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Jan., 1905]

Opinion of the Court-CORSON, P. J.

Appeal from circuit court, Kingsbury county; Hon. JULIAN BENNETT, Judge.

Action by D. A Thompson and wife against Rufus L Hardy and wife. From a judgment for plaintiffs, defendants appeal. Affirmed.

W. A. Lynch and Lancaster & McGee, for appellants.
Hall, Lawrence & Roddle, for respondents

CORSON, P. J. This is an action by the plaintiffs, as hus band and wife, to rescind a conveyance of real estate made by them to the defendant Rufus L. Hardy in March, 1901. A jury was impaneled to try special issues, and returned special verdicts, which were, in substance, adopted by the court as a part of his findings of fact; and, such findings and conclusions of law being in favor of the plaintiffs, the defendants have appealed.

It is disclosed by the record in this case that in the fall of 1900 the plaintiff D. A. Thompson was the owner of a section of land in Kingsbury county, upon which he resided, and upon which there was a mortgage for $4,000, and that the defendant Rufus L. Hardy was the owner of a hotel in Bloomfield, Iowa, known as the "Hardy Hotel"; that negotiations were commenced in the fall of 1900 for the exchange of the farm by the plaintiff Thompson for the hotel owned by the defendant Hardy, but which resulted in nothing definite being agreed upon until some time in the winter of 1901, when, upon further negotiations, it is claimed by Thompson that Hardy represented to him that he had sold the hotel property for $14,000; that thereupon negotiations were continued or new negotiations opened in regard to the exchange of the farm with one Taylor, to whom

Opinion of the Court-CORSON, P. J.

(19 S. D.

Hardy claimed to have transferred the hotel property, and Hardy undertook to effect an exchange of the properties between Thompson and the alleged new owner. In the new negotiations it was agreed that a mortgage for $4,000 should be placed upon the botel property in favor of Hardy, as offset against the mortgage then outstanding on the farm of Thompson, and the properties were conveyed subject to the two mortgages. To carry into effect the agreement, it is claimed, Hardy took a reconveyance of the property to himself, and subsequently executed a deed to the hotel property to Thompson; Thompson in the meantime having conveyed the farm by deed to Hardy.

The grounds upon which the plaintiffs seek to rescind the contract, and compel the appellants to reconvey the property to them, are that Hardy falsely represented to the plaintiff Thompson that he had sold the property for $14,000, and that Thompson, if he purchased the hotel property, could obtain possession of the same by giving 30 days' notice to the tenant then in possession; that these representations were false, the hotel having been transferred for a much less sum, and that the hotel property was under a written lease executed by Hardy for a period of two years from August, 1900; that Hardy made these representations with intent to deceive and defraud Thompson; and that he knew they were false.

The court, in its findings, adopts, in substance, the special verdicts of the jury, and finds that the fraud practiced by said Hardy upon the plaintiffs consisted, in part, that the said Hardy represented to the plaintiff Thompson prior to the execution of the deed from Thompson to Hardy that the hotel property had been, prior to the execution of said deed, sold by

Jan., 1905)

Opinion of the Court-CORSON, P. J.

said

same

said Hardy for the sum of $14,000; that the statement so made by Hardy was material, and was influential in inducing the plaintiffs to deed the farm lands; that said statement was false, and was known to said Hardy to be false when he made such statement, it being true that said Hardy had sold the hotel property a short time prior for the sum of $4,000, and no more, all of which was well known to said Hardy when he made such representations; that plaintiff Thompson believed Hardy when he made such representations, and relied upon the same, and was thereby induced to exchange said farm lands for said hotel property, the being the sole consideration for such exchange; that such false representation made by the said Hardy to the said Thompson was made by the said Hardy with intent that it should be relied upon by the said Thompson, and with intent that it should influence and induce the said Thompson to make such exchange, and was so relied upon by said Thompson, to his damage. The court further finds that said fraud practiced by the said Hardy upon the plaintiffs, and which induced them to convey said lands, consisted, in part, that the said Hardy stated to the said Thompson that the said plaintiffs could have possession of the said hotel property upon 30 days' notice to the person in possession, which said representation was made by the said Hardy to the said Thompson prior to the said con. veyance; that the said representation was material, and was false, and known to be false by the said Hardy at the time it was made, there being at said time in existence a written lease of the hotel property executed by the said Hardy, and the contents thereof known to him, by virtue of which the person in possession was entitled to hold possession thereof until August Opinion of the Court-CORSON, P. J.

[19 S. D

20, 1902, and such lease could not be terminated by notice prior thereto; that said Thompson believed such representation made by said Hardy to be true, and that he would be able to get possession of said hotel property at the end of thirty days, and the said Thompson fully relied upon such representation. and was induced thereby to exchange said farm lands for said hotel property; that the said representation was made by said Hardy with the intent that it should be relied upon by the said Thompson, and with the intent that it should influence and induce said Thompson to make such exchange and that it was relied upon and acted upon by the said Thompson to his damage; that said farm lands of the plaintiff Thompson were of the reasonable value of $10,000 at the time of such transfer; that said hotel property was of the reasonable value of not to exceed $5,000 at the time of such transfer of such farm property; that the plaintiffs at the time of the commencement of this action, and at all times since, have stood ready and willing, and by their complaint therein did offer and tender into court for and in behalf of said Hardy, a good and sufficient deed of said hotel property conveying the same to the said Hardy, subject to the $4,000 mortgage thereon; that the said Thompson has tendered into court, and has filed with the clerk of the court, a good and sufficient deed, conveying the said hotel property to the said Hardy, subject to the mortgage thereon, and that the $4,000 mortgage upon said farm is wholly unpaid; that in the deed of said hotel property executed to Thompson, there was inserted in the same, at the direction of the defendant Hardy, and without the knowledge or consent of plaintiffs, or either of them, a clause to the effect that the deed was given subject to a lease terminating in August, 1902. which said deed was

Jan., 1905]

Opinion of the Court-CORSON, P. J.

placed on record by the agent of said Hardy without the same having in any manner been delivered or examined by the plaintiffs, or either of them; and that the said plaintiffs, or either of them, had no knowledge of such clause, or that such lease could not be terminated, until long after the execution and delivery of their deed conveying said farm lands to the said Hardy.

Upon these findings of fact the court concludes that there should be a decree ordering that said conveyance from the plaintiffs to said Hardy be canceled and set aside, and that title to said farm lands be revested in the plaintiff Thompson, subject to the said $4,000 mortgage, and that the title thereto be quieted in the said Thompson as against said Hardy and all persons claiming under him, and that said Hardy and wife be ordered to deliver to the clerk of this court a good and sufficient special warranty deed, executed by them to the said Thompson, reconveying the said farm property. It clearly appears from the findings of the court that the representations made by Hardy were false, and known to him to be false at the time they were made; that they were material; that plaintiffs were thereby induced to convey their farm lands in exchange for said hotel property under the belief that the hotel property was of equal value with the said farm lands, and that they could obtaio possession of the same upon 30 days' notice; that said Hardy fraudulently caused to be inserted in said deed, without the knowledge of the plaintiffs, the clause declaring that the same was taken subject to the lease terminating in August, 1902, and had the same recorded before being examined by the plaintiffs.

It is contended by the appellants: "(1) The complaint 19 S. D.-7

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