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Dortic vs. Dugas.
ceeds of sale of Holt & Wallace's property, to the exclusion of Dortic's fi. fa. on Holt's note to him of August 1st, 1869.
3d. A duly certified transcript of record from the United States district court for the southern district of Georgia, showing that at November rules, 1869, Risley & Creighton sued Holt & Wallace in that court for $3,013 24, balance due July 31st, 1868, on an account stated; that on the 16th
1 of November, 1874, Holt & Wallace pleaded a set-off of $31,158 00 for timber alleged to have been sent Risley & Creighton by them November 10th, 1867, and that on the day this plea was put in, judgment was rendered in favor of Risley & Creighton for the full amount claimed; the account sued on, as set out in extenso in this record, began with an entry November 30th, 1867, of a balance of $3,175 12 against Holt & Wallace, and showed that from that time up to the close of the account, they had received from Risley & Creighton $1,403 68 more, making the debit $4,578 80, and had forwarded in the same period (November 30th, 1867, to July 30th, 1868,) $1,565 56 worth of lumber, leaving a balance against them of $3,013 24, as sued on.
Respondent objected to these three items of evidence. The objections were sustained by the court, and complainant excepted.
Complainant asked the court to made the following charges, which were refused, and complainant excepted: “Where one partner makes representations as to the value of another partner's interest in the partnership which are not in fact true, and that other partner stands by and confirms those representations, actively or passively, and a third partner buys the interest at the value set on it by the other two, and on his faith in the representations made him by them, and the interest at the time of such purchase is in whole or part worthless, the sale will be rescinded as having been obtained by mistake and misrepresentation, and as a legal fraud upon the third partner, and the second partner will be held, ex æquo et bono, to repay the money, with interest thereon from the day of sale to the third partner.
Dortic vs. Dugas.
"A misrepresentation made by a third person in the presence of the vendee, by which the vendor is benefitted, is ground for a rescission of the contract entered into by vendee with vendor on the faith of such misrepresentation.
Equity will not only relieve against a contract founded in fraud that is a suppression of the truth, or a suggestion of falsehood, but also where both parties honestly labor under a mistake or misapprehension of the facts.
“ As a matter of law, an instrument in the words and figures following, to-wit :
• AUGUSTA, GEORGIA, February 7th, 1867,' * This is to certify that for and in consideration of the sum of four thousand dollars ($4,000 00,) paid by me to Alexander E. Dugas for his interest in the firm of Holt, Dugas & Company, I do hereby assume the said Alexander E. Dugas' share of the debts and liabilities in said firm. In testimony whereof I do hereby affix my hand and seal.
*A. L. DORTIC, [Seal.]' is an instrument under seal.”
The court charged the jury, amongst other things, as follows: “You may not presume or infer fraud; it must be proven, yet being subtle, may be inferred from proven facts. You cannot rectify or make contracts for persons after they arrive at legal age, and no disability exists. If this were allowed, courts then would perpetually sit; yet every man in his contract should be required and held to the strictest integrity, and where any deceitful practice or fraudulent act, by misrepresentations or otherwise, is used in contracts, courts, both of law and equity, should relieve against any advantage thus obtained.
When, however, both parties have equal opportunities of knowing and understanding the truth about any matter, and one grossly fails to inform himself and is badly worsted, be must submit to the consequences of his neglect.
“ Motives are difficult of interpretation, and if from all the facts and circumstances a legal and proper motive for gain even, can be given for bad trades or good ones, if no actual fraud is groven, courts and juries should not interfere with contracts deliberately made and founded on good or valuable consideration."
Dortic vs. Dugas.
The jury returned a verdict for the defendant. The complainant moved for a new trial because of the aforesaid exclusion of testimony, the refusal to charge as requested, and the charge as given. The motion was overruled, and complainant excepted.
SALEM DUTCHER, for plaintiff in error.
HOOK & WEBB, for defendant.
The complainant and defendant being in partnership with two others in a lumber business, the complainant purchased the defendant's interest at the agreed price of $4,000 00 cash. For more than four years thereafter he was not aware that there was any fraud or mistake in the transaction. After that lapse of time he filed his bill for a rescission; alleging that the subject matter of the contract was wholly worthless, and that the contract was the result of fraud on the part of the defendant, or of mutual mistake of fact. The jury found in favor of defendant, and the court refused a new trial.
1. The evidence offered by complainant to prove an increase of indebtedness resulting from transactions of the new firm after the defendant had sold out and withdrawn, was, we think, properly rejected. Whát the firm did after the defendant retired has no bearing on the value of his interest at the time of selling the same to complainant, and does not tend, in any way, to establish either fraud or mistake.
The same may
be said of the record of a suit and judgment in the United States court, which was also rejected. That suit was in favor of third persons, and against the new firm. The defendant in this cause was no party to it. The pleadings do not show that any of the account sued on was contracted prior to his retirement; but even if they did, the judgment could not be used to establish the truth of the account so as to affect him, he being no party to the record.
2. He is equally a stranger to the order passed by the su
Dortic vs. Dugas.
perior court of Tattnall county, awarding certain money to a mortgage made by the new firm in preference to a judgment against that firm in favor of complainant. That order, as against him, would not establish the existence of the mortgage, much less the date of it or the consideration for which it was made. Even its rank as compared with the complainant's judgment, the more direct fact which it adjudicates, could not be set up by this mere order to the prejudice of one not a party to it. The truth is, that none of the evidence rejected was at all relevant to the issues on trial, and the two records were moreover objectionable as being adjudications to which the defendant here was a total stranger.
3. Declarations that defendant's interest was worth $1,000, do not stand upon the footing of statements touching the property, liabilities, credit, income or resources of the firm. They were not representations of a fact, but expressions of opinions only. Defendant valued his interest at $4,000 00 or more, but in the nature of things it must have been a mere estimate, and the complainant ought so to have understood it.
4. Holt, one of the other partners, had full acquaintance with the condition and prospects of the business, or, at all events, his opportunities were ample for that purpose. He said defendant's interest was worth $4,000 00, and defendant, being present, heard and assented to the statement. Let it be conceded that Holt had a different belief, and misrepresented his real opinion; yet, so far as appears, both of the contracting parties were alike ignorant of his duplicity. It is not shown that he spoke at the instance of one of these more than of the other. Indeed, he seems to have volunteered to express his opinion, and there is as much reason for treating him as the complainant's agent as the defendant's. Had his misrepresentation related to matter of fact, it might possibly have had a different bearing on the case.
a 5. One theory of the complainant's bill is, that an erroneous opinion, common to both parties as to the real value of the interest sold, especially if that interest was absolutely
Dortic vs. Dugas.
worthless, would be such mistake of fact as would warrant a rescission of the contract and a return of the purchase money. We think, on the contrary, that the very nature of the enterprise touching which the partnership existed, would be full potice that the value of a partner's share was contingent, and that an estimate of it made in a general way, would partuke of the loose nature of conjecture rather than of the definite characteristics of fixed fact. If it were shown that certain specific data were used upon which to calculate value, and that, among these, were some materially different from what they were understood to be, there would be some approach to a case of mistake.
6. Even then, however, it would still be true, as charged by the court, that with equal opportunities for knowing the truth, a party grossly failing to inform himself must take the consequences of his neglect. We think the opportunities of the parties to this contract were near enough equal to make this part of the charge fully applicable to the case. Had the complainant made such investigation into the details of the business as he might and ought to have made before purchasing, he could most probably have protected himself. It was a reckless inattention to his interest to omit using the means fairly within his reach to guide him in forming an independent judgment touching the value of his bargain.
7, 8, 9. The remaining points are disposed of by what is said, at sufficient length, in the head-notes numbered 7, 8 and 9. If the interest which complainant bought from defendant was worthless, and that fact was such a hidden matter as to require more than four years for the complainant to discover it, there is a strong probability that the defendant never discovered it at all. It is certain either that there was much mystery in the business or that there was little effort to solve it.