Cobb v. Lane

THOMSON, J.,

pro

tem.

This is an appeal from a judgment in favor of plaintiffs in an action to foreclose a mortgage on real property. Defendants set up fraud as a defense and filed a cross-complaint for damages by reason of said fraud.

A short time prior to 1916, plaintiff C. H. Cobb and some other persons organized a corporation named the Peerless Orchards Company, which corporation procured title to a certain tract of land in Fresno County. The corporation was organized for the purpose of selling those lands in small parcels to the public generally. Said C. H. Cobb was president of the corporation and acted as its general agent and manager. Upon the organization of the corporation a prospectus was issued and certain newspaper advertisements were published by the corporation for the purpose of selling such lands, and it is upon fhe statements contained in this prospectus and other advertising matter that appellants seek to predicate their defense of fraud and their claim for damages set up in their cross-complaint. On February 15, 1916, J. R. Woods purchased from the corporation the fifteen acres of land in controversy. The trial court found that he did not have any knowledge of said pamphlets or advertising material and purchased said premises upon his own judgment and without any reliance upon any statement or representation of any person. The contract of sale provided for the payment of a total purchase price of $6,000, of which $600 was to be paid in cash, and the balance to be paid in installments for forty-eight months and, upon the prompt completion of such installment payments, a deed would be

[656]

made to the vendee conveying the premises to him and concurrently therewith the vendee would execute and deliver to the vendor his promissory note for the balance of the purchase price, payable in like manner as the original installments and secured by a first mortgage on said premises. On September 20, 1918, appellant, George S. Lane, purchased the property from Woods, who executed to said appellant an assignment of his contract. This sale from Woods to Lane was negotiated by Guy Stockton, who was the agent of the corporation for the sale of its lands, but who, for the purpose of this transaction, was employed and paid a commission by Woods. Stockton furnished appellants with copies of the advertising matter involved in the case, but the evidence shows that this was done without the knowledge or consent of any officer of said corporation. On February 15, 1921, pursuant to the provisions of the contract with Woods, the respondents, who had acquired the legal title to the premises, conveyed the premises to appellants and appellants executed the mortgage sought to be foreclosed in this action. The lands failed to develop into profitable fig orchards, the proceeds from the crops being generally less than the cost of cultivation of the crops. After a number of extensions of time and changes in the terms and conditions of payments requested by appellants and granted by respondents, appellants being behind in the payment of certain installments of the note, respondents, on February 3, 1928, instituted this action to foreclose the mortgage and appellants answered the complaint setting up fraud as a defense and interposed a cross-complaint alleging fraud perpetrated by the vendor upon appellants as inducements to appellants to purchase the lands.