Sec. 295. Representations As To Rentals

Fraud may be based on false statements of rental.8 Misrepresentations as to rental of the property made by the broker is a sufficient basis for rescission of the contract.9 "The statement by a vendor that the income from a property is greater than it in fact is, is a fraud for which an action will lie."10 The purchaser need make no effort to ascertain from the tenants the actual rent, where the vendor diverts him from inquiry, as the vendee has a right to rely upon the mere statement of the vendor or his broker. Want of diligence in discovering the fraud is not sufficient to deprive a party of his right to rescind a fraudulent contract.11 But statements made by brokers not employed by the vendor, will not support a rescission, as where the brokers really represent the purchaser but the seller voluntarily pays the commission. 12

In Goodman v. Hess, 56 Misc. 482 (N. Y. 1907), a discrepancy of $264 in the statement of the annual rentals was held material, the vendor having stated them to be $5,325 per annum. This was a case in which the proposed purchaser refused to enter into a contract on account of such misrepresentation and the broker was held entitled to commissions. Where a purchaser is induced to take title by a false representation as to the rents, "the measure of damages is the difference between the market value of the premises if they had been as represented and their actual market value. "3

8 Kreshover v. Berger. 135 App. Div. 27 (N. Y. 1909); Remmers v. Berbling. 66 Misc. 291 (N. Y. 1910); Hecht v. Metzler, 48 Pac. 40 (Utah 1897), (citing DeFrees v. Carr. 8 Utah 488; 33 Pac. 217: Griffing v. Dlller, 21 N. Y. Supp. 407; Wise v. Fuller, 29 N. J. Eq. 257; Speed v. Holllngsworth. 38 Pac. (Kans.) 497).

9 Forster v. Wllhusen. 14 Misc. 520 (N. Y. 18951.

10 Conlan v. Roemer. 52 N. J. L. 56 (1889), (citing Wise v. Fuller, 2 Stew. Eq. 257; Dlmmoek v. Hallett. L. R. 2 Ch. App. 21).

11 Forster v. Wllhusen. 14 Misc. 520 (N. Y. 1895). See also Prince v. Jacobs, 80 App. Div. 243 (N. Y. 1903).

12 Rothsteln v. Isaac, 124 App. Div. 133 (N. Y. 1908).

13 Ettlinger v. Well, 184 N. Y. 182 (1906); further appeal, 131 App. Div. 784 (N. Y. 1909).

Sec. 296. Representations As To Improvements

Where it was claimed that the vendor represented that the property had gas and water, and the party charged with making the representations claimed that he only made a qualified representation, "that Babylon had water, gas and all facilities and that this property was within Babylon," it was held that the representation, while literally it might be true, was, as it carried with it a suggestion of falsehood when taken in connection with other facts, made to convey a fraudulent purpose.14

Sec. 297. Representations As To Situation Of Property

A representation that lots are situated five to ten minutes' walk from railroad station, when in fact they are a mile and a half or two miles therefrom, is a false representation.15 Where wrong land is pointed out, recovery may be had;16 and also where the boundaries are misrepresented.17

Sec. 298. Representations As To Mortgages On Property

A representation by the vendor that a mortgage on the property could remain as long as interest was paid, was held sufficient to avoid a contract where the mortgagee had made no such arrangement.18 In this case19 the authorities were reviewed as to the right of a vendee to recover a deposit made on an oral contract for the sale of property, entered into on a representation that a mortgage then on the property could remain as long as interest was paid. The mortgagee had in fact made no such arrangement, and it was held that the vendee could rescind and recover his deposit on account of the fraud.

1 4 Scarsdale Pub. Co. v. Carter, 63 Misc. 276 (N. Y. 1909). See also Hansen v. Kline. 113 N. W. 504 (Iowa 1907). 15 Id.

16 Stelting v. Bank of Sparta, 136 Wisc. 369 (1908). 17 Davis v. Nuzum, 1 L. B. A. 774 (Wise. 1888). 18 Hellman v. Strauss, 2 Hilt. 9 (N. Y. 1858). 19 Id.

Sec. 299. Representation That Others Want The Property

In Hammond v. Pennock, 61 N. Y. 145, 151 (1874), one of the features of the fraud was the overworked assertion that somebody else wanted the property and if the buyer intended to buy he had better make up his mind at once. There were, however, other material misrepresentations.

Sec. 300. Representations As To Title Of Vendor

There may be fraud, too, in respect to the title of the ' vendor,20 as for instance where the vendor induced the purchaser to take a deed on the representation that he owned the property and had a good title, when in fact he had but tax sale certificates.21 "Proof of mere misrepresentation as to ownership may demand rescission of a contract, but will not sustain an action for deceit, in the absence of allegation, sufficient evidence and finding of intent to deceive."22

20 Kerwin v. Friedman, 127 Mo. App. 522 (1907); Meeks v. Garner, 11 L. E. A. 196 (Ala. 1890).

21 Grosjean v. Galloway, 64 App. Div. 547 (N. Y. 1901) ; and see Maupln on Marketable Titles (2nd Ed.), pp. 236 et seq.

22 Zagarino v. Kurzrok, 135 App. Div. 764 (N. Y. 1909), (citing Wakeman T. Dalley, 51 N. Y. 27; Mclntyre v. Buell, 132 N. Y. 192).