Tuesday, December 3, 2013

Byers v. Federal Land Co. case brief

Byers v. Federal Land Co. case brief summary
3 F.2d 9 (1924)


CASE SYNOPSIS
Plaintiff buyer appealed a decree from the District Court of the United States for the District of Wyoming, which granted defendant seller's motion to dismiss the buyer's action against defendants, seller and its president, seeking cancellation of a contract for the purchase of land based upon a claim of fraudulent inducement.

CASE FACTS
The buyer entered into a contract with the seller for the purchase of land, whereby payments would be made over time, possession would be transferred to the buyer immediately, and ownership would be transferred to the buyer after full payment. The buyer discovered that the seller did not own or possess the land, and the buyer filed an action for cancellation of the contract based on fraudulent inducement. The seller filed a motion to dismiss, which the district court granted.

DISCUSSION

  • On appeal, the court reversed and remanded for entry of a decree cancelling the contract. 
  • The court held that the seller's brokers' incorrect opinion about the value of the land was not a misrepresentation where there was no evidence that the brokers had special knowledge of the land or a special relationship with the buyer. 
  • The court held that the seller's misrepresentation of ownership was not material because it had contract rights to ownership of the land and was willing and able to cause the land to be conveyed to the buyer upon full payment. 
  • However, the court held that the misrepresentation of possession was material because of the value of such possession during the long payment period.

CONCLUSION
The court reversed and remanded with directions for the district court to enter a decree cancelling the contract to purchase land as prayed for in the buyer's bill against the seller claiming fraudulent inducement.


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