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Solem Machine Co. v. Carroll

JANUARY 11, 1972.




APPEAL from the Circuit Court of Winnebago County; the Hon. ALBERT S. O'SULLIVAN, Judge, presiding.


The plaintiff, Solem Machine Company, an Illinois corporation, owned certain timber land in Paraguay. On December 14th, 1965, the company agreed, through the plaintiff J.W. McCoy, a stockholder of Solem who also represented all other interests in the company, to quilt-claim the Paraguayan land to the defendant, Wallace E. Carroll, with no warranty as to title, liens or acreage.

The agreement was reduced to a writing dated December 23rd, 1965, sent by defendant's attorneys to McCoy with a $30,000 check for the purchase price. The agreement provided that the check was to be release to Solem if a prior transfer had not been made by one Nunez who had been dealing with the property for Solem and McCoy in Paraguay and in whose hands there was an outstanding power of attorney. Although this condition was satisfied, defendant stopped payment on the check after finding that the Solem Company had no title to the property, having lost all of its interests through various proceedings in Paraguay. These proceedings involved the estate of Peter Solem, Deceased, who under the Paraguayan law held title to the timber land for the benefit of his corporation.

In plaintiffs' suit to recover the purchase price, the jury found for the defendant and the trial court entered the judgment on the verdict from which this appeal is taken.

The principal issue in the case is framed within defendant's affirmative defense alleging fraud in the inducement of the contract, consisting of the alleged concealment of material facts. We will not detail the long and tangled web of circumstances which appear from the testimony and correspondence in the record. We have concluded that there is substantial evidence in the record tending to prove the elements of fraud and find that the jury's verdict is not against the manifest weight of the evidence.

• 1 When fraud is charged, if the facts and circumstances, taken in aspect most favorable to the proponent may fairly be considered evidence tending to prove fraud in all of its elements, an issue is created for the jury. (Millikin National Bank v. Shellabarger Grain (1944), 322 Ill. App. 189, 193.) See also Leonard v. Springer (1902), 197 Ill. 532, 538, 539; Kohl v. Lindley (1866), 39 Ill. 195, 201.

Plaintiffs have argued that the defendant had access to the same information which McCoy had; and that McCoy was forthright in advising the defendant that there were "problems regarding the land," that there were "tax problems," and that "there were people trying to get hold of the property." Plaintiffs contend that they could not properly be charged with either misrepresentation or concealment of the very problems which were the basis for insistence on an "as — is" agreement.

• 2 In a discussion prior to the final agreement, the defendant's attorney told McCoy that the defendant was aware that squatters had lived on the property and that some of them had possibly perfected their right to some small parcel of it; that possibly there were some delinquent real estate taxes and possibly some estate taxes that resulted from the death of Mr. Solem. Defendant testified that he then asked McCoy directly if he knew of any other matters or any other situation other than these items that he had just mentioned that would be defects in the title to the property and that McCoy answered that he did not know of anything. Defendant argues, and we think rightly, that on the whole record this amounted to evidence of the intentional concealment of other circumstances known to McCoy and not to the purchaser. For example, there was testimony that although the final letter agreement did not specify any acreage, the property had originally been approximately a 450,000 acre tract some years before when Carroll had dealt with Solem, which figure was apparently still in Carroll's mind since he specified in the original offer to purchase, "450,000 acres or more." Although McCoy had information that a substantial number of acres had already been sold to pay debts through judicial proceedings, he said nothing about this. Also, McCoy did not tell Carroll that the remainder of the property was in urgent danger of "fraudulent expropriation" by a syndicate of creditors which had been formed to sell the property for debts of the Peter Solem Estate. Even though the correspondence which McCoy had received from Paraguay did not preclude all possibility of relief, it warned of the imminent danger of losing all interest in the property.

While McCoy's last correspondence from Nunez was on November 3rd, 1965, and there was no evidence that he knew, prior to January 11th, 1966, that the totality of the land had been sold through judicial proceedings (culminating in a deed which was effective November 30th, 1965, as to original parties and December 9th, 1965, as to third parties), this does not dispose of the issue. For the correspondence which was in McCoy's possession, the contents of which he did not disclose, could well have alerted Carroll to the danger that more was involved than the question of the exact number of acres, the unpaid taxes and the presence of squatters on the property. Carroll was admittedly aware of these general problems and willing to accept them as his responsibility, but the jury could find from the evidence that Carroll was misled into agreeing to accept a quit claim deed because of the fraudulent concealment of the more expansive dangers involving the property. It is true that McCoy suggested that Carroll contact Nunez directly and that this was not done. The jury could properly weigh this evidence in determining McCoy's intention together with the other circumstances relied upon to prove the fraud. But this does not alter the fact that there was sufficient evidence for the jury to decide whether the concealment of the exact contents of the correspondence from Nunez and others to McCoy constituted a fraudulent concealment of material facts upon which the defendant relied to his detriment.

The jury under proper instructions and in a trial free from any claim of error found for the defendant, and we are not justified in interfering with that finding.

The judgment below is affirmed.

Judgment affirmed.


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