Lecky v Walter

• Jurisdiction: Ireland
• Judge: M. R.
• Judgment Date: 09 November 1913
• Court: Chancery Division (Ireland)
• Docket Number: (1912. No. 1043.)
• Date: 09 November 1913

Lecky

and

Walter.

M. R.

(1912. No. 1043.)

CASES

DETERMINED BY

THE CHANCERY DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND BY

THE IRISH LAND COMMISSION,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL.

1914.

Contract — Sale of bonds — Rescission — Innocent misrepresentation.

Held, that the sale would not be set aside.

Seddon v. The North Eastern Salt Company, Limited, [1905] 1 Ch. 326, followed.

Trial of Action.

The following statement of facts is taken from the judgment of the Master of the Rolls:—

“In this action, as originally constituted, the plaintiff sought to have a contract for the sale to him by the defendant of eight bonds of a Dutch company, known as Petroleum Maatschappij ‘Henderson,’ set aside on the ground of the defendant's fraud and misrepresentation. The charge of fraud was omitted from the statement of claim, and disavowed in express terms by the plaintiff's counsel at the bar; but although it thus completely passed out of the case, I feel bound to say at the outset, in justice to the defendant, that the charge of fraud appears to have been made without any justification, or even serious deliberation.

“The relief sought by the plaintiff has been reduced to a claim to have the contract set aside on the ground that he was induced to enter into it by misrepresentations made innocently by the defendant. Particulars of these misrepresentations are given in detail by the statement of claim, and they are eight in number; but, to my amazement, and I am sure to the amazement of everyone in court who heard his evidence at the trial, not only did the plaintiff swear that six out of the eight several misrepresentations which were alleged were not made to him at all, but further that he never gave instructions to his solicitor that they were made.

“Here, then, we have an action based originally upon fraud. Then we have the charge of fraud dropped, and in lieu thereof a charge against the defendant of making a series of misrepresentations, though without fraud; and then a disclaimer by the plaintiff himself of three-fourths of the allegations made on his behalf against the defendant. I cannot say where the responsibility for the miscarriage lies, but certainly no case was ever brought into court in a manner more calculated to prejudice a plaintiff.

“I must say this, however, for the plaintiff, lest I should be supposed to cast any undue reflection upon him. He appeared to me to be a perfectly truthful and conscientious witness, and the most that can be alleged against him is that possibly he lent his name a little too readily as plaintiff in an action which was really brought on behalf of a group of bond-holders, and that he did not give sufficient attention to the subsequent proceedings.

“The action, as I have said, has been reduced to one for setting aside a contract on the ground that it was induced by the defendant's misrepresentations. No charge of fraud is now made. I must, therefore, treat the misrepresentations, if in fact made, as having been made innocently, and by a bona fide mistake.

The defendant raises the defence (apart from a purely legal defence which I will afterwards specially deal with) that he never made the representations complained of, and, even if he did, that the plaintiff did not enter into the contract on the faith of these representations.

“These are the issues of fact which have to be determined. The defendant is a gentleman carrying on business in London. I do not know how else to describe him, because no evidence was given that he carried on any business other than that in connexion with the company in question. He is described in the statement of claim as a company promoter and speculator in oilfields, and no doubt this was intended to be a disparaging description. But there was no evidence whatever that he was a company as generally understood, and the only speculation with which he appears to have been connected was in the oil-fields belonging to the company in question.

“The history of these oil-fields, and of the company, is shortly as follows:—There are in fact oil-fields in Wyoming, U.S.A., and they are known as the Dallas Oil-fields. They are considerable in extent, and they are admitted by the plaintiff to be a most valuable property. They were originally owned by an Irishman of the not unfamiliar name of Murphy. He had appropriated them when Wyoming was only a territory, and was subject to incursions by Red Indians. When Wyoming was incorporated as a Federal State, his title was confirmed by the State authority, and he afterwards sold the property to a man named Henderson, and hence it is sometimes called the Henderson Oil-fields. The defendant purchased the property from Henderson in or about the year 1903.

“It is not necessary to give a detailed history of the property from that date down to the purchase of the bonds which occasioned the present action, but the following general account of the defendant's vicissitudes will help to explain the existing situation. The defendant had not the money to pay for the property which he agreed to purchase. He raised on the security of mortgages upon it about £90,000, and thus paid for it. This circumstance in itself would go to prove that the defendant had acquired very valuable oil-fields. The defendant in fact valued them at a sum vastly in excess of what he paid.

“The defendant having thus acquired the oil-fields, caused them to be conveyed to a person of the name of Lobell, who had the title registered in his name. This Lobell was only a trustee for the defendant, and the conveyance to him, instead of to the defendant himself, is explained by the fact that it was falsely represented to the defendant that, being an alien, he could not legally hold lands situated in the State of Wyoming. Lobell soon proved himself a most fraudulent trustee. He took advantage of his position of legal owner by raising mortgages upon the property for his own purposes; and, further, without the knowledge of the defendant, who was living in London, he promoted a company in Holland called the Petroleum Maatschappij...