Frey v. Middle Creek Lumber Co., 144 N.C. 759 (1907)

May 27, 1907 · Supreme Court of North Carolina

144 N.C. 759

E. C. FREY et al. v. MIDDLE CREEK LUMBER COMPANY.

(Filed 27 May, 1907).

1. Evidence — Referee—Bindings of Fact — Appeal.—The findings of fact by the referee, when there is evidence tending to support them, affirmed by the Judge on the hearing, are conclusive on appeal and must be made the basis of the judgment.

2. Damages — -Evidence—Counter-claim—Contracts—Fraud.—Representations which were mere matters of opinion as to the quantity of timber covered by a contract to sell, given and received as such when the parties were at arm’s length, each having equal opportunity of informing himself, cannot be set up as a ground of counter-claim for damages in an action upon notes given by defendant for the purchase price, as constituting legal fraud.

Civil actioN, tried on appeal from a justice' of the peace, before W. B. Allen, J., at October Term, 1906, Superior Court ,of SwaiN County.

The action was to recover $190, alleged to be due by note of defendant company given to plaintiff, which was unpaid.

Defendant answered, admitting the execution of the note, and setting up a defense by way of counter-claim that the note was given as' part of the purchase price for certain timber contracts held by plaintiff, and that said plaintiff made false and fraudulent representations inducing the sale, as to the quantity of timber covered by the contracts, causing damage to defendant in the sum of several thousand dollars, which was set up in bar of plaintiffs recovery. Defendant admitting the execution of the notes, the question as to the counter-claim in the cause was, by consent, referred to E. E. Hampton as referee, wbo beard tbe testimony and made bis report, finding tbe facts and making conclusion against tbe counter-claim.

Tbe cause came on to be beard on tbe report and exceptions, and tbe Judge sustained certain exceptions, modifying tbe report in some respects, but affirmed tbe finding of fact No. 12 by tbe referee, to tbe effect tbat no false representations bad been made wbicb bad caused defendant to make tbe contract, and- thereupon adjudged- tbat. plaintiff receive tbe amount of tbe .note and interest and costs, and defendant excepted'and appealed.

A. M. Fry for defendant.

.No counsel contra.

Hoke, J.,

after stating the case: The findings of fact by a referee, when there is evidence tending to support them, affirmed by the Judge on the bearing, are conclusive upon this Court and must be made the basis of the judgment. Harris et al. v. Smith, at this term, reported in current S. E., vol. 57, No. 2.

Tbe referee in tbe case before us reports bis finding of fact No. 12 as follows:

“Twelfth. I find as a fact that in some conversations between the plaintiffs and the defendant’s agent and manager that John Erey told the defendant’s agent that be felt satisfied that there was from 250,000 to 300,000 feet of good timber on the boundary embraced by the Breedlove lands; that the declaration was made to apply to the entire Lick Log Creek boundary; that it was given as a mere guess or opinion, based upon what the plaintiff bad seen himself and bad been told by John Breedlove, but that it was not intended as a 'willful or gross misrepresentation of the quantity of timber on the boundary; that the parties were dealing with each other at arm’s length, on practically equal terms; that it was easily within the power of the defendant to have had the timber on the boundary estimated or measured; that he had been upon and examined part of the timber and had equally as good opportunity, in the exercise of reasonable diligence, to have examined the whole boundary; that the negotiations for the sale were pending for more than two months before the -assignment of the contract; that the parties were upon the identical premises on which the timber was located at the' time of closing the contract; that the defendant had one or more opportunities to rescind the contract before it was finally closed, which it refused to do; that the contract showed and.the defendant knew that he was getting the timber under the contracts by the 1,000 feet, at a certain fixed price; that the price of $100 paid was for the benefit of the contracts and not for the timber; that there was no guaranty or warranty by the plaintiffs that the boundary contained any particular quantity of timber, and that there was no complaint of any shortage or fraudulent misrepresentations by the plain-' tiffs in making the sale until the plaintiffs brought this action to recover the amount dire on the cattle on account of the funds in the defendant’s hands by Breedlove and Grrooms for that purpose. I therefore find as a fact that the sale of the contracts to the defendant by the plaintiffs was not brought about by false and fraudulent representations that were calculated to deceive and mislead a prudent business man.”

There was evidence in the record in support of this action by the referee, and, the same having been affirmed by the Judge, the conclusion necessarily follows that defendant’s counter-claim has not been sustained.

We are referred by counsel to the decision in May v. Loomis, 140 N. C., 350; but.that case decides a question entirely different from that presented by this report. There the assertion complained of as being false and fraudulent was the assertion of a fact: “That the vendor, at the time of negotiating tbe sale, as an inducement thereto, falsely asserted that be bad caused a survey to be made of tbe timber witbin tbe boundary, and tbe survey disclosed tbat there were three million feet; whereas tbe survey referred to bad shown tbat tbe boundary contained only one million, and of this tbe vendor must have been fully aware.”

In the case before us the finding is that the representations were mere matters of opinion, given and received as such, and when the parties were at arm’s length, each having equal opportunities of informing himself; and the cause comes rather witbin the principle so clearly announced by Mr. Justice Brown in Cash Co. v. Townsend, 131 N. C., 652, tbat “Expressions of commendation or opinion or extravagant statement's as to value or prospects do not, as a rule, constitute legal fraud.”

As heretofore stated, tbe finding of fact No. 12, which we have no power to disturb, determines tbe question of tbe counter-claim against the defendant, and tbe judgment below is affirmed.

Affirmed.