
    Continental Coal, Land and Timber Company, Inc., Appellant, v. Ringland F. Kilpatrick and Others, Respondents.
    First Department,
    May 12, 1916.
    Real property—suit to set aside fraudulent conveyance — concealment toy grantor of known defects in title — evidence establishing fraudulent concealment — reliance of grantee on validity of grantor’s title — option entitling grantee to purchase from true owner.
    Although at the time of a conveyance of lands it was understood between the grantor and grantee that the title was in an embarrassed state, if the grantor stated to the grantee that except for squatters and prior conveyances there was no objection to his title, and that he had a better title than any other person and that he knew of no defects, but as a matter of fact he knew that his title was worthless in that it was derived from a person who was not an heir to the original owner, there was actual fraud and misrepresentation which entitles the grantee to have the conveyance annulled and to recover the consideration paid.
    The fact that the grantor knew that his title was worthless is established by the fact that prior to the conveyance he had obtained from the true owners an option to purchase, which fact he concealed from his grantee.
    While one may remain silent and is not bound to tell the defects of his own title, where he does assume to tell defects and omits a material defect known to him, it may amount to fraudulent concealment.
    In a suit to set aside such conveyance it was error for the court to exclude testimony of the grantee to the effect that he took title relying upon the validity of the deed through which his grantor claimed to have acquired title.
    So, too, it was error for the court to exclude evidence of the option entitling the defendant to purchase from the real owners.
    Appeal by the plaintiff, Continental Coal, Land and Timber Company, Inc., -from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 26th day of June, 1915, dismissing the complaint as against the defendant Kilpatrick upon a decision of the court after a trial at the New York Special Term.
    
      Frank Moss, for the appellant.
    
      Louis E. Felix, for the respondents.
   Smith, J.:

The action is brought in equity to permit plaintiff to return to the defendant Kilpatrick a quitclaim deed given of certain lands in Kentucky and to compel the defendant to return $10,000, the consideration paid therefor. This equitable relief is asked upon the ground that the defendant was guilty of fraud in inducing the plaintiff to purchase the land. The complaint was dismissed after the plaintiff’s evidence. From the colloquy that appears at the end of the case it would appear that the court assumed that there was evidence of misrepresentation made only to one Evans, a representative of plaintiff. The proof, however, shows material misrepresentations made to Whitbeck, who was plaintiff’s attorney, and who was acting for the plaintiff in the purchase of the land. Upon the assumption by the court that there was not sufficient evidence of fraud or misrepresentation the court held that the rule of caveat emptor applied, and that the plaintiff took its chances on the title. There are findings in the record to the effect that no fraudulent representations were made and no facts fraudulently concealed by the defendant, but in the absence of testimony from the defendant himself and upon the plaintiff’s case alone those findings are clearly against the weight of evidence.

The plaintiff purchased of the defendant his interest in about 120,000 acres of land in Kentucky. It was clearly understood that the title of this land was in a somewhat embarrassed state. It was stated that there were many squatters upon it and there were some prior conveyances; but the defendant. Kilpatrick stated to Whitbeck that except for the squatters and prior conveyances there was no objection to his title. He further stated that so far as he knew he had, the best title of any one to the land, and so far as he knew there was no fatal defect in his title. These are the representations that are claimed to have been fraudulently made.

Defendant’s only title came through one Elizabeth Young, who is recited in the deed as a sister and sole heir at law of one John D. Graham, at one time the owner of the land. It appears from the evidence that Elizabeth Young was not a sister and was not an heir at law of Jóhn D. Graham, and the defendant’s title was confessedly absolutely worthless. Of this fact the .defendant had full knowledge, because some time prior to the negotiations with the plaintiff he had found the true heirs of John D. Graham, to wit, one Caroline Graham and one Mrs. Whitney, and had obtained from them what may be called an option upon this very land. This fact the defendant did not reveal, as he ought to have'revealed, in stating the embarrassments to the title. One may remain silent, and is not bound to tell the defects of his own title. Where, however, he assumes to tell the defects and omits the most material one which is known to him, that may be fraudulent concealment.

This action need not rest, however, upon fraudulent concealment. The defendant’s representation that there were no objections to his title except for squatters and prior conveyances, was a false representation. His further representation that so far as he knew he had the best title of any one to the land and so far as he knew there was no fatal defect to his title, was clearly a false representation, and known to him to be false.

The respondent strongly urges that there is no proof in the case that the plaintiff or Whitbeck relied upon these representations. The fact seems to me clearly shown. The plaintiff would not have paid $10,000 for a title that confessedly was absolutely worthless. Examination was made and Whit-beck, the plaintiff’s agent, was given certain affidavits showing- that this Elizabeth Young was the sister and sole heir at law of John D. Graham. Whitbeck talked over this very conveyance from Elizabeth Young without any information having been given to him by the defendant that he had an option from two other persons who were known to be the real heirs of John D. Graham. Not until long after the deed had been transferred and the money paid did he find out that Elizabeth Young was not in fact the sister and heir at law of John D. Graham. He was asked if he took that title relying upon the validity of the Elizabeth Young deed, and the court erroneously excluded his answer. For the purpose of this appeal we must assume that his evidence would have established that fact. The court also excluded evidence of the option that the defendant had from the real heirs of John D. Graham. This was clearly competent evidence to show the defendant’s knowledge of the fact that they were the heirs of John D. Graham and that this deed from Elizabeth Young was worthless paper.

The complaint was improperly dismissed, and judgment should be reversed, with costs to.appellant to abide event, and a new trial granted. The findings of fact that defendant made no material misrepresentations to induce plaintiff’s purchase are reversed.

Clarke, P. J., McLaughlin, Scott and Davis, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellant to abide event. Order to be settled on notice.  