Dorr v. Cory Supreme Court, Iowa, April 5, 1899. Reported in 108 Iowa Reports, 725

Appeal from Polk District Court.

Action at law on contracts in writing for the purchase of interests in real estate. Answer alleges (inter alia) that the contracts were obtained by fraud.

Verdict for plaintiff, and judgment.

Robinson, C. J. ... The only statement purporting to be of fact which is shown to have been false is that relating to the cost of the land. Would that statement have authorized the jury to find for the defendant? It was said in Hemmer v. Cooper, 8 Allen, 334, that “the representations of a vendor of real estate, to the vendee, as to the price he paid for it, are to be regarded in the same light as representations respecting its value. A purchaser ought not to rely upon them; for it is settled that even when they are false, and uttered with a view to deceive, they furnish no ground of action.” That rule was followed in Cooper v. Lovering, 106 Mass. 77, and it is the rule of Tuck v. Downing, 76 Ill. 71, and Banta v. Palmer, 47 Ill. 99. In Holbrook v. Connor, 60 Me. 578, it was said: “The statement of the vendor that he paid a certain price for the land, if true, can be no more than an indication of his opinion of its value; and when we consider the various motives which may, and often do, actuate men in making their purchases, and especially when it is done for speculation, it is but the slightest proof of such opinion.” As a general rule, a vendee has no right to rely upon the statements of the vendor respecting the value of the property sold, but must act upon his own judgment, or seek information for himself. But to that rule there are exceptions. It was said in Simar v. Canaday, 53 N. Y. 306, that where statements as to the value are mere matter of opinion and belief, no liability is created by uttering them, but that such statements “may be, under certain circumstances, affirmations of fact. When known to the utterer to be untrue, if made with the intention of misleading the vendee, if he does rely upon them, and is misled to his injury, they void the contract.” The fraud which vitiates a contract must be material, affecting the very essence of the contract; but ordinarily, “if the fraud be such that, had it not been practiced, the contract would not have been made, then it is material to it.” 2 Parsons, Contract, 770. See, also, 2 Pomeroy Equity Jurisprudence, section 878, and notes. That rule was applied in Smith v. Countryman, 30 N. Y. 656, which was an action upon a contract for the sale of hops. It was held that a false representation made by the vendee as to the price at which he had purchased hops of another person, which was relied upon by the vendor, and induced him to enter into the contract of sale, was material, and constituted a defence to an action on the contract. This rule appears to us to be in harmony with reason and the principles of justice. The price at which property actually sells in the open market is very satisfactory evidence of its value at the time of the sale. We cannot assent to the proposition that the statement of a vendor that he paid a specified price for the property he sells is a mere expression of opinion, upon which the purchaser has no right to rely. On the contrary, we think it is a statement of fact; and if the purchaser, without knowing or having reason to know what price was paid, relies upon the false statement, to his injury, he is entitled to relief. The cases of Teachout v. Van Hoesen, 76 Iowa, 113; Iler v. Griswold, 83 Iowa, 442, and Coles v. Kennedy, 81 Iowa, 360, although not precisely in point, tend to sustain our conclusion. See French v. Ryan, 104 Mich. 625 (62 N. W. Rep. 1016); Moon v. McKinstry, 107 Mich. 668 (65 N. W. Rep. 546), and Woolen Co. v. Smalley, 111 Mich. 321 (69 N. W. Rep. 722).

Judgment reversed.