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the other party which proved to be untrue, although they were made in good faith, on the ground that it would be inequitable to permit him to retain the benefit of a contract so induced, cannot be applied to a sale within the rule of caveat emptor, as in case of a sale of live stock where there was no warranty, either express or implied, and where the purchaser had full opportunity for inspection.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 43, Sales, $ 84.] 3. CANCELLATION OF INSTRUMENTS-INVALIDITY.
Complainant brought suit for the rescission and cancellation of a contract. by which he purchased from defendant a herd of cows to be used for dairy purposes, on the ground that they were infected with tuberculosis and were unfit for the purpose for which they were bought. There was no warranty, and the evidence did not establish any fraud or misrepreBentation on the part of defendant, or that he had any knowledge of such infection, if it existed, and in fact the sale was made at the instance of complainant, who was an expert in dairying and had full opportunity to Inspect the herd. It also appeared, from publications of the Department of Agriculture introduced in evidence, that such infection exists to a greater or less extent throughout the country, an the he in question was not shown to have been seriously affected. Complainant abandoned the property and left it in defendant's hands without completing the payment therefor. Held, that under such facts he was not entitled to relief in equity.
James C. Williams and Wash Adams, for complainant.
POLLOCK, District Judge. By the bill of complaint presented in this case the cancellation of certain written instruments and the return of money paid is sought by complainant on the ground of fraudulent misrepresentations, charged to have been made by the defendant to complainant to induce the making of such writings and the payment of the money. The case has been fully presented in oral argument, and stands submitted for decision on abstract of the testimony and printed briefs filed by solicitors for the respective parties. In most things the testimony is conflicting; but the facts material to a decision of the controversy, as I find them, from a reading of the testimony contained in the abstracts, briefly stated, are as follows:
The defendant is a farmer owning a farm of about 437 acres near Lawson, Clay county, this state. About the year 1898 he entered the dairy business in a small way, and increased that business until in the month of January, 1905, he had a herd of about 100 Jersey cows, about one half of which he had raised on his farm. The remaining half he had acquired by purchase from others. At this time he had an established business. The products of his dairy were well and favorably known among dealers in Kansas City and other places, and commanded prices above the usual market price of such products on account of their superior quality and excellence. The complainant is a young man 26 years of age, experienced for a man of his age in the dairy business, having attended the agricultural school at the State University of his native state, Illinois, for three years, and also having attended an agricultural school located at Ames, Iowa, for a period of a year. He also had been in charge of a dairy farm near the city of St. Louis for some time prior to the
date of the transaction in question. Immediately prior to the date of this transaction he made a trip through the Northwest seeking a location for the purpose of engaging in the dairy business. Being at Excelsior Springs January 6, 1905, he learned in some manner of defendant's place and herd of dairy cows; called defendant over the phone and arranged to go out and see his herd, which he did, arriving there after dark on that day; remained there over, night, discussing with defendant his business, inquiring where he marketed his butter, the price obtained, the condition of his dairy herd, and other matters; and at the time asked defendant if his herd of cows had ever been tested for tuberculosis, to which defendant responded it had not been so tested. On the following morning he spent about an hour looking through the herd of cows, inspecting dairy rooms and the manner in which the business was conducted; then left, going to Kansas City, where he inquired of defendant's customers as to the truth of the statements made to him by the defendant, and of others as to the reputation of the dairy and its products. It does not appear from the proofs on this first visit that complainant offered to buy, or the defendant proposed to sell him, the herd of cows. From the conversation, however, plaintiff did learn he could buy all or part of the cows if the price was satisfactory to the defendant. When complainant left, he said he was going to Liberty, Mo., to look over the situation there, and said nothing about returning to defendant's place. However, on Tuesday, the 10th day of January thereafter, he reappeared at defendant's place and remained there for some two or three weeks thereafter. At the time complainant returned he did it with the purpose in his mind of purchasing the business, and spent the time there looking over the business to find out how it was conducted, the amount of butter made and shipped, the individual records of the several cows in the herd, which was kept, and in learning what he could about the property and business; and finally, on the 31st day of January thereafter, the following agreement was entered into between the parties for the purchase and sale of the herd of dairy cows and other per: sonal property:
“This contract, made and entered into this 31st day of January, 1905, by and between A. J. Watkins, of Clay county, Missouri, party of the first part, and Clarence B. Dorsey, of Clay county, Missouri, party of the second part, witnesseth: That the said party of the first part, for and in consideration of the sum of five thousand five hundred dollars ($5,500), hath this day bargain: ed, sold, transferred and conveyed to the said party of the second part the following personal property, to wit: One refrigerator, nine cans, three boilers, one cauldron, one seal and wire for seal, all his Reid butter boxes and trays, one pair of platform scales, one pair of butter scaies, one butter mould and die, one churn and worker, one separator, one tester and glass, one can of butter coloring and tablets, one lot of test bottles, one sack of salt, ten thousand butter wrappers, two racks and papers, two stoves, one lot of stone jars, all his knock-down butter boxes, one Deering mower, one mare named 'Ruby,' four sets of harness, two sixteen-inch plows, two listers, one planter and disc, two two-row cultivators, one barrow, two three-horse double trees, one Deering corn harvester, two wagons, one set of single harness, two sites, one lot of tools, all the ice in two icehouses, eighty acres of fodder shredded, seven hundred and fifty bushels of corn, one lot of coal, seven sows, one male hog, twenty-four shoats and pigs, heifer calves, ninety-two heifers and cows, seven
steer calves and three bulls, one barrel of sal soda, and one Deere eight-roll shredder. ` All said property is located on the premises of the said party of the first part in section one, of township fifty-three, of range thirty, and the possession of all said property is this day delivered to the said party of the second part. Of the consideration named as the purchase price of said property, the sum of twenty-five hundred dollars ($2,500) is this day paid in cash, and the note of the said party of the second part is this day taken for the residue, to wit, the sum of three thousand dollars ($3,000), due twelve months from date, and secured by chattel mortgage upon a part of the personal property hereinbefore described. “[Signed in duplicate)
A. J. Watkins, "Clarence B. Dorsey."
On the same day, as a part of the same transaction, defendant leased to plaintiff about 320 acres of his farm for the period of one year, for the purpose of transacting the dairy business, at the annual rental of $1,400, payable as follows: $500 June 1st, $500 September 1st, and $100 November 1st, 1905. The lease also contains an option on complainant's part to lease the entire farm for an additional period of four years at an annual rental of $2,200. All the papers evidencing the transaction were prepared and executed in the law office of Judge Sandusky, attorney for defendant, at Liberty, Mo. The negotiations between the parties respecting the trade consumed the greater part of the day. During these negotiations the question arose as to the insertion in the lease of a clause giving defendant the right of re-entry under his lease in case of nonpayment of rent reserved for the period of 60 days after the same should become due. To the insertion of this clause in the lease complainant objected, on the ground that something might arise making its prompt payment impossible. The cattle might be diseased, the hogs might die, crops might fail, or he might get sick, and be unable to meet the payments of rent promptly, and cause a sacrifice of his property. In reply to this statement defendant remarked the cattle were all right so far as he knew, but that he did not warrant. the stock, or any live stock he sold; that the crops would be fed to the cattle, leaving him no security for his rent. "About this time Judge Sandusky, the scrivener engaged in drawing the papers, said "there was no warranty," and defendant said, “No, sir;" complainant saying nothing more in this respect. The papers, including the contract, a promissory note of $3,000 evidencing the deferred payment, a mortgage on a part of the personal property to secure payment of the same, the lease, and the promissory notes evidencing the rent to be paid in accordance with the terms of the lease, were executed. Complainant paid to the defendant the $2,500 cash on the purchase price, as specified in the contract, and complainant assumed possession of the business and remained in the home of defendant until some time in the month of May thereafter.
For some time after his purchase of the business, as appears from the proofs, complainant seems to have been satisfied with his trade, and so late as the month of May it appears he contemplated a continuance of the business and the carrying out of his contracts. While there is proof found in the record that some of the cows, shortly after complainant assumed control of the business, and especially cow
No. 17, was found to be coughing, yet the general appearance of the herd seems to have been good, considering the time of the year. About the last of May complainant began to exhibit dissatisfaction with his trade. His account became overdrawn at the bank, and his business affairs evidently did not prosper as he had anticipated. About this time it appears he commenced consulting with a firm of veterinarians about the herd of cows. Representatives of such firm came to the farm quietly, and without any notification to defendant tested the herd for tuberculosis. One of the cows which had become lame or diseased was quietly killed. During all this time he made no complaint to defendant about the condition of the herd, but, when requested by the defendant for payment of rent due June 1st, expressed his intention of paying the same and the manner in which he expected to raise the money to make such payment. Finally, in the month of June, he sold off the butter which had accumulated at prices less than the usual price paid for the same. He also sold some of the hogs purchased from defendant, had the cattle tested for tuberculosis, and on June 16th or 17th went to defendant, informed him the cattle were diseased, and among other things said, "I will quit if you do not make settlement with me." He also procured the state veterinarian to quarantine the cattle, informed his employés he would pay them no longer, and abandoned his business and contract with defendant. Thereafter defendant took possession of the premises under his lease and has since cared for the cattle.
A controversy arose between the state veterinarian and defendant, growing out of the fact that the state official accused the defendant of having injected tuberculin into the cattle, thus reducing their temperature at the time designated for a test of the cattle made for the purpose of ascertaining whether they, or any of them, had tuberculosis, and for the purpose of releasing from the order of quarantine all cattle found not so diseased. Owing to this disagreement the cattle at the time this case was heard remained in quarantine in the hands of the defendant unproductive, because neither the cattle nor the product from them could be disposed of. The proofs further show, in the year 1901, defendant had sold out of his herd some 25 or 30 cows, and that none of them, so far as could be ascertained, has ever been infected with tuberculosis. During all the years defendant had managed the business he had lost in all only 11 head of cows which had died from any cause; and none of them, in so far as could be ascertained, having died from tuberculosis.
With the proofs in this case there has been submitted certain public documents from the pen of the chief of the Bureau of Animal Industry, a branch of the governmental Department of Agriculture, and others, from which it is learned the disease known as “bovine tuberculosis” is, and for many years has been, prevalent in all parts of the civilized world. D. E. Salmon, chief of the Bureau, says:
"The statistics concerning tuberculosis show that it is a disease prevalent in all civilized countries. In some countries, such as the northern part of Norway and Sweden, on the steppes of eastern Europe and Russia, in Sicily and Iceland, and in Algiers, it is said to be quite rare. The returns from testing British cattle with tuberculin supplied by the Royal Veterinary College, as stated in March, 1900, shows that, among 15,392 animals tested, 4,105, or 26 per cent., reacted.”
From tests made of herds of cattle in many of the states it is shown from the same authority the disease is probably prevalent to a greater or lesser extent in all herds of cattle, and more especially is this true of highly bred herds; the infected running from 3°/10 to 26 per cent. Taking such statistics as the guide, it is probably true the herd in question may have been to some extent infected when its purchase was made from defendant by complainant; but the proofs relating to this particular herd do not show the prevalence of such disease prior to complainant's purchase, and wholly fail to show, if it was so infected, defendant had any notice or knowledge of such disease prior to his trade with complainant.
This suit is brought by the complainant to cancel the instruments of writing executed in consummation of the trade and to recover the cash payment made. In the light of the facts stated, what are the rights of the contending parties? The contract of sale and purchase, as has been seen, contains no covenant warranting the soundness of the herd. The fact that the question of warranty as to the soundness was mentioned during the negotiations, and that the contract is silent in this respect, is conclusive proof none was intended. As said by Judge Sanborn in McKinley v. Williams, 74 Fed. 101, 20 C. C. A. 312:
"Where the parties have deliberately put their engagements into writing ir. such terms as to import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed that the whole engagement of the parties and the manner and extent of their undertaking was reduced to writing.” Thompson v. Libby, 34 Minn. 374, 26 N. W. 1: Barnes v. Railway Co., 4 C. C. A. 199, 54 Fed. 87; McMurphy v. Walker, 20 Minn. 382 (Gil. 334); Harmon v. Harmon (C. C.) 51 Fed. 113; Wilson v. Cattle Ranch Co., 73 Fed. 994, 20 C. C. A. 241.
As complainant, a competent judge of such property, with full opportunity and ample time afforded him, inspected the herd before his purchase, although the purchase was made for a particular purpose, no warranty of fitness for such purpose is implied. Mechem on Sales, vol. 2, § 1311 et seq.; Reynolds v. General Electric Co., 141 Fed. 551, 73 C. C. A. 23; Howard v. Emerson, 110 Mass, 320, 14 Am. Rep. 608; Hanson v. Hartse, 70 Minn. 282, 73 N. W. 163, 68 Am. St. Rep. 527; McQuaid v. Ross and another, 85 Wis. 492, 55 N. W. 705, 22 L. R. A. 187, 39 Am. St. Rep. 864; Goad v. Johnson, 6 Heisk. (Tenn.) 340; Scott v. Renick, 1 B. Mon. (Ky.) 63, 35 Am. Dec. 177.
There being here neither an express nor implied warranty upon which complainant may rely, the rule of "caveat emptor” applies. Therefore the defendant is not at fault, unless he knowingly misrepresented the facts for the purpose of inducing the purchase made by complainant, or knowingly represented that to be true which was not true, and which he did not know to be true. In other words, in the absence of fraud on the part of the defendant, the sale made must stand.
While the bill here presented charges all the essential elements of an action at law to recover damages for fraud and deceit, it is entirely clear complainant has failed to discharge the burden resting upon