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ED. LOWRIE AND OTHERS v. ELLING T. CHRISTENSON

Minnesota Supreme Court1925-12-04No. No. 24,690
165 Minn. 181

Summary

Holding. The judgment in favor of the plaintiffs rescinding the contract and restoring them to ownership of their original properties is affirmed, as the trial court's factual findings regarding fraudulent misrepresentation, reliance, and discovery are amply supported by evidence and the defendant's dual-agency argument provides no defense to fraud.

Edward Lowrie sought to exchange his 120-acre farm in Otter Tail County (encumbered by $2,400) and his son Clarence's 80-acre farm in Becker County (encumbered by $4,000) for the defendant's 320-acre property in Roseau County (encumbered by $8,000). The defendant and his agents, John Fox and Ole Hereim, represented to Edward that the Roseau County land was in excellent farming condition and free from problematic weed infestation. Edward made only a cursory inspection in late October when such defects would not be readily visible. After executing the exchange and conveying their farms, the Lowries did not revisit the Roseau County property until August of the following year, when they discovered it was severely contaminated with noxious weeds such as quackgrass, wild oats, Canadian thistle, and sow thistle, rendering it practically unproductive for farming.

The trial court found that the defendant and his agents made false and fraudulent representations regarding the land's condition, that the Lowries relied on these statements in entering the contract, and that the Lowries did not discover the falsity until nearly a year later. The defendant argued that the Lowries had sufficient opportunity to inspect the land and that Fox, acting as a dual agent for both parties, could not serve as a basis for rescission. The appellate court rejected both contentions, holding that the late-season inspection could not have revealed weed infestation and that an agent owing fiduciary duties to both parties cannot shield fraudulent conduct from one principal by invoking dual agency.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether false representations regarding the condition and weed infestation of farmland constitute actionable fraud
  • Whether a cursory late-season inspection defeats a claim of fraud when defects would not be visible at that time
  • Whether an agent acting in dual capacity for both parties can shield fraudulent conduct from discovery

Procedural posture

The trial court entered findings of fact and judgment for the plaintiffs seeking rescission of a land-exchange contract based on fraud; the defendant appealed after his motion for amended findings and new trial was denied.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Quinn, J.

Action to rescind a contract for the exchange of real estate, to cancel certain conveyances made thereunder, and to reinvest plaintiffs with the property parted with, upon the ground of fraud alleged to have been practiced upon the plaintiffs by the defendant and his agents. A trial was had, findings were made, and judgment ordered in favor of the plaintiffs. Defendant moved for amended findings and for judgment in his favor and, if that be denied, then for a new trial. The motion was denied, judgment was entered, and the defendant appealed therefrom.

The decisive question presented by this appeal is whether the findings and judgment are warranted by the proofs. The plaintiffs, Edward and Clarence Lowrie, are father and son. Edward owned a farm of 120 acres in Otter Tail county, which was encumbered to the extent of $2,400. Clarence owned a farm of 80 acres in Becker county, encumbered to the extent of $4,000, and the defendant owned 320 acres in Roseau county, encumbered to the extent of $8,000.

The father was desirous of procuring more land so that his several children might work the same together and so informed his brother-in-law, John Fox, who resided and owned land in Roseau county. Thereafter Fox urged the father to come to Roseau county and look over the land. Subsequently, Edward started for Roseau county. Fox, in company with Ole Hereim, both agents of the defendant, met Edward and showed Mm the defendant’s land. This was late in October. As found by the trial court and as appears from the evidence, Lowrie made a partial inspection of the land in question but, owing to the lateness of the season, coupled with Ms unacquaintance with that part of the state, he did not discover the true character and condition of the place.

It is contended on behalf, of respondents, and the trial court found as matters of fact, that the defendant and his agents, Fox and Hereim, in order to induce the plaintiffs to enter into a contract for the exchange of such farms, falsely and fraudulently represented and stated to the plaintiff Edward Lowrie that all of the defendant’s land referred to was in excellent condition for farming and that it was not infested with foul weeds and seeds to an extent that would interfere with its productiveness; that plaintiffs, believing such statements and representations to be true and in reliance thereon, entered into the contract in question and executed conveyance of their farms in exchange for a deed of the defendant’s land. It appears that none of the plaintiffs again saw. the Eoseau county land until in August of the following year, when they discovered, for the first time, that the statements and representations made by the defendant and his said agents, with reference to the character and condition of the same, were false and untrue, and that the land was not in a fit condition for cropping and that the same was infested with foul and noxious weeds, such as quackgrass, wild oats, Canadian thistle, sow thistle and the like, to such an extent that its productiveness was practically destroyed.

We are of the opinion that the findings of the trial court, relating to the question of false representations by the defendant and his agents, the reliance of the plaintiffs thereon in entering into the contract, as well as to the time plaintiffs discovered the falsity thereof, are amply supported by the evidence. There is no merit in the contention that the plaintiffs inspected the Eoseau county land with full opportunity to discover its condition as to being infested with noxious weeds. When the senior Mr. Lowrie viewed the land, it was late in October when much of such condition would be invisible upon so slight an inspection as he could make in the time spent. The alertness of defendant’s agents is very suggestive to say the least. The court saw the witnesses, listened to their testimony, made findings of fact and subsequently refused to change or modify the same. The real question is, was the land of the kind, quality and in the condition it was represented, and whether plaintiffs relied upon such representations. Hirsebman v. Healy, 162 Minn. 328, 202 N. W. 73á. There seems to be no claim but that the land was about as thoroughly contaminated with noxious weeds as it well could be.

It is also contended, on behalf of the defendant, that Fox was acting as agent for plaintiffs as well as for the defendant in this transaction, and that such a dual agency allows the defendant the right to profit as best he might through the representations of such agent. We are unable to concur in such contention. A broker owes the utmost good faith to his principal. Kingsley v. Wheeler, 95 Minn. 360, 104 N. W. 543. If the agent was, as it seems probable, acting in a dual capacity, and the deception was practiced upon one of his principals, it can avail the other nothing. This is true because an agent owes to his principal the duty of making a full and fair -disclosure of all the circumstances affecting the rights of the principal. If such fraudulent statements were, in fact, made by Fox to the plaintiffs or either of them, they were, as found by the trial court, participated in by the defendant.

It must be remembered that when an action is tried by a court, without a jury, its findings of fact are entitled to the same weight as the verdict of a jury and will not be reversed unless they are palpably contrary to the evidence. This rule applies whether the appeal is from a judgment, or from an order granting or denying a new trial. See Dun. Dig. § 411, and the long line of Minnesota decisions there cited.

Affirmed.