consideration in the trial of this cause, is the whisky, certificates for 40,000 gallons of which were to be and were transferred. As appears from the testimony, and from papers attached to the agreement and made part thereof, the whisky was made or prepared by James N. Merritt, of Buffalo, New York state. He issued certificates, winch contained an agreement to deliver whisky to the holder of such a certificate upon payment of $1.31 per gallon for the Canoe Club Whisky, with the privilege of having the whisky kept in storage by Merritt for the period of two months from the time of the transfer of the certificate. The value of the whisky, therefore, to the purchaser of the certificate, was what he could get for his certificate in excess of the charge of $1.31 a gallon. The complainant insists that Wellborn represented that this whisky was worth at wholesale $2.50 a gallon, and would retail at $3 a gallon; that he again represented that the certificates were worth a dollar and over a gallon, and that Baudet could borrow 50 cents a gallon on the certificates. It appears that the certificates have little or no inherent value. So far as appears, there have been no cash sales of this class of certificates. They had been only used as a makeweight in barters of the kind in question. Indeed, the defendants do not contend that the whisky has a value in the market in excess of the charges upon it. The insistence of the defendant is that he made no representation that the certificates had a cash marketable value. He says that, on the contrary, Mr. Baudet was warned before the execution of the agreement, both by the defendant and by Mr. Bemior, who introduced the parties, and was interested in the barter, and was present at nearly every interview between the defendant and Mr. Baudet. Mr. Wellborn says: "I had been talking whisky to him (Baudet). So had Mr. Bennor. And Mr. Baudet spoke up, and said, T will give you my country place for forty thousand gallons of whisky.' I told him if he got 40,000 gallons of whisky for his country place, he would get no value, because I had not been able to dispose of the whisky myself, only to exchange it and only to trade it." Mr. Bennor also says that he had told Baudet that the whisky was not a salable article; that the certificates had been kicking around the street for a long time; that they had been hawked everywhere, and it had a bad name, and it could not be sold; it could only be traded. Mr. Bennor again says: "Wellborn asked us to help him trade the whisky, and I said, 'I will do the best I can for you; I have some myself and am willing to trade for it.'" Apart from the letters attached to the agreement and the letters written by Mr. Wellborn himself, the complainant relies upon the testimony of George T. Cole, the witness to the agreement, and Mr. Brower, the lawyer who drew it. Mr. Cole says that he was called in the Office of Mr. Brower, and was asked to subscribe to the agreement as a witness. While there he heard Mr. Baudet say to Mr. Brower, "Is everything all right'.'" and Mr. Brower replied: "Everything in regard to the papers, but I know nothing about the whisky or the certificates. As far as I am concerned, you may be buying a cat in a bag." Mr. Cole says that then Mr. Wellborn and Mr. Bennor joined in the statement that the whisky was in Buffalo, or out west somewhere, and to be gotten there for $1.30 per gallon, but that it had a market value of from $2.33 to $3 per gallon, and sold very readily. Mr. Brower states the conversation between the parties in about the same terms. In addition to the testimony of thesewitnesses, the complainant relies upon certain letters written by Mr. Wellborn respecting the negotiation. These whisky certificates had been the subject of conversation between these parties when they were presented by Wellborn to Mr. Baudet as part consideration for the purchase of another property in New York City. On March 10th, when the present deal was under consideration, Mr. Wellborn wrote a letter to Mr. Baudet in which he said, "I will get rid of your whisky, and produce a better net result for it alone than your property is worth." On March 14th, Mr. Bennor, who, as already remarked, had been active in the negotiations, brought to and showed Baudet a letter written to himself (Bennor) by Mr. Wellborn. The letter concerned the proposed deal for the other property already mentioned, in New York City, being on 107th street and Boulevard. In this letter the negotiations for the sale of the Weston property is mentioned, as well as the certificates for the Canoe Club Whisky. Mr. Wellborn, after speaking of the amount of financiering he would have to do in securing the whisky, said, "It is a much easier matter to get rid of than it is to get it." Then, as already observed, by the terms of the agreement certain letters concerning the whisky are attached to and made part of the contract. One of these letters, purporting to be written by Mr. Merritt, the manufacturer or blender of the whisky, is to a Mr. Dickson. In it it is stated that their retail price of Canoe Club Rye Is $3 per gallon, but in large quantities $2.50 per gallon, and that it was suitable for the better class of hotels and family trade.
It is insisted by the defendant that the representations made by him were not concerning a subsisting fact, but were relative to matters of opinion, or were statements that other persons had represented certain facts to exist. It is further insisted that upon contrasting the value of the Weston property with the value of the other properties to be exchanged for it, setting aside entirely the whisky certificates, it is impossible to conceive that the complainant believed that he was getting a right to call for 40,000 gallons of whisky which would net him $1.19 per gallon, and which, therefore, would in itself yield a sum greatly in excess of the value of the Weston property with the $5,000 incumbrance upon it. In respect to the first ground, it is, of course, true that an expression of opinion as to the value of a property, as a rule, is not regarded as a representation, the falsity of which will be a ground for legal or equitable complaint. But the representation that a certain kind of property, constantly sold, has a market at certain figures —that it does sell readily at those figures— is not a statement of opinion, but of a fact Respecting the letters attached to the contract, they may be regarded in two ways— either as an agreement that the letters were genuine expressions of the writers of those letters, or an agreement that the facts stated in the letters are true. If the former view shall be adopted, yet if the contents of those letters, in some substantial and material part, were untrue to the knowledge of the defendant, he would be guilty of fraudulent representation in permitting them to be used in this way. The latter view, however, seems the better one, for the letters seem to be made a part of the contract, and the defendant became responsible for their statements in the same degree as if he had incorporated them in the body of the contract.
In support of the argument that the complainant could not have understood that he was to receive whisky which would sell readily at $2.50 per gallon, because of the values of the other property to be exchanged for the Weston place, the following facts seem to be proved: It appears that the dwelling upon the Weston property had cost some $22,000. It had been built to replace a house which was on the land when purchased, the original purchase price being $20,000. Altogether the property and furniture had cost, according to Baudet's testimony, over $45,000. Its market value, however, was only a small fraction of that sum. The house and its surroundings were too sumptuous for the neighborhood. Nevertheless, to a person who owned the property, its value might exceed its market value, and he might have refused to sell unless he got somewhere near the sum it cost him. All the properties mentioned in the deed were undoubtedly overvalued, as is usual in barters of this kind. If there was nothing in the case but the verbal testimony, I should say that the charge of false representation respecting the whisky certificates were not proved. But the letters of Mr. Wellborn to Mr. Baudet and the letter to Mr. Wellborn shown by Mr. Bennor (evidently with the knowledge of Mr. Wellborn) contained representations that the whisky could be readily disposed of, and that an amount could be realized more than the Weston property was worth. These representations so radically conflict with Mr. Wellborn's testimony as to the real marketable value of the whisky that I cannot resist the conclusion that he intentionally misled Baudet respecting it The contents of these letters make it probable that the verbal representations to which Baudet and Cole and Brower testified were made substantially as they stated. Nor do I think that the complainants can be said to have had an equal opportunity with the defendants to learn of the market value of these certificates. Wellborn and his friend Mr. Bennor knew all about them. They exhibited letters purporting to come from the manufacturer, and a letter commending the business probity of the manufacturer, and under these conditions Mr. Baudet had a right to rely upon the representations made to him without further inquiry. It is true that Mr. Comfort says that he warned Mr. Baudetof the worthlessness of these certificates some time before the execution of the agreement of March 16th, but Mr. Baudet says that the warning came after the contract had been executed, and it is not clear that Baudet is wrong in this statement.
So I am compelled to the conclusion that the agreement was the product of false representations respecting the whisky certificates, and will advise a decree setting aside the agreement and the deeds made in execution of its terms.