Opinion
No. 32916.
November 29, 1937. Suggestion of Error Overruled January 10, 1938.
1. FRAUD.
A person dealing with another may assume that the representations made by such other are true.
2. PUBLIC LANDS.
Land commissioner selling state land could not knowingly accept a fraudulent statement regarding condition and value of land, but if he did so, his act would not bind state, since public officer must act in good faith in representing the state.
3. PUBLIC LANDS.
Evidence sustained decree canceling land patents covering state land on ground that land commissioner was induced to convey land by false representations concerning condition and value of land.
4. PUBLIC LANDS.
Where land patents were canceled because of fraud practiced on land commissioner inducing him to execute patents, fees paid therefor were forfeited to state (Code 1930, section 6028).
APPEAL from the chancery court of Washington county. HON. J.L. WILLIAMS, Chancellor.
Percy Farish, of Greenville, for appellants.
The complainant failed to show, either by a preponderance or by any evidence, that the relators relied upon the representations.
The authorities seem universally agreed that to constitute fraud the following elements must be made to appear: First, that the defendant made a material representation; second, that it was false; third, that when he made it he knew that it was false or made it recklessly without any knowledge of its truth and as a positive assertion; fourth, that he made it with the intention that it should be acted upon by the complainant; fifth, that the complainant acted in reliance upon it; and sixth, that the complainant thereby suffered injury.
26 C.J., 1063; 12 R.C.L., 239, 240.
In the case at bar appellants conceded there are statements in the applications which are untrue. Appellants seriously question the damage sustained by the State of Mississippi from the sale of the lands involved, yet they do not deny that the property was worth more than the amounts paid by appellants. But the evidence wholly fails to show that the relator, R.D. Moore, relied upon the representations or was in any way deceived by them, and that consequently the record made in the lower court fails to sustain the charge of actionable fraud against the appellants.
This court has repeatedly held that a false representation must be relied and acted upon by the complaining party, in ignorance of the truth, in order to be cognizable by the law as a fraud.
Anderson v. Burnett, 5 How. 165; Clopton v. Cozart, 13 S. M. 363; Anderson v. Hill, 12 S. M. 683.
A contract or obligation cannot be rescinded on the ground of false or fraudulent representations unless it is shown that the party to whom they were made placed his reliance upon them, that is, believed in their accuracy and depended on their correctness, and on the strength of his dependence upon them entered into an agreement or assumed an obligation which otherwise he would have avoided.
26 C.J., 1141; 1 Black, Rescission and Cancellation, sec. 110.
It is settled under the decisions of this court that the elements necessary to make out a case of actionable fraud cannot be established by assumptions that may be easily indulged or by inferences displacing the need of factual proof.
Locke v. Keiler, 90 Miss. 3; Willoughby v. Pope, 101 Miss. 808.
It has long been the rule in Mississippi that the elements of fraud must be proved by evidence which not merely preponderates in favor of the charge of fraud but which is clear and convincing.
Carter v. Eastman, 95 Miss. 659; Mohr Sons v. Tate, 117 Miss. 606; McCain v. Cochran, 153 Miss. 237; Griffith's Chancery Practice, sec. 589; 12 R.C.L., 428; 1 Am. Eng. Ann. Cases, 810, 811; Seymour v. Chicago, Etc., R. Co., 181 Ia. 218, 164 N.W. 352; Southern Dev. Co. v. Silva, 125 U.S. 250, 31 L.Ed. 678; Rimer v. Dugan, 39 Miss. 477.
The lower court erred in finding that appellants had violated Section 6026, Code of 1930.
We contend that the evidence does not show a violation of this statute, which, as a matter of public policy, limits the amount of state land to be purchased by any one person and then penalizes anyone who purchases "directly or indirectly" more than 160 acres of such land within a year. Necessarily, we say that the penalty is aimed at those who conspire, by fraud and collusion, to acquire more than allowed by law, regardless of the means used to effect the purchase of excessive quantities. Surely the statute does not apply, nor will the penalty be enforced, where an individual acquires from other individual owners more than 160 acres by good faith sales and without fraudulent intent of violating the law.
Wisconsin Lbr. Co. v. State, 97 Miss. 571.
It is submitted that the evidence in the case at bar does not establish a deliberate and premeditated design by either of appellants to conspire for the purchase of 180 acres of land.
Ernest Kellner and William Payne, both of Greenville, for appellee.
It is a true statement of the law that in order to sustain an action for fraudulent misrepresentation, the person to whom the misrepresentation was made should have acted in reliance upon the misrepresentation but appellee submits that appellant is mistaken as to the burden of proof required to establish reliance. The test of reliance is stated in the following words in 26 C.J., 1141: "The weight of authority holds that whether the party would have acted in the absence of the representation is the test of whether or not he relied thereon."
In this case the sole purpose of requiring an applicant to make a written application, containing information regarding the land sought to be purchased, is to inform the land commissioner regarding salient features of the land, and in the absence of the written application the land commission has no authority to issue a patent. (Section 5, Chapter 174, Laws of 1936). Clearly then, the facts in this case come within the test of reliance as set out above.
27 C.J., 49, par. 179 (8); Wilson v. Carter, 50 A.S.R. 824.
Measuring the facts of this case by the rules of law stated in the case of Wilson v. Carter, supra, it might well be inferred that the land commissioner was induced by the misrepresentations to issue these patents and that a prima facie case has been established which has not been rebutted.
To constitute fraud it is unnecessary that a statement be made with intent to deceive, if it is a statement of fact, or statement purporting to be a fact but not true.
McNeer and Dodd v. Norfleet, 113 Miss. 611.
Here, surely the statement in the applications that the assessed valuation of the land was two dollars per acre and had no improvements was a statement purporting to be a fact, and since counsel for appellant has admitted that the statement was not true, such measures up to what is necessary to constitute fraud in Mississippi.
Vincent v. Corbett, 94 Miss. 46.
Here, there was a positive statement by the applicant that the land contained no clear or cultivated land but was all cut-over land, and we submit that such clearly makes out a prima facie case of fraud.
Petree v. Wright, 14 Miss. 647; Griffith's Chancery Practice, sec. 589.
We submit that the record speaks for itself and a clearer case of conspiracy could not possibly be made out. Appellant says he set out to get the whole Wasson tract, and knowing that he could not legally buy more than 160 acres, he bought that number in his own name then bought the remaining 20 acres of the tract in his wife's name, and shortly thereafter conveyed the 160 acres to his wife; that they had talked the matter over and decided to follow that procedure but at the same time denying that there was any intention to convey it all to one person. He attempts to explain his actions by saying there were some judgments recorded against him. For these reasons, it is submitted that the decree of the lower court should be affirmed.
The Attorney General of the state, on the relation of the State Land Commissioner, filed suit for the cancellation of two land patents issued to Neal Streater, Jr., and his wife, Dorothy Ann Streater, alleging that they were fraudulently obtained and should be set aside. The application of Neal Streater, Jr., was for 160 acres of land in Washington county bordering on Bolivar county, about twelve miles from the city of Greenville, Miss., described as follows:
"Acres in cultivation None, Acres in open or pasture lands None, Acres in timber None,
Description of timber and value.
Cutover land __________________ improvements ________ (a) Description. One frame house. (b) Value ________________
"Assessed value of land and improvements when last assessed, $2.00 per acre.
"Name of person living on land at the present time. Negro living on it without authority.
"Name and postoffice address of owner of land at the time of sale to the State. Z.A. Wasson, Priscilla, Miss.
"Name and address of person to whom land was assessed at the time of tax sale. Same as above.
"Date sold to State, 1932 for taxes due for the year 1931.
"Was there a mortgage on the property when sold and if so what is the name and address of mortgagee. J.S. Jones, unknown.
"Date of mortgage. 1933. Amount of state lands purchased during 1936. None.
"The present value of the above described property is not in excess of $350.00.
"No attention was paid to the notices. Special information. The above property lies on the Bolivar County line in Washington County, and has no road facilities to same. Two notices show as having been sent to mortgagee in the office of the chancery clerk in 1934. Interest of applicant in land (owner, mortgagor, etc.) Purchaser.
"That the purchase of the land described in the above application is intended for my own use and benefit; that I am not acting as agent for any person, corporation, or syndicate in making such purchase, nor in collusion with any person, corporation or syndicate, to give them the benefit of the land purchased or any part thereof, or the timber thereon; and that I am a citizen of the United States of America.
"This the 14 day of May, A.D. 1936,
"Neal Streater, Jr., "By George Adams, Agt. "Rosedale, Miss.
"Sworn to and subscribed before me this 14th day of May, 193_.
"Mrs. J.M. Walker, Notary Public.
"My commission expires April 24, 1940."
A similar application was made by Dorothy Ann Streater for 20 acres of land described as N. 1/2 of N.W. 1/4 of S.E. 1/4, Tp. 19, R. 7 W., and the value was alleged to be not in excess of $50.
After patents were procured from the Land Commissioner, Neal Streater, Jr., conveyed the 160 acres patented to him to his wife, Dorothy Ann Streater.
The appellants admitted making the applications; that Neal Streater, Jr., secured George Adams to purchase the land for them, instructing said Adams to draw a draft upon him for the purchase money, which was done and the draft was paid by Neal Streater, Jr. It was further alleged in appellants' answer that Neal Streater, Jr., was not familiar with the tract of land and did not know the value thereof, but was advised by George Adams that the owner had not redeemed it, and he believed it would be a good investment, and consequently appellants requested the said George Adams to purchase it for them. They also alleged that the statements made by George Adams were made on his own information, and not on any information furnished him by the appellants; that George Adams gave the Land Commissioner all the information in his possession, and appellants denied that they practiced any fraud upon the state in the purchase of said land. They alleged that the original owner had made no efforts to redeem the land so that it would be placed back upon the assessment roll of the county for taxation, and that the Land Commissioner was not deceived, in any way, by the applications for the land, and that so far as the appellants are concerned, they acted in good faith in wishing to purchase the land as an investment. Neal Streater, Jr., admitted that he conveyed his 160 acres to his wife, but denied that they conspired to defraud the state by the purchase of more land than was allowed to one person, and that the patents are void. They answer, further, that the original owner made no effort to redeem the land from the tax sale, as stated above, but that after the patents were issued to the appellant, and as he thought the land had advanced in value, the original owner prevailed upon the state officers to have this suit instituted. It was further alleged in appellants' answer that the Land Commissioner knew that the land was worth more than $1 per acre, and that it was his duty to cause a proper investigation to be made, and if he failed to perform his duty in that respect the state cannot now complain, for the appellants say they practiced no fraud whatever, and did not know anything about the value of the land, but that they believed it was worth more than it could be purchased for from the state, which is true of all tax forfeited land sold by the state to individuals.
A letter dated April 15, 1936, from Neal Streater, Jr. to George Adams was introduced, which recites that: "With further reference to our conversation of a few days ago, I would like to have you purchase for me from the State 160 acres of Watson land in Washington County. This land is located, as you know, on the Washington and Bolivar County line. I have discussed this matter with my wife, and she wants to buy the balance of the tract. Her name is Dorothy Ann Streater. Draw a draft on me through the Valley Bank, Rosedale, to cover this purchase. And along with our conversation, I will take care of your expenses in time when you return to Greenville."
A lis pendens notice was filed with the bill of complaint.
On the trial of the cause it was admitted by counsel for complainant and the defendants, "that the land in question was assessed on the Land Assessment Roll of Washington County, at the time of the tax sale to the State of Mississippi, and at the time of the issuance of the patents sought to be canceled in this cause, as follows:
"120 acres cultivated $3,240.00 "Improvements 300.00 "60 acres uncultivated 300.00 __________ Total $3,840.00"
Neal Streater, Jr., testified that he and his wife discussed the purchase of the land, and she wished to purchase 20 acres and he 160 acres, but there was no agreement prior to the purchase to convey the 160 acres to her, nor was there any agreement that she would pick out what part of the tract she would buy, and that after the purchase he deeded the 160 acres purchased by him to his wife. He further testified that George Adams did not know anything about the land, and that he just bought it because it was located in Washington county on the Bolivar county line.
The chancellor canceled the patents, and from his decree in so doing this appeal is prosecuted.
Appellants argue that the state failed to prove that the Land Commissioner relied upon the representations made in the applications, and contend that to constitute fraud there must be the following elements: (1) A statement made with intent to deceive; (2) the party to whom made must have relied thereon; (3) the statements, when made, must have been purported to have been facts; and (4) the party to whom made must have acted thereupon, and suffered thereby.
The second ground relied upon by appellants that it was not shown that the Land Commissioner relied upon the representations made by the applications, and that it was his duty to know the value of the land sold, is the most important one. It is said in the brief of appellants that they concede there are untrue statements in the applications, but that the evidence wholly fails to show that the Land Commissioner was deceived thereby, and that consequently the record fails to sustain the charge of actionable fraud against the appellants.
The agreed statement of facts as to the assessment of the lands at the time of the sale and the subsequent purchase by appellants shows that the price was largely in excess of the representations made in the applications, and that a large part of the lands was in cultivation, and consequently there can be no question as to damage to the state if the sale was fraudulent, which unquestionably it was, especially in a legal sense, because, when a person makes a representation as a fact, which is untrue, it constitutes fraud at law. The presumption that the Land Commissioner acted upon the applications and was deceived thereby is substantiated by all the facts developed. A person dealing with another may assume that the representations made by such other person are true. The Land Commissioner, being a public officer, could not knowingly accept a fraudulent statement, and if he did so his act would not bind the state, for a public officer must act in good faith in representing the state.
There is nothing in this record to show that the Land Commissioner did not act in good faith, and nothing to show that he had knowledge as to the real condition and value of the land conveyed by him, but, taking the record as a whole, it abundantly appears that the representations as to the condition and value of the land were false, and as the representations made by George Adams were false as to the condition of the land, their representations, since he was their agent, were false, whether Adams knew they were false or not.
The purchaser of state lands is required to give the Land Commissioner information as to the condition, occupancy, and value of the land, etc., as shown by the application therefor. No person will be permitted to profit by his own wrong, and appellants, in the case at bar, cannot rely upon the presumption that the Land Commissioner knew the representations were false, and it devolved upon appellants to prove it, if such were the case. Neither a purchaser nor a public officer would be permitted to connive at fraud and deprive the state of its property. Each must act in good faith.
Where there are differences of opinion among men as to value, the elements constituting value as then acted upon must be considered, and the finding of value in such case by the officer will be upheld, but where there is such a gross discrepancy in value, the representations made by the applications would be evidence of fraud. The patents having been secured by fraud, the fees paid therefor are forfeited. Code 1930, section 6028.
Consequently, the judgment of the court below must be affirmed.
Affirmed.