Graham v. Smither

California Court of Appeal Jul 30, 1942 No. Civ. 6726Published

Before: Thompson

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Holding. The court affirmed the cancellation of a lease and option to purchase land, finding that the defendant procured the agreement through fraud and failed to provide the consideration of prospecting for minerals as promised.

Issues

Whether the evidence supported the trial court's finding of fraud in the procurement of a lease and option to purchase land.
Whether the failure to perform promised prospecting operations constituted a failure of consideration justifying rescission.
Whether the trial court erred in admitting oral evidence regarding the circumstances surrounding the execution of the written lease.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The making of promises regarding material facts, which induces one to execute a lease or contract, or to alter his position to his detriment, constitutes actual fraud which will justify the rescission of the document.”

“It is sufficient to warrant a rescission of the instrument if a single material statement is fraudulently made, provided that statement was relied upon and became an inducing reason for the execution of the instrument.”

THOMPSON, J.

The defendant has appealed from a judgment which was rendered against him in a suit cancel-ling a lease and option to purchase land on the ground of failure of consideration and that it -was procured by means of fraud.

Zeph D. Graham and his brother Victor owned equal undivided interests in sixty-seven acres of unimproved land within the area of the Central Valleys Project in Shasta County. Victor died in 1933, possessed of that interest in the land in question. He left surviving him several heirs. An administrator of his estate was not appointed until March 13, 1939.

Zeph D. Graham was 67 years of age. He lived at Red-ding, where he was engaged in teaching music. He had formerly engaged in some placer mining, including a little unsuccessful prospecting on the land in question. The defendant claimed to be a mining engineer who was employed in the land department of the Pacific Gas and Electric Company at San Francisco. About the time the first contract on the Shasta Dam Project was awarded, this appellant made numerous trips to Shasta County and interested himself in procuring from owners of land within that area at least five or six similar leases for nominal rental with accompanying options to purchase the lands. Another one of these leases, to which reference is made by the appellant in this record, was cancelled by the trial court on the ground of fraud and

[703]

failure of consideration. On appeal that judgment was affirmed.

(Palm

Smither,

52 Cal. App. (2d) 500 [126 P. (2d) 428].) It seems apparent that the appellant procured the lease in the present case, as he evidently did in the Palm case, to tie up the title with an accompanying option to purchase the land, with the purpose of speculating on the probability of selling it for a greatly increased price to the United States Bureau of Reclamation for use in the dam project, and that he fraudulently represented that he was president of a mining company, and that he intended to prospect the land in good faith for gold or other valuable minerals.

The owners of the land were not formerly acquainted with the appellant. On August 27, 1938, Mr. Smither went to Redding and interviewed Zeph Graham, representing himself to be a mining man and president of the Bast Belt Mining Company. He said,

Graham v. Smither

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THOMPSON, J.

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