Opinion
13684
August 26, 1933.
Before STOLL, J. LEE, June, 1931. Defendants' exceptions overruled, and decree affirmed.
Action by O.C. Scarborough against T.C. Crosland and another, individually and as copartners trading under the name and style of Crosland Tyson. Decree for plaintiff, and defendants appeal.
The decree of Judge Stoll is as follows:
The above-entitled cause came on to be heard before me at chambers, at Kingstree, upon due notice given by the plaintiff to the defendants. I heard all testimony offered by the plaintiff and the defendants; Messrs. R.E. Dennis and Randolph Murdaugh appearing as attorneys for the plaintiff, and Messrs. Tison Miller appearing as attorneys for the defendants.
The testimony given before me discloses:
That on the 28th day of September, 1930, the defendants inserted an advertisement in the State, which, among other things, said that they had for sale a theater building, which cost $100,000.00 to build, and that the same was renting for $300.00 per month; that the tenant was satisfactory in every particular.
That this advertisement came to the notice of the plaintiff, who, through his agents, opened negotiations with the defendants, who represented to plaintiff that the theater building was leased for five years from August 1, 1929, to one George D. Hendrickson, the rent for the first year was represented as being $250.00 per month, the second year at $275.00 per month, and the following three years at $300.00 per month. That the tenant was satisfactory, and that he always complied with the terms of his contract, and that he was paying his rent in accordance with the terms and provisions of the rental contract. The testimony further showed that the plaintiff, relying upon these representations and believing the same, entered into a contract with the defendants whereby the plaintiff did execute and deliver to the defendants a conveyance for his farm in Lee County, S.C. containing 1,000 acres, and pay to the defendants in cash the sum of $10,000.00 in exchange for a conveyance from the defendants to him for the lot of land, theater building, and its contents as described in the complaint. That the trade was consummated on or about the 16th day of December, 1930. That thereafter, on the 1st day of January, 1931, when the plaintiff called upon the tenant for the payment of the rent in accordance with the terms of the lease, he then learned for the first time, being so advised by Mr. Hendrickson, that the defendants had been permitting the payments of rent at the end of the month instead of in advance, as provided for in the contract and represented by defendants. That the plaintiff was unable to collect the rent from Mr. Hendrickson during the month of January, and it was not until the 28th day of February, 1931, that the said tenant advised the plaintiff that he would pay him $150.00 per month as rent for the property for the year 1931, beginning January 1st, and which he said was in accordance with a rent reduction arrangement previously given him by the defendants, or he would pay for January and February and give up the lease. That the plaintiff then ascertained that at the time that the defendants represented that they were receiving $275.00 per month rent for the property the tenant was only paying anywhere from $125.00 to $200.00 per month. That these facts were concealed from the plaintiff and were not imparted to him, but, on the contrary, the representation was made that the defendants were receiving regularly $275.00 per month rent for the theater. Upon ascertaining the true situation, the plaintiff offered to return to the defendants the theater building, free of liens, and demanded a return of his farm, together with the $10,000.00 so paid them, with interest thereon from the date of the sale. The defendants admitted that this offer was made, and that they refused the same.
A. I find as a matter of fact that the contract entered into by the plaintiff and the defendants was made on the part of the plaintiff for the consideration of the rental value of the moving picture theater.
B. I further find that at the time of the execution of the contract the defendants represented to the plaintiff or his agents that the rental value of the theater was $275.00 a month, and that the lessee always complied in a reasonable way with the terms of his contract in the payment of rents.
I further find as a matter of fact that, at the time of the execution of the contract between the plaintiff and the defendants, the defendants had reduced and were receiving as rent from the lessee never more than $200.00 a month, and at times as low as $125.00 a month; and that, from any view of the testimony, whether this refund was given to assist the lessee in paying for certain equipment or not, in reality it amounted to a reduction in the rent. I further find that as a matter of fact the defendants failed and neglected to communicate this fact to the plaintiff or his agents.
Now, as to the law on fraud: Fraud comprises all acts, omissions, or concealments involving a breach of a legal or equitable duty and resulting in damage to another. It is synonymous with bad faith, overreaching, and dishonesty, but distinguished from mistake or negligence.
There are several things the plaintiff must prove:
First. Was there a representation? It is admitted on both sides that there was a representation.
Second. Its falsity. If the defendants failed to tell the plaintiff or his agents of any reduction in the rent or of the failure of the lessee to pay the rent stipulated in the lease, and induced the plaintiff or his agents to believe that they would receive the rent as stipulated in the contract, there would be a falsity in the representations made plaintiff's agents.
Third. The materiality of the representation. There can be no question but that the amount of rent that the purchasers were to receive for the theater was material to the transaction.
Fourth. The speaker's knowledge of its falsity. There can be no question that Mr. Tyson of the firm of Crosland Tyson, knew at the time of entering into the contract between his firm and the plaintiff's agents that he was not in reality receiving the rental of $275.00, and that he had not for some time received that amount. His failure to inform the plaintiff and his agents of this fact shows that the defendants knew of the falsity of their representations.
Fifth. The ignorance of the plaintiff or his agents of its falsity. There is ample testimony to show that none of the Messrs. Scarborough knew at the time of the consummation of the contract the lessee was paying to Messrs. Crosland Tyson a lesser sum than that stipulated by the contract of the lessors with Mr. Hendrickson.
Sixth. Whether or not the plaintiff and his agents relied on the truth of this statement. I do not think there could be any question but that they relied on it because with business men the only object of purchasing a moving picture theater would appear on its face to be the revenue they would get on it, and all the testimony indicates that they did rely on it.
Seventh. Did the plaintiff and his agents have a right to rely upon the statements of the persons they were purchasing from? Defendants knew all the facts, or were in position to know them, and should have known them, and their statements would carry weight, and I find that the plaintiff and his agents had a right to rely thereon.
And, finally, the consequential and proximate injuries resulting to the plaintiff because of these statements. It appears, and I am so convinced, that the plaintiff was injured due to the fact that the lessee, who at the time was operating this moving picture place, was unable to keep up his contract, gave up the theater, and forced it on the plaintiff's and his agents' hands to manage themselves, and under their undisputed testimony they have operated it without making any money, and have been unable to pay the debt that was contracted by way of a mortgage over the theater building, that from all of the testimony there was a proximate injury to the plaintiff by virtue of this purchase, and that said purchase by plaintiff was induced by defendants by misrepresentations and concealments amounting to fraud. I think that the testimony of the defendant Mr. Tyson alone warrants the findings as above announced.
I think the plaintiff is entitled to the relief sought, and it is ordered, adjudged, and decreed that the defendants, T.C. Crosland and J.W. Tyson, individually, and as copartners, make, execute, and deliver to the plaintiff a fee-simple conveyance, free and clear of all liens, with dowers duly renounced, to the farm in Lee County as described in the complaint; and pay the sum of $10,000.00, with interest thereon from the 16th day of December, 1930, at the rate of 7 per cent. per annum, and, upon the delivery of the said deed and the said sum of money with interest as aforesaid, that thereupon the plaintiff is hereby required, commanded, and directed to deliver unto the defendants a conveyance in fee simple, free and clear of all liens, to the theater building and lot in the town of Bennettsville, as described in the complaint.
It is further ordered, adjudged, and decreed, that, should the defendants be unable to return the said sum of $10,000.00 with interest as aforesaid, they are hereby directed, ordered, and commanded to execute notes therefor, payable to the plaintiff as follows: $1,000.00 payable November 1, 1932; $1,000.00 payable December 1, 1932, and the balance of $8,000.00 principal, plus accumulated interest from December 16, 1930, on the sum of $10,000.00, on August 1, 1933, said notes to bear interest from date at the rate of 7 per cent. per annum, and defendants are further ordered, directed, and commanded to secure said notes by executing a mortgage to the plaintiff, with dowers duly renounced, covering the said theater building and lot in the town of Bennettsville, as described in the complaint.
It is further ordered, adjudged, and decreed, that, should the defendants fail to reconvey the Lee County farm, as described in the complaint, to the plaintiff and return the said sum of $10,000.00, with interest as aforesaid, or to execute the notes and mortgage as herein provided for, that then and in that event the clerk of court for Lee County be, and he is hereby, authorized, empowered, and directed, for and in behalf of the defendants herein, to execute and deliver a fee-simple conveyance to the plaintiff for the said Lee County farm as described in the complaint, free and clear of all liens, and the sheriff of Marlboro County is hereby authorized, directed, and ordered, after due advertisement as provided by law, to sell at public outcry to the highest bidder for cash the theater building and lot in the town of Bennettsville, as described in the complaint; and out of the proceeds of the sale thereof, after deducting the costs of the sale, to pay the plaintiff or his attorneys the sum of $10,000.00, with interest from the 16th day of December, 1930, at the rate of 7 per cent. per annum; that, should the plaintiff be the purchaser at said sale, he be allowed to credit on his bid, if so much be necessary, the amount of money herein ordered and directed to be paid by the defendants to the plaintiff; that, should there be any surplus remaining after payment of the aforesaid amount to the plaintiff, the balance after deducting the costs of this action be paid to the defendants or their attorneys.
It is further ordered that as to the taxes for the year 1932 the plaintiff upon compliance by the defendants of the terms of this order pay the taxes on the Lee County farm and the defendants pay the taxes on the theater building and lot in the Town of Bennettsville.
It is further ordered, adjudged, and decreed that the defendants pay the costs of this action. It is further ordered that any party to this action may apply to this Court for such further orders that may be necessary to carry this decree into effect.
Messrs. Tison Miller, for appellants, cite: Fraud defined: 1 Rich., 101; 96 S.E., 696; 24 S.E., 327; 92 S.E., 861; 144 S.E., 82. As to misrepresentation of location: 121 S.E., 263; 85 S.E., 585; 93 S.E., 389; 146 S.E., 240.
Messrs. R.E. Dennis and Randolph Murdaugh, for respondent, cite: Appellant must show decree against preponderance of the evidence: 133 S.C. 1; 130 S.E., 57; 151 S.C. 114; 148 S.E., 704; 63 A.L.R., 965; 151 S.C. 152; 148 S.E., 722. As to fraud: 151 S.C. 506; 149 S.E., 271; 100 S.C. 200; 84 S.E., 715; 92 S.C. 384; 75 S.E., 691.
August 26, 1933. The opinion of the Court was delivered by
This action by O.C. Scarborough, as plaintiff, against the defendants, T.C. Crosland and J.W. Tyson, individually and as copartners trading under the name and style of Crosland Tyson, was commenced in the Court of Common Pleas for Lee County June 22, 1931, for the cancellation of certain deeds involved in a contract entered into between the parties, an annulment of said contract and the recovery of a certain sum of money paid by the plaintiff to the defendants, because of alleged fraudulent misrepresentations on the part of the defendants. The real estate involved in the suit consists of a theater building situated in the county of Marlboro, where the defendants reside, and a tract of farm land in Lee County, where the suit was instituted. The matter was heard before Hon. Philip H. Stoll, Judge of the Third Judicial Circuit, at his chambers, Kingstree, S.C. July, 1932. The record discloses that the defendants made a motion to have the case transferred to Marlboro County upon the ground that the defendants were residents of the said county of Marlboro and that the said theater building was situated in said county. This motion the Circuit Judge refused, presumably on the ground that the action could be instituted and tried in the said county of Lee, for the reason that the farm land involved in the suit is situated in that county. His Honor also refused a motion to refer the issues involved in the case to a referee, and the matter was heard by the said judge on the testimony offered by the parties before his Honor, overruling defendants' objections to the jurisdiction of the Circuit Judge to hear the cause at chambers. From the decree issued by Judge Stoll, in which his Honor sustained the contention of the plaintiff and directed a rescission of the contract involved, the defendants have appealed to this Court.
Upon due consideration of defendants' exceptions, in connection with the entire record in the case, it is our opinion that the weight of the evidence sustains the finding and holding of the Circuit Judge, and the appellants having failed to convince us, from the record as presented, that the Circuit Judge erred in his conclusion, the appellants' exceptions will have to be overruled.
It is therefore the judgment of this Court that the exceptions be, and the same are hereby, overruled and the judgment of the lower court affirmed.
NOTE: The decree of the Circuit Judge, which contains a clear statement of the facts and issues involved, will be incorporated in the report of the case.
MR. CHIEF JUSTICE BLEASE and MESSRS. JUSTICES STABLER and BONHAM concur.