fulfilling such promise, and after obtaining the money used it for other purposes, it was held that the plaintiff was entitled to rescind the contract for fraud.308 And a similar ruling was made in a case where a creditor induced his debtor to secure the debt by a chattel mortgage on the faith of the creditor's promise that he would not permit the property to be sold under foreclosure for less than a certain sum, which promise he secretly intended not to perform.304 Again, where a contract secured to a publisher the right to publish certain songs in consideration of paying a certain royalty to the composer, a case for rescission is made out by showing that the publisher had no intention of ever publishing the songs, but merely made the agreement to prevent competition with other composers.305 In another case, the purchaser of a steam plow was induced to accept an old machine by the seller's representation that it was as good as new, and by his promise that he would make it as good as new and supply any missing parts; but it appeared that the seller had no intention of doing anything of the kind, and it was held that the buyer was entitled to rescind.306 So, where persons are induced to buy town lots by the exhibition by the vendors of certain improvements which have been begun by them for the purpose of deceiving the public and not with the intention of completing them, it is a fraud sufficient to avoid the contract.307 And a cause of action is stated by a complaint which alleges that a corporation was organized to carry on fraudulent transactions, that its officers induced the plaintiff to convey his land to it under an agreement that the corporation would at the end of five years convey to the plaintiff other land on which an orange grove five years old was growing, and that the corporation did not own the land which should be thus conveyed, and never took any steps to acquire or improve the same.308 And so of a bill alleging

803 Matteson v. Wagoner, 147 Cal. 739, 82 Pac. 436.

304 Cerny v. Paxton & Gallagher Co., 78 Neb. 134, 110 N. W. 882, 10 L. R. A. (N. S.) 640.

805 Edmonds v. Stern, 89 App. Div. 539, 85 N. Y. Supp. 665.

306 Geiser Mfg. Co. v. Lunsford (Tex. Civ. App.) 139 S. W. 64.

307 Tauner v. Clark, 13 Ky. Law Rep. 879.

308 Martin v. Lawrence, 156 Cal. 191, 103 Pac. 913.

that defendant secured from plaintiff a conveyance of valuable property on his promise to procure a third party to build a line of railroad and operate it for twenty years as an independent and competing road, and to give plaintiff facilities for shipping coal from his land on such line, and that defendant did not intend to fulfill such promise, and in fact did not keep it, the road having been built and turned over to a rival company.30 Again, where the inhabitants of a town were induced to give their notes to procure the extension of a railroad through their town, it being represented to them that if they did not subscribe the railroad would go through a rival town, whereas in fact the contract for the building of the road through their town had already been let, and the railroad had no intention of going through such rival town, it was held that they had the right by suit in equity to have the notes delivered up and cancelled for fraud.810 And a voluntary conveyance by a husband to his wife, fraudulently procured by her by shamming affection for him and promising to resume their interrupted marital relations and conduct herself as a dutiful wife, when she really meant to abandon him and procure a divorce as soon as the conveyance was made, will be set aside for fraud.3

311

But to justify rescission on this ground, it is essential that the party giving the promise should have entertained a fraudulent purpose not to keep it, at the very time the promise was made, or that, at that time, he should have had no intention whatever of redeeming it. Where the making of a contract is induced by a promissory representation honestly made, and the party making it, at that time, fully intended to perform it and believed that he would be able to do so, rescission is not warranted by the fact that he is afterwards placed in a position where he cannot make good his word and therefore fails to do so.312 The intention at

309 Ten Mile Coal & Coke Co. v. Burt (C. C.) 170 Fed. 332.

310 Crawford v. Mobile, J. & K. C. R. Co., 83 Miss. 708, 36 South. 82, 102 Am. St. Rep. 476.

311 Basye v. Basye, 152 Ind. 172, 52 N. E. 797; Jennings v. Jennings, 48 Or. 69, 85 Pac. 65.

312 Arnold v. Hagerman, 45 N. J. Eq. 186, 17 Atl. 93, 14 Am. St. Rep. 712; State Bank of Indiana v. Gates, 114 Iowa, 323, 86 N. W. 311; Bigelow v. Barnes, 121 Minn. 148, 140 N. W. 1032, 45 L. R. A. (N. S.) 203; Neff v. Mattern (Cal. App.) 151 Pac. 382.

the time of making the contract is the important matter; and it is not sufficient, in a bill for rescission, to allege that the party made the promise without any reasonable expectation on his part that he would be able to perform it; it must be alleged that the promise was given with an intent not to perform it.313 Again, if the party honestly meant to keep his promise at the time it was given, but afterwards refuses to do so, not because he is unable, but by reason of a change in his plans or purposes, this may give rise to an action for damages for breach of the contract, but it is not such a fraud as will justify its rescission.314 For instance, in one of the cases it appeared that a railroad company promised, in consideration of the grant to it of a right of way, to construct and maintain a station on the land granted, which it afterwards refused to do. It was held that, if the promise was made with a design to deceive the grantor, having no intention of performance at the time, that fact, with the refusal to maintain the station, would entitle the grantor to a cancellation of the deed on the ground of fraud; but if the contract was made in good faith, and the failure of performance was due to a subsequent change of plan, the grantor would only be entitled to his damages for breach of the contract, and the question of the company's good faith in making the contract was for the jury.315 Where the promise is that a third person shall do a certain thing, the promisor is not responsible for failure of performance, if he believed, at the making of the contract, that the promise would be kept and correctly stated his reasons for entertaining such belief.316

The fraudulent intention not to fulfill a promise is naturally not a matter that is susceptible of direct proof, but it is sufficient for a decree granting relief if it can be clearly inferred from the facts and circumstances proved.317 And

313 People's Sav. Bank v. James, 178 Mass. 322, 59 N. E. 807. 814 New York Life Ins. Co. v. Miller, 11 Tex. Civ. App. 536, 32 S. W. 550; Brown v. Honiss, 74 N. J. Law, 501, 68 Atl. 150.

315 Chicago, T. & M. C. Ry. Co. v. Titterington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. Rep. 39.

316 Lambert v. Crystal Spring Land Co. (Va.) 27 S. E. 462.

317 Blackburn v. Morrison, 29 Okl. 510, 118 Pac. 402, Ann. Cas. 1913A, 523.

on the other hand, where one of the contracting parties has failed to fulfill a promise made to induce the contract, evidence of good faith on his part in making the promise, and of facts justifying his failure to perform it, is admissible to rebut the presumption of fraud.318 And generally, proof of parol promises made at the time of a written contract is competent to show the good or bad faith of the parties in the transaction and in their subsequent conduct.319

§ 91. Same; Promises as to Improvement or Use of Real Property.-Where one induces another to sell land to him, or to give him a lease of premises, on the representation that he means to devote it to a certain use, whereas he has the secret intention to put it to an entirely different use, and one which is so inconvenient or detrimental to the grantor that he would not have made the bargain if he had known the truth, this is not regarded as a mere promise of future action, but as the statement of a material existing fact (the party's present intention) which will warrant the rescission of the contract. This rule is applied, for instance, in cases where one sells a lot adjoining his own residence on the buyer's statement that he means to erect a dwelling on it, whereas he really intends, and begins, to erect a manufacturing plant on it, or a garage.320 So where one sells land for half what he considers it worth, upon the false representations of the vendee that it is to be used for a certain purpose, which would greatly enhance the value of the remainder of his property, whereas it was for another purpose, for which he would not have sold it, the sale will be set aside, even though the grantee may have paid all the land was actually worth.321 The converse case is presented where a person is induced to purchase land of no great present value by false promissory representations concern

318 Nelson v. Shelby Mfg. & Imp. Co., 96 Ala. 515, 11 South. 695, 38 Am. St. Rep. 116.

319 Breyfogle v. Walsh, 80 Fed. 172, 25 C. C. A. 357.

320 Adams v. Gillig, 199 N. Y. 314, 2 N. E. 670, 32 L. R. A. (N. S.) 127, 20 Ann. Cas. 910; Gale v. McCullough, 118 Md. 287, 84 Atl. 469. But compare Feret v. Hill, 15 C. B. 207. And see Brown v. Honiss, 74 N. J. Law, 501, 68 Atl. 150; Starnes v. Raleigh, C. & S. Ry. (N. C.) 87 S. E. 43.

821 Williams v. Kerr, 152 Pa. 560, 25 Atl. 618.

ing plans and projects which would greatly increase its value if carried out, especially in the case of sales of suburban property or lots in new towns. These representations may take the form of assurances that a railroad will enter the town, that a depot will be built near by, that a street railway will pass the property in question, that other buildings will be erected in the neighborhood, that streets will be laid out and graded, that waterworks will be constructed, that the lot in question will be connected with water and gas mains and sewers, that a company will be formed to irrigate agricultural lands, or the like. As to all such matters, the accepted rule is that, in so far as they relate to matters to be performed in the future by third persons, they are merely expressions of opinion and therefore not actionable fraud; and in so far as they constitute promises of future action by the vendor himself, they do not constitute ground for the rescission of the sale, unless, at the time, he had a specific intention not to redeem them, and simply used this device to deceive and cheat the purchaser.822 On the other hand, it was held that a good cause of action for rescission of a sale was stated in a petition which alleged that the plaintiff was the owner of a town site which he had laid off into lots and blocks; that, with a view to enhancing the value of said lots, he had sold and conveyed a large number of them at much less than their value, upon a prom

322 Harriage v. Daley (Ark.) 180 S. W. 333; Day v. Ft. Scott Inv. & Imp. Co., 153 Ill. 293, 38 N. E. 567; Mamaux v. Cape May Real Estate Co., 214 Fed. 757, 131 C. C. A. 63; Wabash R. Co. v. Grate, 53 Ind. App. 583, 102 N. E. 155; Mobley v. Quattlebaum, 101 S. C. 221, 85 S. E. 585; Livermore v. Middlesborough Town Lands Co., 106 Ky. 140, 50 S. W. 6; Decatur Mineral & Land Co. v. Friedman, 108 Ky. 189, 56 S. W. 11; Huls v. Black, 14 Ky. Law Rep. 805; Parsons v. Detroit & M. Ry. Co., 122 Mich. 462, 81 N. W. 343; Canon v. Farmers' Bank, 3 Neb. (Unof.) 348, 91 N. W. 585; Troxler v. New Era Building Co., 137 N. C. 51, 49 S. E. 58; Western Townsite Co. v. Novotny, 32 S. D. 565, 143 N. W. 895; Anderson v. Creston Land Co., 96 Va. 257, 31 S. E. 82; Moore v. Barksdale (Va.) 25 S. E. 529; Slothower v. Oak Ridge Land Co. (Va.) 27 S. E. 466; Stewart v. Larkin, 74 Wash. 681, 134 Pac. 186; Buena Vista Co. v. Billmyer, 48 W. Va. 382, 37 S. E. 583; Manns v. Boston Harbor R., S. S. & Land Co., 82 Wash. 411, 144 Pac. 535. But see Kaufmann v. McLaughlin, 24 Misc. Rep. 603, 54 N. Y. Supp. 160; Roberts v. James, 83 N. J. Law, 492, 85 Atl. 244, Ann. Cas. 1914B, 859; Garrett v. Finch, 107 Va. 25, 57 S. E. 604.